Banish the Brexit Blues: Let’s be honest, the market went pretty quiet towards the end of 2016. Buyers put any plans they had on hold amidst all the political uncertainty. On a positive note I’m pleased to report that I’ve spoken to a number of clients who seem determined to make 2017 the year they finally realize their ambitions of buying their very own dream home abroad. The reasons for this are many and sometimes cumulative. As it stands, buyers have generally seen capital appreciation of their current UK homes so could be selling close to the top of the market or if they are pulling out equity they have quite a bit to play with, twinned with record low interest rates on any re-mortgage they take on. For those with savings, the same record low rates offer next to nothing in the way of growth and when you bear in mind inflation, currently at 1.6% that money is standing-still at best or probably reducing in real terms.
Of course, the behavior of the pound against other currencies has dented some people’s budgets - don’t over-react. As you know, I advise all buyers to speak to currency experts right at the start of their search to safeguard any drops in the pound but also to put you in a position to make the most of any movements upwards when good news comes around.
Now whilst these fluctuations will effect you're budget, it’s the same for all buyers from the U.K. and therefore it effects the market in which you buy. Agents and developers will be all too aware that British buyers have a little less money to spend and they’re also acutely aware that Brits form a huge (and in some cases the majority) part of the overseas buying population.
Just late last year I was involved in negotiations where, due to currency fluctuation, my buyer had less in Euros to offer on a property. I sat down with the developer and persuaded him that other UK buyers would have similar issues and he eventually reduced his sale price, which allowed us to meet him halfway and agree a deal.
In the current market most developers and owners would rather do a deal than hang on for top dollar and risk chasing the market down. Remember, no matter what you're told, you are a buyer, and as such you decide when to enter the market so with unencumbered cash and with the right legal advice you should be in control.
When there are challenges it's best to keep an open mind in terms of achieving the end result. I recently helped a lady buy a second home on Lanzarotte. She wanted sole use for her and her family whenever they fancied. However she hadn’t fixed her currency and so her budget in Euros had reduced. I gave her a simple choice – we look at apartments further away from the beach or consider places with a tourist licence, which she could rent out. Whilst initially reluctant, she soon saw the benefit of a property that could generate an income, which in just over two years could offset the extra cost of the apartment. She took a few extra thousand out of her pension pot, which will be replaced over the next few years by rental income and a deal was done. Flexibility is key. Another way around a reduced budget is to consider rental properties that have a number of bookings lined up in the diary then offer a delayed completion which gives them the income but reduces the asking price. This in turn lessens your exposure to purchasing currency.
Of course us Brits have been buying overseas property for years and many have had their fun abroad and are now selling up and moving back to the UK. With a bit of luck there can be a way of circumnavigating currency issues completely by striking a deal in sterling or at least in part. It’s worth asking the question. Find out the nationality of the seller- if the property is in Spain for example but the seller is Swedish and needs to repatriate the sales proceeds to Swedish Krona then there might be a clever way of engineering a deal that would be more advantageous to both parties- here a currency broker and good lawyer are key.
At the end of the day there are always elements of uncertainty when buying any kind of property whether in the UK or overseas – it is an investment after all. Many might be tempted to use current conditions as an excuse to do nothing, which is a mistake. Remind yourself why you were looking to buy in the first place and take control. The key for any property purchase is to appreciate it’s long-term nature and build a strategy of purchase, ownership and potential exit with the help of independent experts who will help position you and also enable you to move comfortably forward in the purchase of your property.
