British retirees are selling their homes in Spain after Brexit
The dream of many Britons to retire and live on the Spanish coast seems to be fading? Read the article to learn why British pensioners sell their homes in Spain.
Mary approached an estate agent's office in Torrevieja last week to sell her flat after 20 years. This British lady explained, in tears, that she was selling the property because her husband had passed away and with his pension she could only make ends meet in Spain.
Besides, after Brexit, she has many doubts about whether Social Security will continue to give her health cover or whether she will have to pay for private insurance. For this reason, she has decided to sell her home and return to her village in the UK.
Besides, after Brexit, she has many doubts about whether Social Security will continue to give her health cover or whether she will have to pay for private insurance. For this reason, she has decided to sell her home and return to her village in the UK.
Examples like this are seen every day in areas with a large British presence. "In municipalities such as Guardamar, Torrevieja and Orihuela Costa [the province of Alicante], as well as on the coast of Murcia and in the province of Almería, the sale of homes by British residents is a widespread trend; it is not a massive movement but it is a continuous one," explains Santiago Sánchez, director of Engel & Völkers Torrevieja and Orihuela. This trend also extends to the Costa del Sol, according to agents in the area.
In the third quarter, UK nationals ceased to lead the list of home purchases by foreigners in Spain, for the first time since the Registrars have been compiling these statistics, and were replaced by Germans.
In the third quarter, UK nationals ceased to lead the list of home purchases by foreigners in Spain, for the first time since the Registrars have been compiling these statistics, and were replaced by Germans.
What has happened?
Mary's is not a unique case. Although it seems to be a family affair, behind it is a context of uncertainty generated after the UK's exit from the European Union, coupled with the pandemic and an adverse economic situation.
Uncertainty is fueled by the following: Brexit became effective on 31 December 2020. From that moment on, the British lost many of the privileges of EU citizenship and the bureaucracy involved in obtaining, for example, residency for stays of more than three months has become more complicated. Moreover, these major changes have taken place in the midst of the Covid pandemic. This context has led many Britons to return home to their pre-retirement life. "It has affected, above all, older people who have felt insecure outside their country, and have preferred to return to their families and come to Spain just for holidays," explains Setareh Mohregi, Gilmar's International Director for the Costa del Sol.
"In fact, although the demand from the British has dropped somewhat, there is still interest from buyers in their 40s and 50s," she adds. In addition, in this real estate agency they are seeing a new trend: British people who already have a property and are looking to buy another one so that their investment exceeds 500,000 euros and thus they can obtain the Golden Visa. This visa for investors, in force since 2013, allows you to live in Spain for 2 years (with the possibility of renewal), and only requires you to visit Spain once a year (unlike other residencies, which require a minimum of 6 months in the country). In other words, it gives much more flexibility to enter and leave.
In addition to the political situation and the COVID-19, there is the depreciation of the pound against the euro. This means that many people cannot sustain the same level of comfort as they did a few years ago. For example, if in 2000 1 euro was equivalent to 0.61 pounds, today the figure is 0.84 pounds – purchasing power has fallen by more than 27% due to currency fluctuations. Pensioners used to live very well in Spain with £1,000 (1,639 euros in 2000), but today the standard of living has risen and a pension of £1,000 is now barely equivalent to 1,190 euros.
"On the other hand, this situation is in their interest when it comes to selling their house for euros, as they get more when exchanging for pounds, so it may be a good time to put it on the market," explains Sánchez of Engel & Völkers.
It should also be borne in mind that the British pension system is mixed. It was common practice for these retirees to capitalise their private pension plan and with that money acquire their property in Spain. For this reason, "many of them live solely on their public pension, which is a maximum of around 210 euros a week, around 890 euros a month", adds this expert.
Although it is British retirees who are leaving the Spanish property market the most, any uncertainty causes fear, and fear makes investment come to a standstill. Brexit has also put a major brake on new buyers who were not resident in Spain prior to the UK's exit from the EU and who face increased administrative requirements. This has meant that Germans have for the first time replaced the British as the foreigners who buy the most homes in Spain. The shift has given rise to a buyer profile with greater purchasing power, as Germans are looking for homes between 250,000 – 500,000 euros.
Source: https://www.expansion.com/inmobiliario/mercado/2021/11/22/61977bdc468aebc8088b45dc.html
Uncertainty is fueled by the following: Brexit became effective on 31 December 2020. From that moment on, the British lost many of the privileges of EU citizenship and the bureaucracy involved in obtaining, for example, residency for stays of more than three months has become more complicated. Moreover, these major changes have taken place in the midst of the Covid pandemic. This context has led many Britons to return home to their pre-retirement life. "It has affected, above all, older people who have felt insecure outside their country, and have preferred to return to their families and come to Spain just for holidays," explains Setareh Mohregi, Gilmar's International Director for the Costa del Sol.
"In fact, although the demand from the British has dropped somewhat, there is still interest from buyers in their 40s and 50s," she adds. In addition, in this real estate agency they are seeing a new trend: British people who already have a property and are looking to buy another one so that their investment exceeds 500,000 euros and thus they can obtain the Golden Visa. This visa for investors, in force since 2013, allows you to live in Spain for 2 years (with the possibility of renewal), and only requires you to visit Spain once a year (unlike other residencies, which require a minimum of 6 months in the country). In other words, it gives much more flexibility to enter and leave.
In addition to the political situation and the COVID-19, there is the depreciation of the pound against the euro. This means that many people cannot sustain the same level of comfort as they did a few years ago. For example, if in 2000 1 euro was equivalent to 0.61 pounds, today the figure is 0.84 pounds – purchasing power has fallen by more than 27% due to currency fluctuations. Pensioners used to live very well in Spain with £1,000 (1,639 euros in 2000), but today the standard of living has risen and a pension of £1,000 is now barely equivalent to 1,190 euros.
"On the other hand, this situation is in their interest when it comes to selling their house for euros, as they get more when exchanging for pounds, so it may be a good time to put it on the market," explains Sánchez of Engel & Völkers.
It should also be borne in mind that the British pension system is mixed. It was common practice for these retirees to capitalise their private pension plan and with that money acquire their property in Spain. For this reason, "many of them live solely on their public pension, which is a maximum of around 210 euros a week, around 890 euros a month", adds this expert.
Although it is British retirees who are leaving the Spanish property market the most, any uncertainty causes fear, and fear makes investment come to a standstill. Brexit has also put a major brake on new buyers who were not resident in Spain prior to the UK's exit from the EU and who face increased administrative requirements. This has meant that Germans have for the first time replaced the British as the foreigners who buy the most homes in Spain. The shift has given rise to a buyer profile with greater purchasing power, as Germans are looking for homes between 250,000 – 500,000 euros.
Source: https://www.expansion.com/inmobiliario/mercado/2021/11/22/61977bdc468aebc8088b45dc.html
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