Well we are all expecting that not much will change in the UK during the ‘Transition Period’ in 2020, or at least have been told as much.
Given the UK is outside the Schengen Zone – which provides for unchecked border crossings in a common-visa area – border checks for holiday-makers and business travelers have been the norm travelling to and from the UK during membership of the European Union. There is anecdotal evidence that some Continental European countries are tightening up border checks, where previously they may have been more relaxed. For example some border mountain passes between France and Italy have been reported to be tightening up on identity checks for ski instructors who have, until now, traveled back and forth freely on a daily basis.
Thinking beyond the ‘Transition Period’, the renewed gusto with which the UK government is brandishing the potential ‘Hard Brexit’ mantle has been unsettling and it is hard to unpick the political rhetoric and negotiation posturing from the reality.
For expat and entrepreneur UK property investors some of the things you will want to know are:
- Am I still going to see my investment property perform?
- How might mortgages be affected?
- How will the economy and job creation fare?
- How much red tape will be stripped away or created when investing for European-based expats?
- How might my portfolio in UK and Continental Europe be affected?
- What will be the changes, if any, travelling to and from the UK?
So just to focus on a few of these..
Am I still going to see my investment property perform?
Your property’s investment performance, whether a buy-to-let or HMO or Serviced Accommodation, that potentially serves an international tenant base, depends a lot on attracting the right type of tenants and minimising voids. Arguably many of the Europeans who intended to leave, may already have done so and the situation may not get that much worse. In 2018 it was estimated 3.35 million people with EU, EEA, or Swiss nationality were living in the UK. Of these 2.8m people had applied for Settled Status, about 80% of the total number. If the relationship between the UK and Europe worsens significantly this could be exacerbated in the short term. However the UK will remain an attractive place to be for non-European nationals.
Raising finance – mortgages how will they be affected?
The City and financial markets could be hit by the renewed talk of a ‘Hard Brexit’. The stance has been that the city wants to continue trading with the EU as now, meaning equivalence rules across fund management and investment banking. Divergence could have an impact on savings and pensions. There might be a sweet spot where some divergence could work and could be acceptable to EU regulators, which could make a difference to British savers and mortgage borrowers. There is now more talk of ‘outcomes-based equivalence’ meaning third-country regimes do not need to be identical but must have the same “outcomes” as EU rules to give access to its markets.
How this might affect mortgages at this point in time is difficult to assess, but affordability tests could be affected.
In the short term we might notice some subtle differences when travelling, but it might not be until the end of 2020 we get to see what is political-posturing versus economic reality.
As for the economy and red tape it might be too early to tell. However it does feel as though the UK is far more engaged since the December 2019 General Election in pro-actively shaping its future.
If you would like to discuss your situation or find out more then please get in contact.
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