In June 2016, 48% of the British population voted to leave the EU. Although the United Kingdom was meant to leave the EU on March 29th, 2019, the leaving date was then extended until Thursday 31st October, ironically, the same day as Halloween.
Whether the British public gets a deal or no-deal Brexit, until the official deadline, there is still uncertainty on a lot of things: how it will affect trade deals, businesses, free movement of workers, the NHS, the list is endless. Among these uncertainties are owning a property in Europe.
But how will Brexit affect my holiday home? Let’s analyze.
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 large number of British people who go there on vacation, 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 right documentation needed.
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.
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. 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 implications 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. Depending on the type of Brexit, (deal or no deal) the British economy is expected to shrink, 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 wait some time for a new passport.
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 looking 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.
Keep Calm and Carry on
In conclusion, do not panic.
It looks like Brexit won’t affect your property abroad. But just in case, it’s better to keep a record for all your documents, proving that you are the owner and that you are entitled to rent out your holiday home to guests. This also includes keeping a record of licenses and taxes you’ve paid.
Remember guidelines and regulations won’t be set until Britain officially leave the EU on 31st October 2019. Lodgify will keep you updated if there are any changes. In the meantime, keep calm and carry on.