As a general commentary, now that Brexit has been ‘agreed’ by Boris, as of the 31st January 2020, there are a number of features to consider if you are a foreign homeowner looking to sell. Boris (because we are all on first-name terms here!) is keen to accelerate the negotiation process with a view to completing most elements of it in 11 months. Good luck with that Boris!
With that backdrop, the key issues as we see them are:
Pound to Euro/Swiss Franc exchange rate.
- Many people purchased in 2008 when the rate was £1 to 1.48€ compared to £1 to 1.19€ today,
- The Swiss Franc differential here is much bigger and a different issue altogether,
- Many factors could affect that in the next 11 months, not least the tone of the negotiations,
- Another key element of the currency in this period is the ongoing economic performance of the U.K. -v- E.U. The EU economy is currently in the doldrums with France’s and Italy’s economies struggling and in turn, holding back Europe, and
- Another outside factor is how ‘the Donald’s’ Presidential Election Campaign goes into the U.S.
- Currency movements,
- Hard Borders, i.e. passport control, restriction of goods etc,
- Health Cover, and
- Foreign Property taxation.
This is a brief oversight because essentially, nobody knows how Brexit will pan out but the only decision to make for those contemplating sale, even if in negative equity, is:
- Do something now, or
- Bunker down and do nothing.
Another feature not loudly discussed, could be the development of a formal secondary market for foreign property owners.
Mark Stucklin’s recent article on his excellent website Spanish Property Insight
talks about the different markets that do exist. E.g. Spanish to Spanish, English only selling to English etc.
A recent success where we acted for a client involved in a negative equity case saw the following settlement achieved.
- Value: c90,000€,
- Mortgage including 2 years arrears: c205,000€,
- Management Charges and IBI taxes arrears c5,000€,
- The total deficit for the above was settled at a total cost of £17,000, including fees.
So €17,000 to cover an overall shortfall/negative equity position of €120,000.
€103,000+ saved. It’s what we do.
In this case, our client decided enough was enough of foreign property ownership and Brexit was the tipping point in terms of their decision process to get on with things and appoint to EU Property Solutions to resolve their negative equity position.
If nothing else, we would implore you to do something rather than nothing, to take control of your own future.