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ARCHIVED - Could Brexit lead to less Brits buying properties in Spain?
Will enthusiasm for a retirement in the sun diminish as the automatic right to freedom of movement throughout Europe ends for British nationals?
Brexit negotiations are still ongoing as the UK continues its attempts to achieve a last-minute deal and avoid a “hard Brexit” which will undoubtedly lead to a greater sense of uncertainty heading into 2021.
The British have long enjoyed a love affair with Spain and continue to be its most loyal tourism market, thousands of British nationals opting every year for a new life in the sunnier climate of Spain and purchasing Spanish properties, either with the intention of remaining here permanently or spending as much time as possible in Spain, but maintaining a property in the UK.
As a result, established communities of British nationals have appeared all along the Mediterranean coast, with British-run bars and businesses offering everything the British communities in Spain could possibly need, and a full service in English.
But could this be about to change as Brexit changes the relationship`of the UK with Spain?
British no longer the biggest property buyers in Spain
The latest figures produced by Spain’s notaries show that during the first half of 2020 the number of properties bought in this country by British nationals was 41.1 per cent lower than in the same period last year at 3,917, and while there is no doubt that the scale of the decrease is due mostly to the coronavirus pandemic which began in Europe in the spring, it is undeniable that the imminent end of the transition period before the effects of Brexit become a reality have also played their part.
The 41-per-cent drop in the number of British buyers compares with an overall decrease of 37.4 per cent in the figure for all non-Spanish purchasers, and the six-month period ending on 30th June was the first since 2009 when UK nationals did not represent the largest group in terms of nationality, being overtaken by the catch-all category of “other countries outside the EU”. With foreign buyers accounting for 17.3 per cent of all purchases, a proportion which is broadly in line with those reported in recent years, the decreasing figures for the UK mean that Britons were responsible for only 2.1 per cent of the overall figure, and Spain’s property registrars report that in the third quarter that proportion dropped to only 1.5 per cent.
The notaries’ statistical bulletin shows that the number of purchases made by Britons in Spain was already falling in 2019, perhaps in anticipation of the activation of Brexit, the total dropping by 12.7 per cent to 13,360.
Given the restrictions on air travel since March it is of course logical to find such notable decreases, but it is by no means certain that the figures will pick up again when the pandemic eventually eases and flights become more readily available. Post-pandemic Europe will also be post-Brexit Europe, and the readiness of many Britons to relocate to Spain and other EU states could be affected significantly when the added difficulties created by the departure from the EU become apparent.
From now on the plunge will be a far more important one, requiring either a greater level of commitment to living in Spain (and therefore taking out residency) or an acceptance of the fact that there are limits on how much time non-resident owners can spend here. This in turn is likely to affect both the type of properties favoured and the nature of the expat communities which have sprouted over the last few decades in many parts of the Costa Blanca and the Costa Cálida.
Communities like those in the southern Costa Blanca and parts of the Region of Murcia, where English is the most commonly spoken language and life may revolve around the golf club, the bowling green or the English pubs and Indian restaurants, may begin to decline as the amount of “new blood” injected by British buyers decreases and the aging existing resident population also diminishes. It has been common in many of these areas for expats to enjoy their life in the sun for five to ten years before the emotional tug of family and other ties becomes too strong, and it remains to be seen whether this is still the case when the realities of Brexit kick in.
It was formerly very common to meet British nationals who have been “living in Spain” for several years but have never even registered on the local municipal Padrón or registered with the regional health services, falling back on the health services designed to cover tourists, not residents. Over the last few months there have been many comments claiming that the Spanish Authorities will make no effort to clamp down on those who are already here, but there have also been plenty of reports of difficulties experienced in renewing medical cards and official documentation during the last few months, and it’s impossible to remain “under the radar” all of the time. We don´t know yet how the authorities will verify our residence, but it will be considerably more difficult for anyone to be here for any period of time without legalising their status.
90 day limited stay due to Schengen rules
Among the additional obstacles brought about by Brexit and being highlighted by the British press lately, is the fact that the Schengen rules will be applied to UK nationals as of 1st January 2021, meaning that the amount of time Britons can spend in their overseas homes is to be limited to 90 days at a time and a maximum of 180 days annually.
Those who exceed the 90-day maximum stay could face heavy fines, deportation or even a ban from the Schengen zone. This will adversely affect those accustomed to spending the winter in Spain and may deter potential purchasers.
Potential buyers will now have to ask themselves the following questions:
Are they prepared to buy in the knowledge that they can only spend 3 months here at a time.?
This is no problem for those who genuinely only want a holiday property which they can lock and leave and for the majority of holidaymakers, Brexit will make very little difference; family buyers are generally limited to school holidays for holiday home visits anyway and very few have the luxury of being able to spend 180 days a year on holiday.
Are they ready to leave the UK behind and take Spanish residency?
The main market which will be affected is that of retirees, who will have to ask themselves if they are committed enough to living in Spain to sever their ties in the UK by applying for Spanish residency and all that it implies.
This is a big decision with financial implications and requires a firm commitment to Spain. For many who retire to Spain now, but have never taken Spanish residency, return to the UK is an easy process and many retirees don´t think of Spain as their “permanent home” rather than as a pleasant interlude for several years. At the moment it is easy to “go back home” should one partner pass away, or deteriorating medical conditions make it easier to be closer to family members, and others find the distance from the family simply too much to bear.
The situation post-Brexit will make it so much more difficult to “give it a try” before making a permanent move and the bureaucracy involved in applying for residency may well deter many of those who have been “thinking about retiring abroad” and now find it more difficult to make the move.
Will some potential buyers be unable to meet the financial requirements to be accepted for residency?
There is also the cost of living abroad to now be considered.
UK Nationals applying for residency must prove that they have either regular income or a sufficient lump sum with which to support themselves, as well as taking out private health insurance. Will some be unable to afford this?
The uncertainties are numerous and the answers to the questions above can only be guessed at. But while it is not hard to find indications that the state of the Spanish property market as a whole will remain a fundamentally healthy one when Covid can be taken out of the equation, there are also signs that the decrease in the number of British buyers will be more permanent than the pandemic.
It can be argued that for some regions of Spain a decline in the British population would represent a significant loss; after all, the latest notaries’ report notes that over half of all purchases by non-residents in the Region of Murcia were made by UK nationals between January and December, and there can be no doubt that the expats do make a contribution to the local economy in coastal areas. Some of the golf resorts which were purpose built specifically for the overseas property buyers such as the former Polaris World Resorts are extremely quiet out of season and it has been very noticeable during the last few months of the pandemic how few people actually live here permanently. Without a constant flow of new residents and “holiday makers”, the number of Brits visible in the streets has been noticeably lower. And without the volume of clients, some British-run businesses which specialise in servicing the non-Spanish speaking market, have found it difficult to survive; were this to become a permanent level of clients it would be impossible to continue. Charities have reported a loss of volunteers, making it difficult to maintain services and clubs have also gone into hibernation, with insufficient numbers of volunteers and participants to hold even the most basic of activities.
Of course, the Spanish Government does have flexibility to make exceptions should it choose to do so, but at a national level, 1.5 per cent of property sales is a sacrifice the Spanish government could possibly be prepared to make; the majority of properties sold are for holiday purposes only and there is no indication that British nationals will stop holidaying in all European Union countries because they are now limited to a 90 day stay or for that matter, stop buying holiday properties abroad.
There are still many Brits determined to buy in Spain and move here in search of a better life post-Brexit; some social media posters maintain that their post-Covid early redundancy is even more of an incentive to move to Spain as they now have no work! But there are also social media posts from those who have changed their minds about a move to Spain after looking at the implications of the changes.
There will certainly be changes post-Brexit. How significant these will be, remains to be seen, but it is highly unlikely that the level of Brits seeking to move to Spain (and other EU countries) will reach the same levels as in the past if the governments of Europe decide to maintain the Schengen rules and not to make exceptions for British nationals.
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