Own a ski property in the EU? What would a Brexit mean for you?
Britain’s ease of access to mainland Europe means that rather than just holidaying on the beaches of Spain, the ski resorts of France or the vineyards of Italy, UK nationals have bought homes there, ever since the UK first joined the EU. Brits are one of the largest markets for property purchases of all kinds in Europe, and the impending June 23 vote has EU home owners wondering what Brexit means for them.
With the terms of a “Brexit” currently unknown, the best we can do is speculate about the potential outcome. Should the UK vote to opt out of the EU, we may find that many of the arrangements and agreements in place are maintained. If not, there may be many issues to consider.
1. Will Brits be held to the same immigration laws as non-EU residents?
France is the most popular country for a ski property purchase, and like Italy and Austria, it belongs to the Schengen Area. Schengen countries have eliminated border controls and although non-Schengen members of the EU or EFTA states may enter and leave freely, this may change should UK leave the EU. Currently, non-EU, non-EFTA and non-Schengen nationals may not legally work or visit the Schengen area for more than 90 days out of every 180. Although it seems unlikely, there is a possibility that Brits may need a visa to use their ski chalet.
2. Will Brits be able to get an EU mortgage?
European based banks consider non-EU residents to be higher-risk clients and the amounts borrowed tend to be lower. In France, property purchase deposits for EU citizens are generally around 20%. This could go up to 50% as a non-EU citizen.
The pound's strength has also been questioned, with major banks such as Goldman Sachs predicting a 20% drop in value on a Brexit, as foreign investors shy away from UK investments due to economic uncertainty. Higher risk borrowers could be charged higher interest rates and those earning pound sterling will need to factor this in.
3. Will Brits be subject to greater taxes if the UK leaves the EU?
Being a member of the EU brings a certain level of tax protection when owning a property in any EU country due to the free flow of capital within the single EU market. Up until 2015, non-EU residents with homes in France were subject to a higher CGT rate than EU residents - a 15% difference - but this has since changed and EU and non-EU residents now pay the same. It is unclear whether or not taxes would be significantly different if Brexit happens, though it seems that the double tax treaties already in place with other EU countries will remain unaffected.
4. Will Brits be entitled to health care when traveling to EU countries?
Thanks to reciprocal health agreements within EU countries, Brits receive the same level of health care as a local at the same cost. This may change, with French officials already stating that millions of UK nationals living in France will no longer have access to their healthcare system upon Brexit. There is a possibility that UK nationals may still be entitled to the European Health Insurance Card as non-EU countries belonging to the EEA (Ireland, Lichtenstein and Norway) are able to obtain it.
5. What should I do if I'm currently buying a ski property?
Sterling has been tested over the last few months and for anybody currently buying a ski property it is a major cause for concern. The best approach at this stage is manage the currency risk. Currency exchange experts can advise on whether a forward contract, which allows you to lock in the exchange rate at the current level, is the best way to proceed. This way you can be assured you know exactly how much you will pay regardless of exchange rate fluctuations. As ever with currency, take specialist advice!
Whatever the result, at least there will be certainty
Despite speculation, the upcoming vote is already having an impact on the European property market. Nobody likes uncertainty, so many buyers and sellers are waiting to see what happens. Although things are unlikely to change too much, there is no guarantee of the status quo staying the same for those owning a ski property - or wanting to buy one in the future. With current polling showing the British public split about 50/50 on whether to leave or stay, at least by 24 June we will have certainty. For now!