January 2021 brought the long-anticipated end to the UK’s membership of the European Union. This monumental shift in dynamics between the UK and EU will undoubtedly affect multiple aspects of everyday life, from politics, trading, to even travel.
Brexit is also likely to dramatically affect the property market, which is set to shift this year regardless due to the end of the stamp duty holiday (introduced as relief throughout the pandemic.)
Whilst no one truly knows exactly what’s in store for the UK or EU property market and how this will affect British buyers, here’s how to prepare for a post-Brexit overseas property investment:
How will Brexit affect property owners in the EU?
According to publisher International Investment, there are approximately 500,000 Brits who own property in the EU. Visiting, living in and maintaining these overseas properties will become slightly harder after the Brexit transition period.
One of the key changes that will come into play post-Brexit is the duration in which UK citizens can stay in an EU country. Without freedom of movement, second-home owners will only be entitled to stay in any EU country for a maximum of 90 days. That is, unless Brits want to permanently live in their overseas property, pay for full residency (incl. taxes) in the EU country, and ultimately lose their NHS provisions back home.
These new regulations will bring a harsh reality for any homeowner that has previously enjoyed dividing their time between their UK and EU homes.
What impact will Brexit have on buying property abroad in 2021?
Whilst the exact repercussions that Brexit will have upon the UK are uncertain; it’s inevitably going to add limitations for Brits purchasing property in the EU.
UK citizens that are dreaming of buying their second home this year should consider the additional admin that will come post-Brexit; for example, having to sort additional investment visas, paying larger stamp duty prices, and even potentially higher tax rates on their overseas property.
Brexit, along with the unfolding COVID-19 pandemic, will inevitably impact the foreign exchange market. However, market volatility can work in your favour if you lock in a rate when it’s most beneficial. Our International Payments team can work with you to provide smart exchange rate management - to help you get more bang for your buck throughout this uncertain time.
How to prepare for overseas property investment
Be aware of your tax obligations
Similarly to working two jobs, owning two or more properties will affect your tax obligations; even more so if one of those properties is international.
If you live and work in the UK, you’re required to update HMRC when there are any changes to your income or personal situation, which includes investing in and financially benefiting from an overseas property.
Taxes are difficult to navigate at the best of times, therefore, we recommend seeking advice from a tax adviser prior to purchasing property abroad. This will enable you to fully understand the tax obligations in both the UK and EU country, to factor in when cost-planning for your potential investment.
Research international mortgage options
Unless you’re able to purchase an international property outright - it’s likely you’ll need to research the best overseas mortgage lenders.
A post-Brexit landscape might make it harder for Brits to access overseas mortgages. It’s advisable to speak with a financial adviser to gauge the best mortgage options, and whether it’s best to take one out with a UK bank or international lender.
Additionally, potential buyers must consider how the fluctuating currency market will impact their mortgage repayments, especially if you are repaying your mortgage to an international lender in another currency. For peace of mind, any international lender is required to notify the buyer if the exchange market moves by more than 20% - so to ensure that they can keep up with payments.
Ensure that you’ve fully researched the best mortgage options out there before securing your bolthole in the sun!
Research the best places to buy property abroad
Regardless of what an investor is putting their money into, they will generally expect to see a return. In order to be best positioned for investment returns on an overseas property, you must deep dive into the best locations for buying.
It’s important when purchasing property to factor in elements such as location, accessibility, average house price vs. monthly rental costs, and whether it could have future demand.
We conducted our own research on where we believe the best places to purchase property in Europe: the best places to buy property abroad.
Will Brexit affect making international payments?
Our world-class, expert team are here to support you throughout the Brexit transition period and assist with any enquiries you may have when making international payments.
No matter how big or small your international transfer is, if you need to send money abroad, the rise and fall of currency rates can affect the value of your purchase. We can help ensure that you get the best value when transferring your money overseas.
Call our International Payments team today on 0333 123 1815.