If you’re planning to sell your property in Spain, you would no doubt be deeply worried by a confluence of events, all taking place at the same time. There hasn’t been a government in power in Spain since the conclusion of the general election of 2016 which threw up a confused mandate. The parliament was dissolved and a fresh election was called, to be held on June 26, as no party was in a position to form a government.
Then there is the problem of Brexit. A referendum will be held on June 23, which will decide if Britain stays in the EU or leaves it permanently. There is a lot of confusion about what Brexit would mean for British buyers and sellers of Spanish property.
The Brexit has caused a serious fall in the value of the sterling, which has declined from 1.4/euro to the present 1.29/euro. It is believed that Brexit would cause the pound to decline further.
This is not good news at all for expats who depend on a pension or other income from Britain, or for those who want to buy property in Spain. Any decline in the value of the pound would hurt their buying power directly.
But the depreciation of the pound is not exactly a bad outcome for those who want to sell their property in Spain and repatriate the proceeds of the sale back to the UK. The exchange rate would be in their favour and they would get more out of the sale with every decline in the value of the pound.
However, there is another concern – there is reason to believe that property values in Spain would be negatively affected by a Brexit, as there would be less people from Britain who would venture out to buy Spanish property. British buyers are the biggest buyers of holiday homes in Spain. Take them out of the equation, and property prices in the country would collapse immediately.
This is a belief held on to by many British expats who have assets in Spain that they are looking to sell. They are concerned that if Britain leaves the EU, property prices in the Spain would go into a freefall. So there is a lot of confusion about the right time to sell their house in Spain – sell it right now, with weeks to go for the referendum, or sell it after the referendum, when the picture becomes a bit clearer.
Brexit is not the only concern that British expats have. They are equally worried by the new general election to be held in Spain on June 26. Many have said that they would sell and move out if a left-wing government was to come to power in Spain. There is a concern that a left-wing government would clamp down on the property rights of foreign nationals in Spain and would force many out of the country.
The uncertainty is slowly building up and nobody is quite sure as to what to expect. There is a new worry – Spanish banks have been asked by the regulators to update the way they evaluate individual assets. This could result in assets worth over €2 billion being written off, and reduce the Spanish banks’ abilities to offer mortgages. This would automatically bring down the asking price for properties in the whole of Spain.
But it’s not all doom and gloom. There are a lot of nationalities buying properties in Spain other than Britons, such as the Scandinavians, Germans and other northern Europeans. The Irish are big investors in Spanish property as well.
They would make up for any downfall in buying activity from British investors. So Brexit wouldn’t have as much of an impact as feared by many. Still, the events of June 23 and June 26 are closely awaited.