In June 2016, 48% of the British population voted to leave the EU. Since the referendum, the Brexit date has been changed multiple times. However, now the official date is getting closer than ever before. This week on Friday 31st January, Great Britain will leave the EU.
Although a withdrawal agreement has been signed, there is still rests a lot of uncertainty. Among these uncertainties are implications for owning a holiday home abroad, and how Brexit will affect it.
What Will Brexit Mean for my Holiday Home?
Currently, as members of the EU, British citizens can buy a property in any country within the EU and live there for as long as they please. When Britain is no longer part of the EU, they could lose these rights and may require permits to purchase a property, or even stay longer than a period of 3 months. There may also be an increase in tax and different regulations for taking out a mortgage.
So how will Brexit affect my holiday home? Let’s take a look at Brexit will affect your holiday home in Spain, France, Italy and Portugal, and also in the rest of the EU.
British Homeowners in Spain
Spain is one of the most popular holiday destinations for British tourists, with over 17 million visiting Spain every year. With the high number of Brits who go there on holiday, many move there too. However, according to Spain’s National Statistics Institute, the official number of British people living in Spain has decreased from 397,000 to 240,000 in the past 5 years. Despite the drop, the British people continue to be the top foreign buyers in Spain.
There are currently no restrictions that homeowners in Spain need to be an EU national; non-EU citizens, such as Americans and Swiss have been buying properties in Spain for decades, so Brexit will not prevent you from buying or owning a property. Additionally, a citizen of any nationality can request a mortgage in Spain, provided that you have all the required credit score.
But can you still rent out your holiday home in Spain? Absolutely! As there are no laws which state that homeowners who rent out their property need to be an EU citizen, so you can still continue your business after Brexit. However, when it comes to tax laws, it’s slightly different. There may be an increase after Brexit. At present, EU citizens are charged a 19% tax, whilst non-EU citizens are taxed 25%.
British Homeowners in France
Around 200,000 Britons own a holiday home in France. Similar to Spain, British citizens can continue owning, buying and selling a property in France without any major implications.
Although the post-Brexit requirements are still unclear, there are some things that could occur, such as financing your property. In the future, British citizens who wish to obtain a mortgage in France will not be able to borrow as much as EU nationals. As it stands, non-EU residents can borrow up to 60-65% compared to EU residents who can take out a mortgage of 80%. Nevertheless, the tax laws are the same for EU and non-EU citizens.
British Homeowners in Italy
Italy is one of the first EU countries to provide reassurance for the British people regarding Brexit, with an estimated 64,000 living there. In the event of a no-deal Brexit, British citizens will still be entitled to work and live in Italy and remain as legal residents. In addition, British people who’ve lived in Italy for the past four years can apply for Italian citizenship.
If you own a property in Italy, your right to own will not be affected by Brexit. British citizens who rent out their holiday homes can continue to do so.
British Homeowners in Portugal
There are over 50,000 British citizens living in Portugal, with the country being the third most popular destination for Brits to buy a holiday home. There are no current restrictions on nationality when it comes to purchasing a property.
The Portuguese prime minister has sought to protect the rights of UK nationals who live in Portugal and invest in their economy. With the latest Brexit deal, British people can continue to live and own a property in Portugal. However, there may be some changes in the amount of tax that non-EU citizens must pay.
Holiday Homes in the Rest of the EU
Since the Brexit referendum, the British pound has fluctuated. At times, it’s become weaker or stronger and some people have taken advantage of this and bought a holiday home abroad. In fact, today half a million UK citizens own a property in the EU.
Depending on each country in the EU, there may be legal implications regarding homeownership once the UK leaves the EU. As British people will no longer be EU citizens, there may be tax implications as well as other costs in terms of insurance.
Homeowners are advised to check depending on the country where their holiday home is located, as different countries have different rules for non-EU citizens in renting out a property in Europe.
Future travel in the EU
British owners with properties abroad who are currently only catering for British tourists may need to think of diversifying their client base. The main reason is that in the immediate short-term after Brexit, there may be a reduction of British tourists traveling to the EU.
The British economy is expected to fluctuate, therefore people may not have as many funds to travel. For those who do travel abroad, they could spend less, as the Pound will be against the Euro.
Furthermore, British citizens will need to have at least 6 months on their passport before it expires if they want to leave the country. This means that for those who have less than 6 months until their expiry date may be less reluctant to travel, as they will need to apply and pay for a new passport and wait some time for it to arrive.
Therefore, if your property is only catering for British tourists, you may find that British clientele will decrease. To get ahead of Brexit, it’s a good idea to start advertising for clients in other countries.
For example, if you are renting your property in Spain, who else goes on holiday there? Germany, France and Italy are among the most visitors that travel to Spain. One of the best ways to attract international travelers is to translate your website into multiple languages. There are also many other quick and easy ways to advertise your property.
Keep Calm and Carry on
After nearly 4 years of negotiations, Brexit is finally happening. But there’s no need to panic.
Perhaps Brexit won’t have any major implications on your property abroad. But just in case, it’s better to keep a record of all your documents, proving that you are the owner and that you have the right to rent out your holiday home to guests. This also includes keeping a record of licenses and taxes you’ve paid.
Lodgify will keep you up to date post-Brexit. In the meantime, keep calm and carry on.