June 2016 Archive

Tuesday 28th June 2016

Brexit - Questions and Answers from Girasol Homes

How will Brexit affect British buying property overseas?

Following the UK's decision to leave the European Union many expats, holiday home-owners and investors have raised important questions about buying property overseas and their rights to live in another EU country. Here are answers to some of their concerns.

Can I still buy a property in Spain, France or Portugal?

Yes, nothing is going to change for some years to come. While the Brexit is being negotiated, Britain is still a fully paid-up member of the EU and, therefore, its citizens still have the same rights as they did before the referendum.

It is forecast that it will take at least two years of negotiations to leave with any changes to trade agreements taking many more years to settle after that. Therefore British property buyers should not feel any impact for some years and it's not expected to be major.

What could happen to my property when the UK does leave?

Spain and Portugal has a long history of welcoming overseas investors from around the world. Foreign buyers account for one in five property sales in Spain and, whilst many of these are from the UK, non-European buyers are also big investors and enjoy similar rights to EU nationals. 

This investment is very important to Spain's economy (and Portugal's) and so leaving the EU is highly unlikely to affect the rights of UK citizens to buy in Spain. Indeed many politicians have come out to publicly support expats, calling for calm and unity.

The president of the Valencian government Ximo Puig said: "The Valencian Community has been, is, and will be a welcoming land, a land that wants to do business for the benefit of all. Whatever the next chapter in Europe will be, we want it to be written with friendship and cooperation with the United Kingdom." Alicante and Murcia are big and popular areas for second homes and permanent residences for UK citizens and massive areas to holiday in as well.

Could the market crash?

This is perceived as highly unlikely. Although British buyers are the biggest overseas investors, it is still just four per cent of the property market. Many foreigners (Non residents) buy in Spain and Portugal from throughout Europe including Germans, Dutch, Belgians, French, Russian and Norwegian so the UK is a significant, but still small, sector. So even if the UK demand fell to zero - which again is highly unlikely - it would only create a very small ripple. 50% of Girasol buyers are now non UK citizens.

Spain's property bubble burst in 2008 (and Portugal) which saw prices halve in some areas. It has been recovering steadily in the past two to three years with prices in the popular areas starting to rise but it is still a long way off its peak. So the worst-case scenario of a Brexit fall-out would be restrained growth.

Will it still be possible to get a mortgage?

Yes. Banks in Spain usually ask foreign investors for a deposit of up to 40 per cent. It is possible that they could put this up but banks consider the current level to offer considerable protection. It is unlikely this will change considerably. The European economic climate goes hand in hand with low interest rates and so taking out a mortgage or loan is still very good value, we have seen 10 year fixed rates this week at 2.5%.

What could it mean for sterling?

The Pound has been volatile in the lead-up to the referendum and is likely to remain unsteady over the next few months. Effectively, a weaker pound will make property in Spain more expensive for UK buyers. The best thing to do is to use a currency exchange company as their experts can read the markets to get the best rates. We would recommend Foreign Currency Direct which offers a specialist foreign exchange service.

It is also worth bearing in mind that properties in Spain are still much cheaper than in most parts of the UK. If you are selling up in the UK, you are likely to get a lot more property for your money in Spain. Prices are still about one-third cheaper than at their peak in 2007 and so property is still excellent value for money.

What about my pension?

Obviously a weakened Pound is going to affect your spending money in Spain. You will find your pension still goes further than in the UK as prices are lower for so many day-to-day items including a few treats such as a glass of wine in a Spanish bar from as little as €1.50 or a pint of lager for €2.50. At present, UK pensioners living in any European Economic Area have their pensions and social security payments automatically increased each year just like their counterparts still living in the UK. This is a mutual EU agreement and is expected to form part of the Brexit talks.

At the very worst it could mean that expat pensioners are given similar treatment to those in Canada and lose their right to inflation-proof increases. Effectively it means their pensions are frozen.

Will I still get free public health care if I move to Spain?

Yes, at the moment. While Britain is still an EU member then these reciprocal health-care arrangements will stay in place. However, this could change. Many people moving to Spain are older people - pensioners or early retirees - who generally need more health-care than younger generations so this could change. At present, expats registering for a NIE number have to show proof of income and have private health insurance if they are not working or contributing to the Social Security system. If you need a quote for Health Cover please let us know by emailing health@girasolhomes.co.uk*.  
It is likely that Spain will expect pensioners to take out private insurance* in two years' time. If you have a European Health Insurance Card, issued by Spain, Portugal or the UK, this will remain in place for at least two years too. This is an agreement within Europe to allow residents to benefit from health-care while travelling so it is possible this could be kept in place.

What about tax and inheritance tax?

All EEA residents, including British, pay the same inheritance tax as the locals. Also the double-taxation treaties are not made by the EU so Brexit will not affect any existing tax agreements between Spain and the UK.

So, what will happen next?

Nothing will happen for at least two years while the Brexit terms are worked out and so the best thing to do is to keep calm and carry on. This two-year period of talks will not begin until Article 50 has been triggered which is not due to happen until the Prime Minister David Cameron actually leaves office in October and his successor triggers this procedure.

The referendum is not legally binding and there is every possibility that MPs will squabble over what to do next, including who is going to be responsible for triggering Article 50, so it could be a very long, drawn-out process. The only thing we should notice is that exchange rates will continue to fluctuate for a while because of uncertainty over the future so make sure you get the right advice with this crucial matter from us as soon as possible.

In the meantime it is business as usual with Britons continuing to enjoy the benefits of being part of the European community for some years to come.

Any questions just ask us we are delighted to assist as always.

Nigel Salmon and the Girasol Homes Team

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Friday 24th June 2016

Post Eu Referendum Vote-Our take from Girasol Homes

Hi everyone, a quick note on the immediate reaction to the UK vote on the EU and I confess it was a surprise to many who assumed we would stay in the EU when the United Kingdom voted out. People are naturally asking us at Girasol Homes our position and opinion.
Keep calm and carry on 
Its been a busy day here with many people wanting to know what will happen next and both sides are either ecstatic (out) or down (remain). From our point of view we have had a very busy week with sales to clients from all nationalities, English, Dutch, Finnish, Scottish, British, Belgian and German and these were all "outcome unconcerned" clients. Sales are still happening today and expected to next week as well.
With the pound steady at around 1.24- 1.25 most things are continuing as usual but we expect this weekend to be a slightly quieter one. I think it is important not to over react to what has just happened, people are moving to Spain and Portugal for all sorts of reasons, investment, retirement, second homes, leisure and for business and these Iberian economies are recovering (and have been for a while).
Our currency partners said (Daniel Wright at Currencies.co.uk)
Following the decision for the U.K to leave the EU - Sterling exchange rates saw an immediate drop followed by a slow recovery throughout the trading day. The fact that the Pound has not dropped off by quite a lot more is surprising and should be seen as a positive for those looking to buy property overseas this year. Pressure may now start to mount on the Euro as other economies may seek to leave the EU and I would not be surprised to see Sterling come back up against the Euro in the coming weeks. Of course it is hard to know exactly what may happen next but we need to remember that at present nothing has changed and we will not officially be out of the EU for a long period of time.

Mortgages at great rates are still freely available to Uk and Non EU citizens and for us its business as normal, let us know when you are coming to view!

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Friday 10th June 2016

House prices in Spain are continuing to rise in 2016

House prices in Spain are continuing to rise in 2016 with a 1.3% growth in May, which is slightly lower than the 1.9% rise until the end of April.







According to the May IMIE index the average price is still 41.1% below what you would have paid in the boom years about 10 years ago..The biggest rises were in large cities and the islands with 3.5% growth year-on-year while the Mediterranean coast resorts were up 1.6% on 2015.

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Friday 3rd June 2016

Time is right to take out a mortgage on your ideal home in Spain

Time is right to take out a mortgage on your ideal home in Spain

Low interest rates, rising prices and signs that the economy is strengthening continue to attract property buyers to Spain. Property prices are still very attractive and with more mortgages being approved, all the signs indicate that now is a great time to buy in Spain.

Mortgage approvals rose 19.8 per cent last year, according to the National Statisics Institute and it is possible to borrow money with rates as low as 1.9 per cent for up to 70 per cent of the asking price.
For example, you could borrow €50,000 over 20 years at 2.5 per cent interest with monthly repayments of €264.95 or a €200,000 mortgage over 25 years at 1.9 per cent interest would cost €838.01 each month.

You could take out a mortgage to part-finance a brand-new, bespoke home in Spain. You can design and build a home which is perfect for your way of life.

If you are looking to move to Spain or want an investment with a high rental yield, please get in touch to find out more. 

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