Why Brexit could be bad for expat homeowners in Spain

Spain was the top European property destination for British buyers in 2015 – but Brexit could throw a spanner in the works.

Over the last two years, Spain has maintained its historic reputation as the top Mediterranean destination for Brits buying abroad but that could be about to change if Britain votes to leave the European Union.
Property purchases in Spain rose by around 90 percent in 2015 according to foreign exchange provider UKForex. Overall, it was the most popular country for Brits buying in Europe in 2015, thanks to a strong pound, still low property prices and great mortgage deals for foreign buyers.
READ: Ten-point guide on how to register to vote in the EU referendum

But Alex Edwards, UKForex Head of Dealing, warns that the threat of Brexit paints the possibility of a drastically different future. Here are his five reasons why Brexit could affect decisions to buy or sell Spanish property.

A lower exchange rate

Photo: Jason Barles / Flickr

If Brexit looks more and more likely in the run up to June, then the pound could continue to drop against the euro. This could make Spain, as well as other European destinations, a far less attractive proposition- the exchange rate is a key consideration for many buying Spanish properties. A falling pound could negatively affect British consumers buying overseas properties and more generally those funding a life abroad with GBP, whether that be a holiday or longer-term retirement.

Securing a mortgage

Photo: Shaun Curry / Flickr

If Brexit happens, EU banks might make it more difficult for Brits to get mortgages.  This could be through limiting the amount they are willing to lend or by increasing the deposit amount required.  It would be smart to investigate your mortgage options thoroughly, or, if selling, ask your prospective buyers to double-check theirs. 

Accessing healthcare

Photo: AFP

Most Brits rely on their European Health Insurance Card when holidaying or moving to Europe. This system might change should the UK leave the EU. If healthcare becomes suddenly more expensive or harder to access, it could be a deal breaker for overseas buyers looking in Spain, particularly retirees.

Changes to investment protection and taxes

Photo: AFP

A lot of changes regarding tax and investment rules are on the cards should Brexit happen. It’s difficult at this stage to know whether this might be good or bad for UK consumers, but non-EU residents might have to pay more in capital-gains tax, which could potentially reduce British interest in Spanish property.

Rises in university fees

Photo: Luftphilia/Flickr 

At the moment, British students studying in the EU pay the same tuition fees as locals. This could well change if Brexit goes through and might impact British demand for Spanish properties close to university towns, making it harder to sell your property.

Ultimately, no one knows whether Brexit will happen, or exactly how key EU agreements will be renegotiated with Britain if it does, but Edwards advises that protecting your property transaction against currency risk is the smart route to take in an uncertain market.

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Reciprocal healthcare agreements between Spain and Gibraltar end

The Spanish government has confirmed that it will not extend its reciprocal healthcare agreements with Gibraltar, meaning that from July 1st 2022, it will come to an end.

Reciprocal healthcare agreements between Spain and Gibraltar end

When the UK left the EU on December 31st 2020, both sides agreed that the UK’s EHIC European healthcare cards could still be used until their expiry dates.

This card provided British travellers with free state-provided medical care in the EU in case of emergencies.

Beyond their five year period of validity, EHIC cards are no longer valid and travellers have to apply for the new Global Heath Insurance Card (GHIC) instead. 

Spain made a separate agreement with Gibraltar under its Royal Brexit Decree in which unilateral arrangements would be maintained in the territory and extended until June 30th 2022.

During the meeting of the Spanish Council of Ministers on Tuesday, the Spanish Government decided not to extend the agreement further, meaning that residents of Gibraltar will no longer be able to benefit from it.

In a statement the government of Gibraltar said: “It would have been HMGoG’s preference for these arrangements, which deeply affect citizens on either side of the border on matters as essential as healthcare, to have been maintained. Indeed, HMGoG was prepared to continue with them”.

“However, because reciprocity is a key element to these arrangements which cannot work without coordination and provisions for reimbursement of costs etc., HMGoG is left with no option but to discontinue them also in so far as treatment in Gibraltar is concerned,” it continued. 

What does this mean?

Gibraltar residents insured under Gibraltar’s Group Practice Medical Scheme will, after 30th June 2022, no longer be able to access free emergency healthcare in Spain during a temporary stay in the country. 

Those who are residents in Spain who travel over to Gibraltar will not have access to free healthcare on The Rock either. 

As a consequence, if a resident of Gibraltar falls ill or has an accident while over the border in Spain or the same for a Spanish resident in Gibraltar, they will have to pay for healthcare.

The government of Gibraltar is encouraging its citizens from July 1st 2022 to have appropriate travel insurance with medical cover each time they visit Spain.

This means that even those who are hopping over the border for few hours such as for a shopping trip or going out for dinner will have to make sure that they have adequate health insurance. 

“Where medical attention is required the costs incurred may be considerable, so you should ensure you have adequate insurance cover or alternatively the means to pay,” the Gibraltar government said in their statement.