BREXIT: Top 10 Potential Impacts on the Overseas Property Market


BREXIT: Top 10 Potential Impacts on the Overseas Property Market

Voting is under way in a historic referendum on whether the UK should remain a member of the European Union or leave.

Polling stations opened at 07:00 BST and will close at 22:00 BST.

A record 46,499,537 people are entitled to take part, according to provisional figures from the Electoral Commission.

Top 10 Potential Impacts on the Overseas Property Market

Between the sand and the eternal sunshine, holidaymakers from the UK are naturally drawn to warmer climates during the colder months of the UK. 1973 was a memorable year as this was the year that Britain joined the European Union, expanding holiday choices for many.

Since that day, the number of trips to the EU have increased by fourfold. Many however, don’t simply just go on holiday there, they consider this their second home, having significant beach front properties that allows them to retreat away from the hustle and bustle of city life.

This mesmerising fantasy however could vanish tomorrow following the referendum, and with a result to Brexit.

The reality is that we cannot know for sure what the consequences are for overseas homeowners yet as there are no clear terms set in place for Brexit regarding this matter. Actually there is also no clear terms currently set out by the EU that cannot be transferred to the new arrangement with the UK.

However, there are a few points which can be highlighted:

1. Buying and Owning Overseas Property

As it stands with current agreements, UK citizens have the right to buy property without having to apply for permission from the government of that country. Depending on if the Brexit is a full exit or partial this will have a big impact on whether there will be further barriers in the buying process.

In many countries around the world, foreigners simply do not have the right to buy properties, while others have limitations imposed that is controlled by having to go through the government for permission. Will this be the case following Brexit?

It is unlikely that there will be a full exit as it would simply cause more problems for everyone than solutions, especially with so many British nationals living and owning overseas properties. Even if there was a full exit, new treaties would be proposed and agreed to allow for reciprocal rights and to take into consideration all affected parties.

2. Getting a Mortgage

In the duration shortly after a potential Brexit where political disunion would begin to form, there may emerge barriers for British nationals to obtain mortgages for further real estate investments within the EU zone. This ultimately means that there may be higher rates.

Low cost of real estate investment combined with low cost of mortgage rates has always been the main selling point for investment within the EU zone. Taking example from cases where Americans find it difficult to borrow as much money as an EU national, a Brexit may result in British nationals being put in a similar situation as Americans. Riskier countries like Pakistan and Syria experience an almost zero tolerance policy to be assisted with finance, however it is extremely unlikely that British nationals will be put in this situation.

In France, EU citizens get a minimum deposit to get a mortgage at 20pc while non-EU citizen have to deal with as much as 50pc, a 2.5x the standard rate.

“Riskier borrowers will inevitably be charged higher interest rates. But it remains to be seen whether our already close connection with holiday resorts in Europe will override any exit fears.”

Because many banks lend across borders, a Brexit may not ultimately cause lenders to regard Britons as posing higher risks.

3. Exchange Rates

Having a strong currency to back up investment decisions in the EU zone has always been a strong motivating factor for buying a holiday home outside of the UK. This is because the pound gives buyers a huge advantage when it comes to purchasing holiday homes at bargain prices.

Focusing specifically on the recovery of the GBP last year which lead to a massive real estate investment spree, this ultimately resulted peak deposit value of ?10,000 stretching to €14,407 while in 2014 a ?10,000 deposit only offered value of €12,470.

It is feared that a potential Brexit could also cause a level of volatility to GBP which could initially weaken, but would eventually recover to a similar stable level.

4. Living, Working and Retiring in the EU

Again, not a direct impact on the Brexit overseas property market itself, but still a big factor in the buying and maintaining process of a holiday home. It is estimated that anywhere from 1.5 million to 5 million British nationals live and work abroad, 2 million of which are in Europe.

Based on the deal set out by David Cameron, there will be no impact on the people currently living and working within Europe. If a full exit takes place, then all 2 million British nationals currently living in the EU zone will have to apply for a visa to continue working, living and to eventually retire in the EU zone.

The actual process of how this is going to take place is currently a big mystery, though it seems if such drastic actions will take place it is likely the interest of these 2 million UK nationals will be taken into consideration. Hopefully this will mean there will not be such a big inconvenience such as having to return to the UK for a short amount of time to process a visa. The terms of the visas will also be entirely for discussion following the referendum decision.

5. Health Care

Though a smaller issue and not directly related to overseas property costs. This will impact on a more personal level and could also impact the level of incentive an overseas property can provide. As of now, UK nationals can expect to get the same cost as locals in the EU zone for using medical services in local facilities. An exit agreement could completely reverse this if it doesn’t include terms regarding “reciprocal health care”.

Bob Atkinson of comparison website said: “Reciprocal health agreements form an important part of premiums, although other things like the cost of repatriation are also factored in.”

6. Taxes

“Being an EU national brings with it a certain level of protection when owning a property in any EU country, in particular with taxation,” said Richard Way, the editor of

France, in particular, is extremely tough on tax legislation against non-EU citizens, putting in place a capital-gains tax of 49pc from its “imp?t sur les plus values” plus an additional social charge added on top. In comparison, EU citizens pay only 19pc on capital gains tax.

This highlights the potential that the Brexit could in fact result in a 62% increase in capital gains tax in France, not including the social charges which is a further 15.5pc. This totals to a potential increase of 70.5% in tax associated costs on holiday homes in France for British nationals.

However, if the UK withdrew from the EU, but still remains as part of the single market, tax treatment should in theory remain the same as it is now.

There may also be others issues regarding inheritance tax which UK nationals currently benefit from. “We do not yet know if similar levels of protection would be put in place if we were to leave the EU, but they are unlikely to be as comprehensive,” said Mr Way.

7. Pensions

If Brexit takes place, it would potentially mean bad news for UK nationals living in the EU zone and living on the EU pension scheme. It is possible that they will find their pensions frozen until further agreement has taken place to see what happens after Brexit regarding the EU pensions.

This means that if you dedicated a number of years with the aim to receive pension from the EU zone, it will be completely worthless if further agreement is not considered by the UK. This will also be impacted by the fact that the pound is likely going to drop after a Brexit, the purchasing power for expat’s pensions may also decrease.

8. Travelling to Your Holiday Home

If the UK leaves the EU, then there may be an issue regarding access and visas. This includes entering popular tourist destinations like France, Spain and Portugal and may theoretically impact certain aspects of holiday homes within the EU region.

However, if we look at current affairs regarding tourist destinations outside of the EU zone, we will find that British nationals have little problem entering countries that are not members of the EU, including Turkey and the US. This is significant as many thousands of British nationals also own properties there, completely undeterred.

“There is a theoretical possibility that anyone with a second home in France could suddenly find themselves also needing a visa to use their property,” said Miranda John of mortgage brokers SPF Private Clients, which specialises in helping Britons fund property purchases abroad.

“But uncertainty over travel and other agreements would be resolved after an exit, if it happened, even if such agreements took time,” she said.

9. Can My EU Overseas Property Be Seized?

The short answer is no.

Regardless of the amount of hostility shown by the EU nation towards the UK or even individual UK nationals, there will still be a level of respect to individual property ownership rights. Both the United Nation's Universal Declaration of Human Rights and the European Convention on Human Rights make this clear.

Violating this right would be an extremely agressive move which could result in nationwide economic breakdown as all foreign investors invest their money elsewhere.

10. Brexit and Deportation of UK Nationals

Though extremely unlikely, but if the right scenarios take place, this may just become a reality for many who currently live in the EU zone. First of all, there are obvious political reasons why the country may perform such disastrous actions including taking the interest of their own citizens first.

If you live in the EU zone right now however, you can rest assured knowing that if such an event takes place, mass expulsions of UK nationals will indefinitely result in economic turmoil in the expelling country as UK and other foreign investors begin to shy away from such a hostile show of force.

Even if it does happen, expats will be protected under the Vienna Convention of 1969 offering significant legal protection against deportation. The convention states that that the termination of a treaty "does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination.” The House of Commons Library says that "withdrawing from a treaty releases the parties from any future obligations to each other, but does not affect any rights or obligations acquired under it before withdrawal."

It is important to note however that the Vienna Convention of 1969 only applies for those that are already living in the EU BEFORE Brexit. If a UK national were to leave shortly before or enter shortly after, their ability to stay should a deportation take place will be solely dependent on the new agreement negotiated by the UK and the EU country.


Following the events of today & tomorrow, this will begin a long process should the decision go either way. Whether the UK decide that they will leave the European Union or stay in but with renegotiated terms, the process is going to take a few months. Then after legislation has been written in stone, it is highly likely that overseas property owners will have a sufficient amount of time to react to events that will duly unfold.

It is extremely unlikely that UK nationals will be the victim of misguided EU actions taking vengeance on the actions of the UK government, as any heavy handed reaction will result in economic breakdown for both the offending country and the remaining EU zone.

The UK represents one of the few countries which are “givers” to the European Union, the majority of the nations associated with the EU are known as “takers”. Meaning that if the UK were to leave and there are negative reactions towards this decision, then this would only create more problems for the EU zone.

This means that for the time being you can rest assured that your overseas property is protected and you can continue your holidays as normal and without interruption.

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