Over the past few years, the British represent the majority of foreign investors in real estate of Spain. According to data for 2019, investments in Spanish property by British citizens accounted for about 15% of other foreign investments. Almost 400.000 Brits live in the country permanently, about 1 million are owners of Spanish property, and about 20 million British residents visit the country as tourists. This data confirms that the British are not ready to give up the benefits of living in hospitable Spain.
Why is it real estate in Spain in demand among residents of the UK?
That’s a pretty simple question. Real estate here is relatively inexpensive compared to other European countries: according to the portal idealist for February 2020, the average cost of housing in Spain was 1752 €/m2. Also, foreigners are attracted by low mortgage interest, developed medicine, high standard of living and ecological-healthy food. Wealthy Britons, who purchase luxury property can also count on receiving of the «Golden visa».
Although the most desirable cities to live in for British citizens remain Madrid and Barcelona, but the Costa Blanca and, in particular, the province of Alicante are arousing marked interest. The advantages of this region include pleasant climate, proximity to the sea and affordable housing, which cost is 1575€/m2 according to the portal idealist for February 2020.
Is it wise to buy property in Spain after Brexit?
Presently, there are no special requirements due to the citizenship of the European Union for those, who buy housing in Spain. Therefore, the official exit of the United Kingdom from the European Union since 01.02.2020 can not significantly affect current investments of British people in Spanish real estate, if they were previously interested in it.
One category of purchasers prefers to invest in homes for personal holidays in sunny Spain, while the others purchase for profit purposes. Of course, Spain still has a lot to offer: wonderful beaches and mild Mediterranean climate, water sports and mountain routes, the diversity of gastronomy and fine local wines. Is it worth giving up?
Can I live in Spain after Brexit?
Particularly, it is worth noting that the United Kingdom and Spain already have certain assurance provided to European citizens, who live in neighboring countries, and further details of their future position will be known as the process progresses.
Previously, all citizens of EU-member countries, including the British, could repeatedly get in and out, live and work in any EU country without the need for additional permits. The situation after Brexit leaves many questions regarding to further arrangements for British citizens to enter/leave other EU-member countries and for citizens of EU-member countries to enter/leave the UK. It should be noted, that the previous procedure is valid until the end of 2020 and significant changes are not expected until the beginning of 2021. In the future, we must assume, that adopted decision will be mutually beneficial for all stakeholders, for example, to sign the agreement on visa regime simplification.
Can I still buy property in Spain after Brexit?
The answer is clear and positive. The purchase procedure will not change until the end of 2020. When you purchase housing in Spain, you should pay transfer tax on secondary property market, and Spanish VAT and stamp duty – for new buildings bought from developing companies.
The current rates for both taxes, the transfer tax (Impuesto de Transmisiones Patrimoniales) and the Spanish VAT (IVA) and stamp duty (Actos Jurídicos Documentados) are applied for any relevant transactions, and the rates are established regardless of the nationality or of the EU-citizenship presence.
But there are also additional fees that must be taken into account. These include notary fees, because of the notary certifies every transaction as a public official, and land registration fees are payable to the local Registrar. All of these taxes and payments must be paid regardless of whether the purchaser is a citizen of an EU-member country or not, so there is no reason to believe that purchasing a property in Spain after Brexit will cost more.
How safe will real estate transactions be for Brits abroad?
All real estate transactions in Spain are completed by signing a deed of sale before the notary, who is a Spanish public official, who records the transfer of property, confirms the identity of the parties and gives legitimacy to the transaction.
Given that the notary is a public official, who acts on behalf of both parties, so it makes sense to get independent legal advice. It is desirable, that the chosen lawyer was accredited in both countries, Spain and the United Kingdom, so that the purchaser could get detailed personal advice about the future purchase and reliably defend his interests.
I already own a property in Spain, would I be disadvantaged, if I try to sell it after Brexit?
It is expected that new international agreements will be signed in the near future to eliminate double taxation between the United Kingdom and Spain.
Some of the contractual agreements between the two countries already exist and relate, for example, relating to income tax, but there is no updated agreement on the elimination of double taxation and documents related to inheritance tax yet.
You need to pay attention to the different tax rates applied to EU citizens and non-EU citizens that are related to IBI and income tax. The fact is that from 2021, the income tax rate for British non-EU residents will be 24%, not 19% as it was previously.
What does the Spanish property market expect after Brexit?
Overall, the forecasts for both the United Kingdom and Spain are quite positive. Previously, experts predicted that real estate prices will increase in the range of 3-5% in 2020. Given the current situation with coronavirus in the world, the cost of property may decrease by 5-10%, so if you have the necessary funds and an attractive mortgage rate, now is the time for a bargain purchase. Experts believe that after lifting of the quarantine, prices will quickly go back to their previous indicators. Panic and the slump in the housing sector as by the crisis of 2008 are not expected.
Therefore, if in the future the British currency begins to fall again due to the consequences of Brexit, then most likely the British will decide to transfer their assets to euros or invest in liquid and attractive in terms of investment real estate, including Spanish one.