On January 31, 2020, when the UK has officially withdrawn from the European Union, this event aroused numerous issues and doubts. Among other things, will brexit affect buying property in Spain? Can you buy a property in Spain after brexit? Will Brits continue to purchase real estate in EU countries, and particular Spain? What the difference for both parties to a transaction (sellers and buyers) will exist regarding new rules? How will the Spanish property market respond to Brexit since 2022? Let’s discuss that in our article.
Brexit and Spain Property: The British are Leaders Among Foreign Buyers of Spanish Properties
Spain is one of the most preferred destinations for immigration for the Brits, and there are reasons for this: the quality and cost of living, a wonderful climate with an abundance of sunny days, a developed service sector – all this seems very attractive for British nationals. According to statistics 2020 from the Spanish Ministry of the Interior, there are about 370,000 Britons permanently residing in the country and this is the third largest national group of immigrants in Spain.
In the meantime, a much larger number of Britons – according to various sources, from 800,000 to 1,000,000, own real estate in Spain. Demand for Spanish real estate among British buyers has grown up by 39% in January 2021 in comparison the same month in 2020, regarding to real estate company Taylor Wimpey España, supposing Brexit can’t hardly stop British lovers of Spanish resorts.
Many of the British citizens who have chosen Spain for permanent residence selected the option of purchasing real estate in this country, including the elite one, which allows them to take advantage of the Golden Visa program.
Spanish real estate is in great demand among British buyers, firstly, due to an amazing price/quality ratio compared to other European countries, and secondly, due to low mortgage rates.
Even in the two main Spanish capitals – Madrid and Barcelona – the most expensive cities in Spain, the cost of real estate is an order of magnitude lower than in such European cities as Paris or Berlin.
While Madrid and Barcelona are the most desirable immigration destinations for Brits, coastal areas like the Costa del Sol and Costa Blanca continue to be enormously popular.
Both these areas beckon the inhabitants of Foggy Albion, first of all, for their sunny Mediterranean climate (the local winter isn’t much colder than the British summer). Also, the closeness the sea and well-maintained beaches, safety and relax, fine gastronomy and an abundance of entertainment for every taste and budget. Furthermore, real estate prices here are lower than in Madrid (3.700 €/m2) and Barcelona (3.932 €/m2).
The province of Alicante is allocated especially, with its magnificent Costa Blanca area. The property cost here is very affordable –1,697 € per sq.m. on average (idealista.com as for December 2021), and the climate conditions, infrastructure, local meals and great sunny beaches are unrivaled.
Will brexit affect buying property in Spain?
Regarding to the data of the College of Registrars, in 2017 the number of transactions for the purchase of real estate in Spain fell by 9.4%. In 2018, it increased, but in the 3rd quarter of 2019, a drop was recorded once more. In 2020, it fell again by 12.2%. Official data for the whole of 2021 are still unknown.
By the way, COVID restrictions 2020 has more influence on the Spanish property market than Brexit:
- To visit and view properties had become more difficult for potential buyers.
- The total amount of transactions on acquisition properties fell by 17.7% in 2020.
- Purchases made by foreigners were even more affected, dropping by 26.5%.
- So there’s another interesting thing that the UK citizens continue to purchase more Spanish property than any other foreign nationals.
- Brits were 13% of the homebuyers in 2020 and bought 60% more Spanish properties than the German or French nationals.
A Brief Account of Some Conclusions:
- Spanish property prices showed a steady increase during the past 5 years.
- In general, Brexit didn’t impact significantly on the property market.
- The Spanish property market is supported by low interest rates and high foreign demand.
- Spanish property continues to be more affordable compared to the UK.
- The British nationals remain the biggest group among foreign buyers.
Experts also point out that the situation on the real estate market is highly dependent on the economic situation. In this context, it is emphasized that if the UK economy will face difficulties, the purchasing power of the British will decrease, and this will lead to a further reduction in the number of property buyers.
According to IMF forecasts for 2022, the UK economy could reach its pre-COVID level by the end of this year. The UK economy to end the year is expected to be with an annual GDP growth rate of between 7.0% and 7.1%. It appears to be comparable given the same forecasts made in July 2021.
In previous years, there was an agreement between London and Brussels regarding the absence of visas to EU countries for British for a period of stay up to 90 days (out of 180).However, from 2022 Brits will need a visa waiver to enter Spain, regarding to official rules outlined on the Spanish government website.
Also, like third-country nationals, the British will be deprived of the privileges in paying property taxes, whereas previously the owner could pay this tax at the rate of the autonomy where most of his assets are located. Moreover, in many autonomous communities there are large discounts for these rates.
Nevertheless, experts believe that the Spanish property market will continue to be attractive to British nationals due to its undeniable advantages. Moreover, even if the pound sterling weakens again (which is unlikely, since the GBP has reached a new peak in 2021, with exchange rates up seven per cent against the euro since the beginning of the year), the British can consider real estate in the EU (including Spain) as a reliable asset, and investments in euros – as investments in a stable currency.
