How do you respond to articles saying that British expats are leaving in droves?
Here on the Costa del Sol, and especially in the mid-upper end of the market in which we are working, we haven´t seen any noticeable difference in the volume of new sales instructions from UK-based owners.
If anything, now that many of these owners have been able to sample their second homes in the sun again since the easing of travel restrictions, they have fallen back in love with the Mediterranean lifestyle. Consequently, for many, any thoughts that they may have had of selling up have at least been put on hold, and in most cases dismissed altogether.
What we may end up seeing is a two-tier market, where those at the high end of the spectrum (normally self-employed or senior corporate employees) actually want (and are more able to) base themselves for larger parts of the year from their Spanish home, while those at the mass end of the market who perhaps cannot afford or justify the extra time abroad may have thoughts of selling up, especially if they have no method of trading up which would enable them to apply for a non-lucrative or Golden Visa, which would allow them to stay for longer than 90 days.
In a nutshell, I expect to see more interest from UK buyers in the €500,000-plus segment seeking a second or permanent Spanish home, while a minority of those owners with lower-valued properties may be tempted to sell up if they are not happy with the current 90-day stay arrangements, and cannot afford to trade up to obtain a Golden Visa.
Who are the UK buyers who are purchasing at the moment?
At the high end, they are predominantly self-employed or fairly high up the corporate ladder, in their late 40s-50s. They are buying a second home with a view to spending extended periods of time here, and maybe with a view to moving permanently, depending on kids, schools, requirements to be physically at work in the UK etc.
Of course, each client’s circumstances are different, but a common theme is how disillusioned the UK clients are with living in the UK in a post-Brexit and post-pandemic world. The vast majority feel that the UK is becoming an inward-looking nation that is set to be isolated from the rest of the world.
What are the savings which come from the current tax break that you mention in your YouTube video?
The transfer tax when purchasing resale properties is a flat 7% until the end of the year. Previously it has been 8% on the amount up to €400,000, 9% on the amount between €400,000-€700,000, and 10% on the amount above €700,000. So, for a purchase of €3,000,000, the transfer tax would currently be €210,000. Under the previous (and future) tax regime, the transfer tax payable on the same purchase price would be €289,000 – a difference of €79,000 (2.6% of the price)
Are the post-Brexit restrictions deterring a lot of lower end British buyers? How about at the higher end of the market?
The love affair with Spain from all budget groups is very much alive, especially now that people can holiday fairly freely again. But the new visa rules have hit the lower ends of the buyer market. If a buyer has a maximum budget of €300,000 and wants to spend 6 months of the year in Spain, the pathway to this scenario is currently blocked by the 90-day visa rules.
If a buyer can obtain a non-lucrative visa (showing that they will not be reliant on the Spanish state) or can upgrade at some point to the qualifying point for the Golden Visa (€500,000-plus of unencumbered assets), then a property purchase at this level and at this point may make some sense.
For many people, owning a holiday home in Spain still makes perfect sense, especially if they were only using the property during school holidays and/or were renting out the property for the rest of the year. But it needs careful thought and planning and we’re advising buyers and discussing this with them every day.
Any predictions for Q4?
I think that the market will settle down to more realistic levels in terms of volume, but I also think that there's a new breed of clients on its way, who are looking to make a more permanent or semi-permanent move here.
I can just sense it calming down a little bit in terms of levels of interest and also transactional levels on the ground. However, our conversion rates are double what they normally are. People who are here looking at property are well-researched, know what they want, and they're determined to do it.
Vendors and developers may have to change their attitude to their pricing as the market cools, if they are serious about selling, and this may offer opportunities for buyers. I also see growth in the off-plan market due to lack of stock in the best areas for high-end properties.
*Sean Woolley is the Founder and Director of leading real estate agency Cloud Nine Spain.