It’s hardly a new revelation to state that Brexit has caused uncertainty for British expats. Until the EU and British government reach a final agreement in Brussels, the lives of many expatriates are certainly in a state of limbo.
Depending on how negotiations unfold, Britons who are living abroad may need to move back to their home country. But trends in the housing market, in both the UK and EU countries, suggest they could run into financial difficulty if they haven’t made sufficient wealth management plans for the future.
Concern has arisen that if British expats need to sell their overseas property, the proceeds will not be enough for them then to buy a new home in the UK which has continued to see property prices increasing in spite of the recent uncertainty surrounding the country. And it’s these high prices combined with falling property prices in many popular expat destinations that mean expats may end up facing a significant shortfall as they try to settle back in Britain.
The growth seen in Britain’s property market is contrary to what many thought would happen just over a year ago. After last year’s referendum vote, property experts, and even ex-chancellor George Osborne, predicted that there was going to be a sharp dip, but although growth has slowed slightly, property prices have still managed to rise.
Now, research from Retirement Advantage has shown that the average price of property in the UK retail market has risen by 12 per cent since 2010, which is a stark contrast to other EU countries.
The most significant fall in the EU has been in Spain, where house prices have fallen 26 per cent since 2010. Although the Spanish property market has recovered a lot since the financial crisis, prices are still far below the peak level seen in 2007.
So, for example, someone who sold their UK home in 2010 and bought a property in Spain could experience significant negative equity; while the cost of a similar property in the UK has risen. It’s also worth bearing in mind that Spain is the most popular location for British migrants, meaning many people could potentially be affected by this problem if they want to move back to the UK.
Many other EU member countries will experience the same issue to some degree. The same research showed that prices were lower by 20 per cent in Italy, 6 per cent in Portugal, and 3.8 per cent in France.
If you do think you’ll have to move back to the UK post-Brexit, it’s important not to be disheartened by the above news. First of all, the falling pound (which is mainly due to the results of the EU referendum and the snap election) is actually a positive factor for Britons who need to sell their house abroad and return home. This is because the pound’s weakness makes for a favourable exchange rate, so your property price conversion could stack up a little better than you might think.
James Stewart, who sells Spanish villas in association with the estate agent Savills, gave an example of this to the Telegraph:
“We had an owner who rejected an offer when the euro was at a particular level but accepted it when the pound fell further,” Stewart said. “The property price didn’t change, but the fact that they would now get more pounds for their property meant they felt comfortable.”
Secondly, there are numerous resources you can use to help your money to grow. Blacktower’s experienced and independent international financial advisers in Spain, can help you with wealth management strategies to help you reach your financial goals. They can help you find the best ways to manage your money so that, if you do need to move back to the UK from Spain (or France, Italy, or Portugal), you will be in the best possible financial position to do so. We can help you make the most out of your money and prepare for a post-Brexit world.