As Britons have just voted to leave the European Union (EU), what will this mean for the more than one million Brits who own a holiday home in the EU, as well as the wider holiday rental market in general?
It’s still difficult to know exactly what will happen, as a lot depends on what’s already been negotiated and what is put in place from now. However, here are a few areas where things might change:
Each EU state is a separate authority when it comes to tax. So, owning a property in an EU country makes you subject to that country’s rules. However, certain EU rules supercede the local rules and being part of the EU affords you a greater degree of protection and, in particular, tax perks. For instance, in France, non-EU citizens pay 49% capital gains tax compared to the 19% paid by EU and EEA residents and, in Spain, EU residents pay the same lower level of inheritance tax as locals (unlike non-EU residents).
Brexit could mean a reversion to all local rules, which would have significant affect on holiday home owners. For example, in leaving the EU, UK citizens would lose the right to choose the inheritance law that applies to their assets in the EU (eg property). If this happens, property owners could be forced to face more punitive, local tax regimes and provisions such as forced heirship etc.
Analysts forecast that the pound could fall by as much as 20% if the UK voted to leave the EU and, already, the pound has fallen to a low not seen since 1985. This could have significant implications for those property owners who are still paying off a European holiday home, as mortgage repayments could soar.
On the other hand, a falling pound would make the UK more appealing to visitors from overseas. For owners of property in the UK, this could be good for business. A weaker pound would also make travelling overseas more expensive, so we might see an increase in the number of staycations, which would benefit UK property owners.
According to a recent ABTA report, 63% of travellers who come to the UK each year are from the EU (and 76% of UK holidays abroad are in EU countries). It now remains to be seen whether the EU will still be the main source market for overseas travellers coming to the UK (and vice versa).
At the moment, EU citizens can move freely among the EU states, without the need for visas. Now, however, the government may decide that travellers from even just some of the EU states require a visa to enter the UK (as is already the case with travellers from non-EU states). If this were to happen, travellers from the EU could be put off holidaying in the UK (due to the extra hassle and cost of obtaining visas), and book elsewhere.
Likewise, if you own holiday homes in the EU and a large proportion of your guests come from the UK, your bookings could take a serious hit as Brits opt to holiday outside the EU to avoid the cost and inconvenience of getting visas.
Of course, there are various ways the relationship between the UK and the EU could operate now and we might find little changes at all.
What do you think?
Were your bookings affected ahead of the vote (are they up/down compared with what you’d expect for this time of year)? Do you have any particular fears following Brexit? Or, are you happy we’ve voted to move away from the EU? We’d love to hear your views on the subject. Please leave us a comment, below, or send us an email.