Buying property abroad? Your most important Brexit questions answered
With the election just around the corner and building hopes for a swift exit from the EU, you might have some questions about how your overseas property purchases or life abroad could be affected. If you fancy a change of scenery and want to buy a property that won’t break the bank, you might be considering where you could move to maximise your funds given the Pound's recent strength. We answer some of the important questions you need to consider when buying abroad, look at some relocation and retirement locations inside and outside of the EU, and what Brexit could mean for you.
Where are some of the cheaper places to buy property in the EU for those moving on a budget?
For those wanting some winter sun, Spain can be a good place to buy property at reasonable prices. Even though the Pound to Euro exchange rate isn't at pre-referendum levels, there are still some cost-effective properties around that could be a good fit for you. South Costa Blanca is a popular option for expats with plenty of beach and golf resorts in places like Torrevieja and Orihuela Costa, while also being easy on the wallet.
Bulgaria has been ranked as the cheapest place to buy a two-bedroom apartment within the EU. Bulgaria has plenty of museums and seafronts to visit, as well as ski resorts for those who enjoy winter sports. Some places to visit include The Sveshtari Tomb, a UNESCO-protected ancient Thracian site, which was built for a royal funeral, and Pirin National Park, one of the most popular range of mountains for hiking.
Hungary has been ranked the third-cheapest place to buy a two-bedroom apartment within the EU. The country contains several landmarks, such as Vajdahunyad Castle, which is said to be the castle of which Bram Stoker based his famous gothic horror, Dracula, and Buda Castle, the residence of Hungarian kings, now since turned into a national library.
Poland has been ranked the fifth-cheapest place to buy a two-bedroom apartment in the EU. Poland has excellent natural landforms such as the Bledow Desert, one of only five deserts in Europe, has excellent beach towns such as Sopot and Debki, and also contains famous UNESCO World Heritage sites such as Krakow and Auschwitz Birkenau.
What are some alternative places that might be suitable for people to retire outside of the EU?
Those who are fluent in Spanish may find Uruguay a good match. There's plenty of coastline to explore for property (as well as whale watching), and for those looking for winter sun, the summer months run from late December to the end of March. It can cost around £476.99 per month to rent a three-bedroom apartment outside of the city centre, and around £606.29 to live inside the city centre. The Cost of Living Index rates it at 57.31, and there’s easy access to healthcare through a national healthcare system which grants foreign residents the right to quality medical treatment. Several residency visas are also available which grant you the same rights as if you were a resident.
Costa Rica can be an exciting choice for expats, with tropical beaches, the chance to get back to nature and explore beautiful scenery, volcanoes, rainforests, waterfalls and more. It can cost around £513.26 per month to rent a three-bedroom apartment outside of the city centre and around £696.33 per month inside. Costa Rica was one of the first countries to offer a special benefits package aimed at expatriate retirees, as well as offering good healthcare, and a stable economy. If you want to relocate permanently, you’ll have to apply for a Pensionado visa, which will allow you to stay long-term.
Australia is an incredibly diverse country, with a laid-back lifestyle and some of the most beautiful sights on the planet. It can cost around £1029.89 per month to rent a three-bedroom apartment outside a lot of the major city centres and around £1450.78 inside; however, it’s worth doing your research as some cities can be considerably more reasonable than others. Australia is typically associated with beautiful scenery, with places such as the Great Ocean Road and Great Barrier Reef. To retire to Australia, you must apply for the Investor Retirement Visa, which requires you to be over 55 and self-supporting. You'll also need to look into medical insurance and private healthcare, as retirees may not have access to Australia’s Medicare, the free healthcare system all native Australians are entitled to.
What could Brexit mean for people retiring overseas in terms of pensions or healthcare?
In terms of Brexit affecting healthcare, If the UK leaves without a deal, the EHIC (European Health Insurance Card) may not be valid in the countries that they currently are. For countries outside the EEA (European Economic Area), the UK has previously negotiated deals regarding healthcare, which should not be affected. However, If the UK does leave with a deal, the EHIC cards may still be valid when spending time overseas, depending on the content of the agreement. As referred to by GOV.uk, the best ways to make sure you have access to regular healthcare is to check with the country’s government about the possibilities of healthcare for you and registering for healthcare under the local rules and legislation of the country you live in.
When it comes to pensions, if the UK leaves without a deal, it would need to negotiate an agreement with each of the 27 member countries of the EU, and failure to do so could affect retirees in those countries. If the UK leaves with a deal, the state pension may not be affected depending on the content of the agreement. Without a deal, the insurance company providing an annual private pension might no longer be authorised. The pension companies would be able to pay into a UK bank account, and expats may need to consider cost-effective ways of moving their money overseas, such as using a broker like Global Reach, to help navigate the market and make cost-effective regular payments.
How much more expensive are properties abroad since the Pound's fall?
Since the Brexit referendum in June 2016, properties have become considerably more expensive outside of the UK and raised considerably in the EU. This is down to the Pound's fluctuations and a fall in the Pound to Euro (GBP/EUR) exchange rate (which took an initial 20% tumble after the Brexit referendum). In May 2016 before the Brexit vote, the GBP/EUR interbank rate sat around the 1.31 level, meaning £200,000 would have been worth around €262,000. However, in the latter part of 2019 (when the Pound has been strengthening considerably), the same amount would only be worth around €234,000 home. At the time of writing, the Pound has been trading at its highest levels against the Euro since May 2017, meaning it could be a good opportunity for those looking to buy property abroad to capitalise on this positive market movement.
How could Brexit impact people moving overseas or buying second homes or holiday homes abroad?
One thing that could impact people buying holiday homes in the EU is the local laws applying to buyers in foreign countries. For example, if you were to buy a property in an EU member country to relocate and the UK left without securing a deal, you could potentially be subject to that country’s national insurance and other social security contributions. However, If the UK does manage to form an agreement similar to the current situation, then you should be able to live in that country without contributing. An article written by the Telegraph mentioned that visa requirements would be introduced in all countries, unlike the current rule of staying for a continuous period of five years to automatically acquire the right of permanent residence, as stated on the EU’s website.
If you're looking to move your money abroad for a property purchase, pensions, salaries, or anything in between, get in touch with one of our currency specialists to discuss how we can help you make the most of your transfers; call us on +44 (0)20 7989 0000.