There is one conundrum that Brexit has instigated which does not necessarily receive the level of press coverage it should – expats. It would appear that some British expats are now looking to sell their European properties and return to the UK. Uncertainty, currency movements and perceived value for money are very active topics of discussion within the expat community.
Sterling v Euro
As you will see from the graph below, the sterling/euro exchange rate peaked on 21 July 2015 at 1.43720. It currently stands at €1.138 to the pound which is a fall of just over 20% from just prior to the subject of Brexit emerging and today, as we enter the final round of negotiations. This is a significant fall by any measure and one which has not gone unnoticed by the expat community.
Recovery in property prices
After a disastrous period in light of the 2008 US mortgage led crisis we have seen a degree of recovery in markets across Europe. Some of the areas more popular with expats, such as Spain and Portugal, have recovered from extremely oversold and depressed levels. There is growing evidence to suggest that expats in these two countries in particular are looking to sell their European properties, convert proceeds into sterling and reinvest back into the UK.
There are a number of reasons why this trend may have strengthened in recent times which include:
Uncertainty over expat status
At this moment in time there has been little talk about the protection that British expats currently living in Europe might be afforded. There has been talk about the Irish border, non-stop for months, there is been talk about the status of individuals from the European Union, but little reciprocal information about British expats. As a consequence, it does look as though many expats are now looking over their shoulders towards their former homeland with the idea of starting life afresh.
Independence offers opportunities
Independence from the European Union will prompt a number of short to medium term issues but many believe there are significant long-term benefits. The UK property market will be central to any long-term growth in the UK economy. Indeed, while there is much speculation regarding the level of immigration in years to come, the UK will remain an attractive proposition for many within Europe and across the world. Once everything is settled, with some form of trading arrangement with Europe, there are expectations that investment focus will return to the UK property market.
There have been a number of scare stories in the press of late with one in particular suggesting that payment of state pensions to British expats living overseas could be deemed “illegal” in the courts. While this is likely to be nothing more than “project fear” in full flow, it has prompted concern within some expat communities. Britain has had more than its fair share of problems with the European Union and while about to cut the apron strings this is unlikely to be the end of tensions and disputes between the two.
Changing face of UK property
Whether the UK is able to negotiate an acceptable trade arrangement with European counterparts remains to be seen. Whatever happens to the UK in the future, the outlook is very different to the times when it was shackled to the European Union. Future immigration will ensure constant demand for UK homes, limited finance and skilled workers will limit the number of newbuilds each year which will lead to constant upward pressure on UK house prices. It will be interesting to see how many British expats do return, taking advantage of a weak UK currency, and where they decide to lay their hat.