Buying property in Europe after Brexit

Since we left the EU on January 31, we’ve entered into a period of transition which will come to an end in December this year. How does this effect those wanting to buy a holiday home in Europe?

Costa del sol

Depending on which report you read, the top country for British to buy a second home is either Spain or France. This tends to be followed (at some distance) by Italy, Portugal and Cyprus. In any case, in search of some guaranteed summer sunshine or snow in the Alps, almost 70 per cent of second homes bought last year by Britons were overseas—the vast majority in Europe.

In recent past, the buying process has been relatively easy. European nationals are able to buy a property in any member state and live there for as much of the year as they wish. For British buyers, this will continue to be the case until December 31 this year. Non-EU nationals, however, require visas or permits to buy a home, and are exposed to different rules when it comes to working and accessing healthcare.

Currently, much of the nature of our ongoing relationship with the EU remains up in the air but key concerns for those buying, owning or indeed living in another European country is what will come of the healthcare provision. Until the end of this year, British citizens in the EU still have access to free healthcare under the European Health Insurance Card. What happens thereafter has yet to be confirmed.

Visas are another unknown entity. Most anticipate that Britons will be able to stay in Europe without a visa for up to 90 days in any 180-day period. This could prove problematic for those who own a holiday home and want to make the best use of it. One option being put forward by advisors is to look to somewhere with a strong rental track record to absorb the months that you cannot be there.

Another question mark hangs over the availability of mortgages for British nationals buying in Europe. Before we left the EU, British buyers generally applied for a mortgage using a local bank. But the qualifying requirements are often different for non-EU citizens. For example, in France the minimum deposit can jump from 20% for EU citizens to 50% for non-EU citizens (they are regarded as higher risk borrowers). Much of what you can borrow is dictated by residences (where you live and pay taxes).

One way around these unknowns is to become a European citizen. There are various countries that offer citizenship programmes if buyers commit to investing a certain amount in a property. The Cypriot citizenship and residences schemes are playing a key role in the island’s vibrant property market. If you buy a property (either residential or commercial) valued at €2m or over, you can have EU citizenship within six months—it’s currently the fastest route to a red passport. Failing that, if you spend €300,000 on a property, you can get permanent residency in Cyprus.

The Portuguese government also offers enticements to incoming residents. One is its Non-Habitual Residents scheme allow for a tax-free UK pension for 10 years for those who spend at least half the year in the country. It’s particularly attractive to older business owners and empty nesters. The other attraction is the Golden Visa scheme which is a way for non-EU nationals to gain residence in return for making a €500,000 investment in property.

Like their Iberian neighbours, the Spanish also have a residency programme open to those who invest €500,000 in a property. After five years, those holding this type of visa can apply for permanent residence. However, permanent residency and citizenship will require you to live full-time in Spain.

Some countries aren’t as lenient. In Austria, as a Non-EU citizen, you are restricted to buying Zweitwohnsitz (properties that are specifically designated holiday homes) in the Tyrol Province, Salzburg Province or the Vorarlberg, however, permission has to be first granted by the local authority (Grundverkehrsbehörde).

Are there any other ways?

Securing a European passport is another way to buy a property in the EU without jumping through any hoops and be entitled to social security and healthcare. Some British with European connections are making the most of this and applying for dual nationality. Ireland has received a record number of passport applications following Brexit with a record 860,000 Irish passports issued in 2019. Rules about citizenship vary from country to country: in France, you have to be resident for at least five years while in Italy, you have to prove that at least one of your grandparents is Italian.

Another option is to bite the bullet and buy a property before the transition period ends on December 31, 2020. Here are some examples:

Costa del Sol
Enjoy expansive sea views from this three-bedroom apartment in Monte Halcones, Benhavis. It lies just a few minutes’ drive from Marbella’s Golden Mile.
€395,000 through Winkworth Spain.

Costa del sol

Provencal charm
Maussane Les Alpilles is one of Provence’s prettiest towns. This farmhouse has four bedrooms and a lovely south-facing garden.
€1.995m through Winkworth International.

Provence

Ocean views
An attractive house sitting on an elevated plot but only a short drive to Carvoeiro, it has five bedrooms and a terrace overlooking the swimming pool and views down to the Atlantic.
€1.65m through Winkworth International.

Portugal