The coronavirus pandemic hasn't just affected the UK's domestic property market, it's also badly affected overseas investment, too, especially in countries such as Spain - which, along with Italy, has been worst affected by the disease.
But how are British sellers and would-be buyers in Spain coping in the current environment? Property Investor Today spoke with Simon Pelling, managing director of Sell4LessSpain.com, to get his thoughts on how the Spanish property market is functioning at present, whether Brexit will be delayed in light of the crisis and how the overseas investment sector might look once the pandemic has abated.
How is Covid-19 affecting British homeowners in Spain?
The lockdown has totally frozen the market. There is no market activity! Many owners were, prior to Covid-19, very keen to get their sale completed before the end of the year (when the transition period is set to end) as there is a lot of open questions on tax, movement of money, etc, that they were looking to avoid.
It's a very frustrating time for sellers in Spain and I believe that when this crisis is over there will be a huge surge in people looking to sell.
Equally, what will the impact be on British people planning to move to Spain before the Brexit transition period comes to an end?
Likewise, this is now also stalled. We saw a huge increase in interest from people looking to get established before the 31/12 Brexit deadline.
These people now cannot do anything - the freeze of the UK market (many purchases in Spain are dependent on sales on a UK property to fund it) and the changes in mortgage availability, together with the inability to travel to Spain, is meaning that valuable months are being lost prior to the December 31 deadline.
There is talk and rumour and I believe “hope” that the deadline will be extended.
With the current extraordinary situation, it seems inevitable that the transition period will have to be extended, doesn't it?
I would like to say YES, and that is for sure what our buyers and sellers would like to see, however we cannot guarantee that will happen.
It would be helpful if a statement from the government and the EU could be put out at least hinting at this as a possibility to ease the fears of sellers and concerns of buyers.
How is the Spanish property market functioning at present? In a similar way to the British one, with agents, sellers and buyers finding innovative ways to do still do business where safe and possible?
The classic market is currently closed. However, we are advocating that people use the time they are 'on lockdown' to get their property listed with us.
We allow clients to upload their information, photos, price etc to our website without the need for a human visit. We also have the ability to provide a valuation from the land title and sales records if they need that - all without visiting.
We are promoting to people to use this time to tidy up the property and get it uploaded to our site, and then we are offering an incentive to anyone who uploads during the lockdown time a discount on our Portal Services costs once the lockdown is over.
There's no point in starting portal services whilst the UK and Spain are locked down as nothing worthwhile will happen.
You operate in Portugal and Gibraltar, too, which have been less affected by Covid-19. What impact have you witnessed in these places?
The market across all three locations has closed. Gibraltar is very dependent on Spain as most of the people there work in Spain or have a dependency on Spain in some way. Portugal is suffering due to the lack of flights, etc, and the general closure of public places. The country may not be as 'closed' as Spain but the market is performing in a similar way.
What reassurances could you offer to British sellers in Spain and would-be Spanish property owners at this difficult time?
Once this is over, the demand will be back for buyer and sellers - perhaps stronger than it was before. This time creates an opportunity for people to re-evaluate their lives and to prioritise what is important to them.
Many who have been thinking of making a move or returning home will now get on with it much more quickly. The market for property will always exist and the demand from buyers will remain, including post-Brexit.
It’s just a great shame for everyone that there is now this “dead” period at a time when both sides wanted to make progress - buyers and sellers!
Are buyers still able to buy and sellers still able to sell at this point?
Any deals that were passed survey and with lawyers that can be completed without the need for human meetings are progressing, but in reality this is next to nothing.
Most lawyers are not working now and access to other items needed like getting a NIE number or opening a bank account are near impossible.
What do you think the overseas property investment market will look like after this crisis?
I think there will be an increase in people looking to sell, and an increase in people wanting to buy. What I hope is that the buyers are supported by an ability to buy - in terms of available funding, etc.
The impact on the economy is going to be huge, and what impact that will have on caution or otherwise from institutions to support purchases is unknown. Also the ability to value - who will be the first to value a property post-Covid-19 - will it be the same, less, more? Who knows?
What will be the exchange rate position? So many variables.
All I can be confident of is that there will be a lot of sellers wanting to sell and a lot of buyers wanting to buy - let's hope everything supports their ability to do just that!
Will it take a long while for it to recover/get back to normal?
Yes, it will. I am not sure it has ever been 'normal'. I think the impact of the Brexit situation stalled the market for the past 2-3 years and we started to see a good recovery in the early part of this year.
It’s unknown how long this Covid-19 situation will last for, and it's unknown how long the impacts of it will remain. I think it will bankrupt more people than it will kill, but unfortunately both will be high numbers.
Events like a global pandemic are incredibly difficult to plan for or foresee, but have property markets across the world been unprepared for a crisis like this?
I am not sure how a property market in any country could prepare for this or foresee it. I think the key is how they deal with it - once it's out there on the table.
It will need decisive action from buyers and sellers, it will need support from governments in terms of red tape, legislation, Brexit timelines, etc, and support from financial institutions in respect of mortgages.
The Spanish market will also be somewhat linked to what is happening in the UK market - how will UK prices be post-Covid-19 and how will the pound be sat against the euro? Impossible to answer at this stage.
*Sell4LessSpain is a free, no commission service and since 2019 has had David Lloyd on board as an executive director, lending his name and brand values against the business. "This helps underline to sellers we are a genuine real service - sometimes people worry that it’s too good to be true," Pelling says.