Why returning British expats may face a property nightmare

By Carrie Ann on

While Brexit may well mean Brexit, nobody yet knows exactly what this will mean for thousands of people living both in the UK and in Europe. European workers, students, employees of European firms and pensioners are all potential ‘losers’ following the referendum to leave the European Union.

According to financial experts, one group who may have particularly worrying times ahead are British expats.

Thousands of British people, many of whom are pensioners, currently live in European countries. According to the Office of National Statistics, around 300,000 British people are living in Spain, 185,000 in France and 65,000 in Italy alone.

With confusion reigning over their continuing rights once Brexit has been achieved, especially over pensions, many of these British expats are considering returning to their native country before any changes take effect.

The issue they are facing, however, is not whether Britain will welcome them back, but whether they will be able to afford a house when they get home. The problem is that while house prices in the UK have shown a rise in recent years, albeit quite a small one, the property market in Europe has witnessed a sharp decline. UK properties for expats could cost far more than they have to hand.

The figures are indeed shocking. Since 2010, house prices in Spain, where the majority of British expats are living, have dropped a massive 26%. In Italy the fall was around 20%, in Portugal 6%, while France has been lucky and has only seen a 3.8% fall.

In the same timeframe, Britain itself has seen house prices rise by an average of 12%. This means properties for expats returning from Europe will cost far more than the price they will achieve for their European homes. The average ‘price gap’ between a home in Europe and a similar one in the UK is now around £65,000.

Experts say British expats thinking of returning home before Brexit need to carefully consider their options before making a move. However, should they have a sufficient deposit, maybe from the sale of their foreign home, there could be a solution.

Buying a property with equity release is akin to using a residential mortgage to purchase a new home also. Having the deposit available, which when combined with the equity release, totals the purchase value of the UK property & enables the land transaction to complete.

So, for expats looking to get back into the UK property market, all is not lost as one solution exists and that is a UK Lifetime Mortgage scheme.

Categorised in: Equity Release Mortgages
This post was written by Carrie Ann