The number of British nationals buying property in Spain has dropped to its lowest non-lockdown level ever, according to data just released by Spain’s Land Registry.
During the second quarter of 2021 just 1296 home sales in Spain by British buyers were recorded. And while this figure is up slightly versus the same period in 2020 those months fell during the depths of lockdown in both Spain and the UK, when transactions were at their flattest due to travel restrictions.
When comparison is made with property transactions during the same period prior to the onset of the pandemic in 2019, 2018 and all years previously the scale of the decline in demand from British buyers starts to become more apparent.
For example, in Q2 2019 sales were roughly double this amount. Whilst in Q2 2015 the British accounted for nearly 3,000 sales.
Annualised figures are even more revealing. As whilst the British used to dominate foreign property sales in Spain, accounting for 43% of all transactions back in 2007, they now currently comprise just 9.5% of the overseas market, based on these latest Q2 numbers.
Which still leaves them as the largest group of overseas buyers by nationality – but only just. As other markets such as France and Germany recover quicker from the pandemic.
So why is British demand for Spanish property on the wane?
Best estimates suggest that around one million British nationals still own a property in Spain. With around 360,000 based permanently in the country as residents.
Brexit has undoubtedly had an impact, as the UK’s withdrawal from the EU bought with it two fundamental changes that have made property ownership in Spain (and indeed the EU) a far less attractive proposition.
Firstly, British non-residents can now only spend 90 days during any 180-day period in their Spanish property. So, their ability to be able to use and enjoy their investment for their own pleasure has declined.
Many owners will have purchased the property as a rental investment. But covid and ongoing travel uncertainty have blown a hole in rental earnings over the last year, leaving the outlook unclear.
Secondly, the amount of tax payable on their Spanish property has increased from 19% to 24%. Whilst non-residents can also no longer claim various deductions, such as mortgage interest and insurance against their tax bill.
Taken together, these two changes clearly make owning a property abroad less attractive.
However, it is also important to appreciate that British demand was also on the wane prior to Brexit too – thanks to longer term factors such as the decline in the sterling/euro exchange rate and shifting demographics.