Brexit and the Mallorca Property Market
What does Brexit mean for UK homebuyers in Mallorca?
Following an emotional, tense and highly contradictory campaign, on the 23rd of June 2016 Britons voted by a 1,9% margin in favour of leaving the EU.
The Brexit Referendum was tight; 17.4 million voted for Brexit and 16,1 million against. The Prime Minister David Cameron resigned and Theresa May took his place. Ever since, Britons have been asking themselves how will this affect me?
And will it affect me buying property abroad, in Mallorca?
A quick look at the Mallorca property market in figures
Curiously, Brexit didn’t have any immediate affect on British holidaymaker’s choice of holiday destinations.
In 2017, following the referendum, almost 19 million UK tourists arrived in Spain (23% of all tourists visiting the country that year). This follows an uphill curve seemingly unaffected by the vote; 17,8 million British tourists visited Spain in 2016 and 15,5 million in 2015. It also means that more British holidaymakers visited Spain in 2017 (after Brexit) than voted in favour of exiting the EU!
Aside from tourist numbers, between 300,000 and 700,000 Britons reside in Spain, primarily in the Costa de Sol, Costa Blanca, Canary Islands and the Balearics. There are an estimated 15,000 British residents in Mallorca and Britons continue to make up the second largest demographic of foreigners buying on the island (and first in Spain as a whole) despite Brexit and the subsequent drop in value of the pound against the euro.
Interestingly, in 2017 the property market saw increases in both the number of properties sold and the prices being paid. The Spanish National Institute of Statistics (INE) reported an increase of 9.1% in prices paid in the Balearics in 2017 compared to 2016.
Will Britons continue to buy property in Mallorca... despite Brexit?
Not surprisingly, British residents in Spain are particularly worried about how Brexit will affect their lifestyles, and one such worry concerns healthcare.
At the moment, it should serve as some kind of reassurance that the EU and UK have agreed that rights to healthcare for Britons in Spain and Europeans in Britain will continue as before.
Regardless of Brexit however, the British will continue their love affair with Mallorca's climate, culture, gastronomy and way of life. That is unlikely to change with Brexit.
Still thinking of buying property in Mallorca?
As we all know, the Brexit negotiations are still very much underway and we don't know yet what the eventual system for Brits is going to be exactly. That said, we can be certain of a few things:
You will have a right to buy property in Mallorca post Brexit
The right to buy property in Spain is not restricted to EU citizens. People from all over the world buy and own property in Mallorca and all over the country. In fact anyone who can pay the purchase price can buy real estate in Mallorca and after Brexit this is not going to change.
Buying property in Mallorca post Brexit will not cost you more money
The cost of a piece of real estate in Mallorca is the same if you are a Spanish national, a British citizen or from anywhere else in the world.
In general terms the costs of a property in Mallorca are made up of:
- Purchase tax
- Notary’s fee
- Property registry fee
- Miscellaneous expenses
These costs are exactly the same for everyone, with or without Brexit.
Costs to you personally can vary due to fluctuations in the pound, that is true, but the property and financial markets are always subject to fluctuations.
You will be able to rent your property after Brexit
This is certain, because in Spain your right to let your home is not affected by nationality. Whether you want to rent your property as a short or long term let, as a holiday home, as a business or on an ad-hoc basis, you can.
Having said that, your tax rate on rental income may change. EU citizens are taxed at 19% at present, after Brexit UK citizens may be required to pay the non-EU citizen rate, currently set at 24%. You may be able to off-set the rental tax against your UK tax bill however.
Mallorca regional laws require you to have a rentals license if you wish to let your property as a holiday home. To read about what is required of you and how to do this, see the link below:
How to get a licence to let your Pollensa property out as a holiday home - Any property owner in the Balearics wishing to let their home out on a seasonal holiday basis is now required to hold a tourist licence to let their property.
You will still be able to visit Mallorca after Brexit
At present, Brits, as EU citizens, can travel, live and work anywhere within the EU without the need of a visa or any other document apart from their passports, and have taken good advantage of this over the years, with many buying property and re-locating to Mallorca. Post-Brexit this could change.
Mallorca lives from tourism however, and is very unlikely to put restrictions on holiday travel to the island. Long term travel may well be affected, and at present we can only hope that it will be affected the least amount as possible.