Buying Property in Spain? Uncertainties that You Should Keep in Mind

The UK is a very important market for the Spanish real estate sector. Nowadays, there are around 800,000 British with properties in Spain and about 300,000 residents. As a result, around 14 percent of the dwelling transactions in Spain have people from the UK as one of the parties.

In general, experts do not expect that this is going to change much, but there are some unresolved factors to keep in mind.

  1. The currency

When the BREXIT started to seem real, the GBP prices respective to the EUR went down significantly. However, lately the EUR seems to be in a weak position, and it seems the currency pair will come back to values closer to the ones it had prior to 2016.

If the GBP is stronger, it will favour purchases from UK residents in Spain. However, currency prices is one of the factors that is hard to predict.

  1. The paperwork

We still do not know what paperwork UK residents will need to stay in Spain for more than three months. The easier the process, the more people will want to continue enjoying their sun. 

If eventually the paperwork becomes similar to those in other countries outside the EU like those in North Africa, the competition that Spain will face will be more important that it has been until now.

In any case, Spain will continue being a country in the comfort zone, with reasonable publishing services and health systems, so we still think it will be an attractive destination.

  1. UK economy

This is a traditional factor. If the UK economy is weak, its residents will have less acquisition power, and their purchases in Spain will be affected by it.

  1. Taxes

In general, a UK resident renting property is now paying 19 percent of the benefits on taxes. After this first year outside the EU, the tax could rise up to 24 percent because they will be non-EU residents. 

This is something important to take into account if you want to purchase a property to generate regular income through renting it.

The tax on the personal assets can also get worse. Until the BREXIT, UK residents could opt to pay the tax in the autonomous community in which they lived. This allowed them to enjoy the exemption that the autonomous communities have. For example, Madrid has a 100 percent exemption. 

However, being a non-EU resident, they will need to pay the tax according to the national law, and it does not have such kind of exemptions.

Having properties in other countries always involves some risks. This list is not and does not pretend to be comprehensive, but hopefully it can serve you to take some of the uncertainties you will face in consideration.