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EXPLAINED: How Brexit will affect your plans to buy a property in Spain

What are the implications of Brexit for those wanting to invest in Spanish property as the transition period deadline of December 31st draws closer?

EXPLAINED: How Brexit will affect your plans to buy a property in Spain
Photos: AFP

Since the referendum deciding the UK’s future in the EU was announced in February 2016, much has been conjected and forecast regarding Brexit and British buyers in Spain.

Well over four years later and with the UK formally outside the EU, many aspects are now clear. There are others, however, that the Spanish and British authorities have yet to agree on.

In this article, Celeste Alonso, manager of The Property Agent and an expert on real estate on the Costa del Sol, explores all aspects of Brexit affecting British nationals buying property in Spain.

The current status of the UK and Spain and the transition period

When the UK formally left the EU on February 1st this year, a transition period started and the Withdrawal Agreement came into play.

The transition period lasts until December 31st 2020. During this time, British citizens have broadly the same rights in the EU as they did before February 1st. In a nutshell, nothing changes until  January 1st 2021.

What is the Withdrawal Agreement?


Photo by Frederick Tubiermont on Unsplash

This is a special type of agreement regarding British citizens in Spain. Under it, if they register as resident in Spain before December 31st, they may continue to live, work (or study) in Spain with the same rights as EU citizen from January 1st 2021 onwards.

READ MORE: What the Brexit Withdrawal Agreement guarantees for Brits in Spain

Buying property in Spain post-Brexit

Spanish property law does not distinguish between nationalities of foreign buyers, so in this respect Brexit changes nothing for British buyers in Spain.

Does Brexit mean the British can’t buy property in Spain?

No, not at all. All foreigners are allowed to buy property in Spain regardless of their nationality. In fact, the property market in some parts of Spain, e.g. the Costa del Sol and Costa Blanca, relies heavily on foreign buyers. Non-Spanish buyers represent around 12 percent of the market in Spain every year, but this percentage rises to 27.76 percent in Malaga province (figures for Q1 2020 from the Property Registry). It is even higher in Alicante province.

Bottom line? In terms of Spanish law regarding your purchase, it makes no difference whether you’re British, American, French or Swiss.

Has Brexit impacted the property market?


Photo: AFP

Since the UK announced its decision to leave the EU, there has been a slight drop in the number of British buyers as can be seen in the graphic below. However, the same graph shows that purchases by most other nationalities has remained steady over the last four years.

Covid-19 has had a more widespread effect on the Spanish property market than Brexit, although its impact has generally been far less than expected. This is the case on the Costa del Sol where sales of property in May were over half those registered a year earlier.


Graph produced by Colegio de Registradores de la Propiedad, Mercantiles y Bienes Muebles de España

Has Brexit affected property prices?

According to the Association of Property Registrars, Spanish property prices went up by 4percent in Q1 this year compared to the previous quarter and by 6.96percent in the year. Since they bottomed out in Q4 2014 (prior to Brexit), they have gone up by 40.85percent. These figures suggest that Brexit has had no effect on prices at all.

Has Brexit made it more expensive to buy property in Spain?

Exchange rates are notoriously volatile and susceptible to changes in politics and uncertainty. While it is true that the pound sterling has been weaker since the Brexit referendum result, the future performance of its rate against the euro is unknown (as is always the case with currency). Some analysts argue that since the outcome is already known (i.e. Britain has left the EU), exchange rates will fluctuate very little.

However, regardless of future variations, buying a property in a different currency entails careful planning to ensure you get the best exchange rate available whether you are buying in Spain, the US or Switzerland, for example.


Photo: AFP

Will I be able to get a mortgage post-Brexit?

As a non-resident and provided that you can provide proof of a sound credit record, you may take out a mortgage in Spain, usually for up to 70percent of the loan-to-value (LTV). There is the possibility that from 2021, British buyers may only be eligible for a lower LTV (60-65percent) on a par with other non-EU applicants. However, Spanish banks regularly approve 70percent LTV for Swiss nationals so a lower LTV for the British seems unlikely.

What about property purchase taxes?

Everyone (Spanish or foreign) who buys a property in Spain is liable for the same taxes, which amount to between 10percent and 12percent of the purchase price. This has not changed because of Brexit (and there are no plans to change it).

Will I be able to let my Spanish property after December 31st this year?

As is the case with purchases, foreigners are freely permitted to let their properties in Spain for holidays and long-term rentals. This has not changed since Brexit and is not set to change.

What about rental income tax?

Once the transition period ends on 31 December 2020, British property owners in Spain will probably pay slightly higher tax on rental income. EU citizens (including the Spanish themselves) pay 19percent while non-EU pay 24percent. Non-EU owners cannot deduct expenses from their tax bill either. However, this aspect of Spanish law is currently being contested in the European courts as unfair discrimination.

Staying and living in Spain

At the time of writing (July 2020), the British and Spanish governments had come to no firm decision regarding visas for British nationals travelling to Spain. It is generally believed that the two countries will work towards an agreement that favours both. Spain is particularly keen to attract British tourists and property buyers – some 17 million Britons visit Spain in a normal year and between 800,000 and 1 million own a home there.

Will I be able to come and go to Spain freely?


Photo: AFP

There are no plans to curb movement on British nationals to Spain. In fact, that would go against Spanish interests particularly at a time like this when Spain needs tourists more than ever. From January 1st 2021, however, there may be limitations on how long you can stay in Spain at a time.

Will I need a visa to come to Spain?

Analysts generally agree that Spain (and probably most other EU countries) will not require visas for British nationals. It seems likely that the UK will join the group of countries (such as the US and Canada) whose nationals don’t need a visa to enter Spain.

Will I be able to stay as long as I like in Spain?

Non-EU visitors to Spain may currently stay for up to 90 days within 6 months without the need for a visa. This scenario appears likely for British visitors too. If you wish to stay for longer, you will probably have to apply for a residence visa.


Stock photo: Esther Ann/Unsplash

Can I get a residence visa if I buy property?

Non-EU property buyers have the chance to apply for a non-lucrative visa (often known as the Golden Visa) that includes residence permits for the buyer and their dependents in exchange for making an investment of at least €500,000 in property. One of the big advantages of this residence permit is that you do not actually have to live in Spain or pay tax there, although you do need to visit at least once a year if you want to renew it.

READ ALSO: How to make the most of Spain's Golden Visa scheme

Can I get a residency if I buy property before the end of the year?

Under the Withdrawal Agreement, all British citizens who register as resident in Spain before December 31st has the right to live in the country with the same rights as EU citizens. If you’re planning to move to Spain, now would be a good time to do it!

The process is straightforward, but you should act quickly since you only have until the end of the year. Once you are in Spain full time, you need to apply for a residency card (known as the Tarjeta de Identidad de Extranjero (TIE)) from the Spanish authorities in Malaga city. If you get your TIE before December 31st, you will have the same rights in Spain as other EU citizens.

READ ALSO: Q&A: What Brits in Spain need to know about the new Brexit-friendly residence card

 

What else has not changed about buying in Spain since Brexit?

As we have seen, Brexit has changed very little for British nationals when it comes to buying property in Spain and we fully expect this to continue. Furthermore, Spain offers some compelling reasons to buy property, steady constants that are completely unaffected by Brexit. They include:

  • Great weather – Spain generally offers year-round sunshine and warm temperatures. In some locations such as the Costa del Sol, you can expect 320 guaranteed days of sunshine a year, Brexit or no Brexit!
  • Welcoming people – the Spaniards are generally warm and friendly, and on the Costas and islands, happy to speak English to communicate.
  • Healthcare – Spain offers premium healthcare services, both in the public and private sectors.
  • Communications – Spanish airports offer an excellent network of flights connecting key holiday home and relocation destinations to dozens of European capitals and cities.
  • High-tech – internet speed and availability are world-class in Spain and many areas offer fibre-optic connection, an important consideration for staying in touch with family and friends and if you need to work from home.
  • Exemplary behaviour – during one of the toughest lockdowns in the world and the consequent easing out process, the Spanish has shown themselves to be aware and attentive when it comes to COVID-19 regulations. 

This article has been written by Celeste Alonso, who runs The Property Agent specializing in real estate on the Costa del Sol and was first published on Spanish Property Insight (SPI).

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PROPERTY

Why are Spanish homes so dark?

Despite being known for its year-long sunny weather, Spain is the EU country with the fewest homes with natural light, often intentionally. Why is it that when it comes to spending time at home, Spaniards seem to love being in the dark?

Why are Spanish homes so dark?

Spain – the land of sunshine. The country gets between 2,500 and 3,000 hours of sun per year on average, almost double the 1,600 hours the UK gets, for example.

You’d probably assume that finding a bright apartment in such a sunny country would be a piece of cake, but unless you’re renting or buying a modern home, it might be trickier than you realise.

More than one in ten Spaniards live in dwellings they feel are “too dark” – the highest percentage among all EU countries, according to figures from Eurostat.

As far as dark homes go, Spain is head and shoulders above the EU average of 5.9 percent, and higher than other nations with a high rate of gloomy homes such as France (9.5 percent), Malta (9.4 percent) and Hungary (7.7 percent).

At the other end of the brightly lit spectrum, it’s no surprise to see that countries with cloudier skies and darker winters such as Norway, Slovakia, Estonia, Czechia and the Netherlands have homes that let in plenty of natural light, and yet Spain’s sun-kissed Mediterranean neighbours Italy and Cyprus do make the most of the readily available light.

Dark homes are almost twice as common in Spain as the EU average. Graph: Eurostat.

So why are Spanish homes so dark?

Is it a case of hiding away from the sun, and keeping cool during the summer months? Or is it something else? 

Apartment blocks

The vast majority of Spaniards live in apartments as opposed to houses, often in tightly-packed cities with narrow streets.

In fact, in Spain 64.6 percent of the population lives in flats or apartments, second in the EU after Latvia (65.9 percent.)

By contrast the EU wide average is 46.1 percent.

By nature of apartment living, Spanish homes tend to get less sunlight.

Depending on whether they have an exterior or interior flat, they might not actually have a single window in the flat that faces the street.

If the apartment is on a lower floor, the chances of it receiving natural light are even lower. Internal patios can help to solve this to some extent, but only during the mid day and early afternoon hours. 

why are spanish homes so dark

A dark, narrow street in the centre of Palma de Mallorca. Photo: seth0s/Pixabay

Hot summers

During Spain’s scorching summer months, there’s no greater relief than stepping into a darkened apartment building lobby and feeling the temperature drop. 

In southern Spain, and in coastal regions, Spanish buildings were traditionally built to protect against the heat and hide away from the long sunny hours. White walled exteriors and dark interiors help to keep homes cool.

It’s often the case that bedrooms are put in the darkest, coolest part of the apartment, sometimes with just a box-window to allow for a breeze but no sunlight.

Spaniards’ obsession with blinds and shutters

Spain is pretty much the only country in Europe whose inhabitants still use blinds (persianas), even during the colder winter months.

In this case, rather than it just being down to keeping homes cool during the sweltering summer months, their usage is intrinsic to Spain’s Moorish past and the fact that they provide a degree of privacy from nosy neighbours. By contrast, northern Europeans with Calvinist roots such as the Dutch keep the curtains open to let in natural light and because historically speaking, keeping the inside of homes visible from the street represents not having anything to hide. But in Spain, the intimacy of one’s home is sacrosanct, especially when the neighbour in the apartment building opposite is less then ten metres away.

Keeping the blinds or shutters down also has the advantage of making it easier to have an afternoon nap (the siesta, of course) or to sleep in late after a long night out on the town. 

In any case, it seems hard to believe for some foreigners that many Spaniards are happy to live in the dark whilst spending time at home, regardless of whether they’re sleeping or not. 

A byproduct of this? Dark, gloomy homes.

why are spanish homes so dark

Spaniards aren’t fans of airing their dirty laundry, at least metaphorically speaking. Blinds have historically provided the privacy they’ve wanted from their homes. Photo: Quino Al/Unsplash

The long, dark corridors

Spanish apartments have plenty of quirks that seem odd to outsiders, from the light switches being outside of the room, the aforementioned shutters, the bottles of butane and last but not least, the never-ending corridors. 

Most Spanish homes built in the 19th and 20th century include these long pasillos running from the entrance to the end of the flat. They were meant to provide a separation between the main living spaces and the service rooms (kitchen, bathroom etc), easy access to all and better airing and light capabilities. But when the doors to the rooms are closed as often happens, these corridors become the opposite of what was intended: dark and airless.

Navigating these windowless corridors at night is akin to waking around blindfolded.

dark corridor spain

Light at the end of the tunnel? Dark corridors are a common feature of Spanish homes. (Photo by Josep LAGO / AFP)

Are Spaniards rethinking their dark homes?

Times are changing, and modern designs are experimenting with more spacious, light-filled, open-plan apartments, especially as the Covid-19 lockdown forced many Spaniards to reconsider their abodes. 

It’s also increasingly common to see property ads stressing that the property is diáfano, which means that natural light enters the home from all sides.

However, the vast majority of Spanish homes are still gloomy for the most part, often intentionally.

A combination of traditional building styles, the crowded nature of apartment block living, the use of shutters, the desire to keep homes private, and the long windowless corridors mean Spanish flats can seem dark if you’re new to the country, and with good reason.

Ultimately, it is worth remembering that Spanish society is one that largely lives its life outdoors. Living in smaller apartments, Spaniards generally spend less time at home and more time out and about in the street.

Native to a hot and sunny country as they are, Spaniards’ homes are a place of rest, relaxation and, crucially, sleep.

Spanish people have enough sunlight and heat in their lives; they like to live, therefore, in homes designed to keep cool and dark.

READ ALSO: Why are Spanish homes so cold?

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