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Homebuying hurdles in the post-Brexit age

Italian-born translator Elisa Martellini moved back to her native Tuscany this month after living in the UK since 2017. She had been planning to stay on in Cambridge until she was eligible for “settled status” — applicable after five years of residency — but has had enough of Brexit Britain.

“Everything felt so touch and go about whether I would get granted [settled status],” she says. “I know people who have been turned down for not being able to prove they have been here continuously — I just couldn’t cope with it mentally any more.”

Her British boyfriend has got a work visa through his company, Gucci, so the couple have moved to Florence. “It’s now much easier for me to get a job in Italy than the UK due to my residency status.”

A year after the end of the Brexit transition period, EU citizens in the UK, British citizens in the EU and those with families spanning both sides of the Channel are all adjusting to their new status and loss of freedoms. Cross-border movement has become more complicated with a points-based immigration system; and access to finance and healthcare has also become tougher for those buying homes abroad.

After 47 years of EU membership, in which EU nationals moved easily to and fro across the Channel, built relationships and businesses and bought second homes, the close-knit ties are loosening.

Twelve months on, we look at some of the hurdles expats have had to deal with in one of the most complex and confusing years for cross-border moves.

Stringent visa requirements

Before Brexit, Britons who wanted to work, live or do both in the EU could just jump on a plane and start a new life, with plenty of time to register and apply for the relevant residency card in their country of choice. Now those hoping to spend more than 90 days in an EU country often need to apply for a visa before they leave the UK, and each country has its own residency requirements.

In Europe, Spain and Portugal remain two of the most popular locations for an affordable retirement in the sun, according to visa firms and estate agents. Many Britons started applying for the non-lucrative visa (NLV), which allows financially self-sufficient non-EU applicants to move to Spain. This visa had been an especially popular route for Americans to work remotely in cities such as Barcelona. But last year the terms of the visa were altered to prohibit new applicants from working.

Altea, a town on Spain’s Costa Blanca: the British dream of a place in the sun has become more difficult to realise © Getty Images

“A year on, there’s now a wider understanding these visas are only suitable for non-workers and retirees,” says Melanie Radford, a relocation specialist at My Lawyer in Spain. “For those who do want to work, the golden visa [offered with a property purchase of €500,000 plus] is by far the best option if they can afford it.”

Recent regulation changes may yet make life easier for some workers looking to relocate to Spain. At the end of last year, a digital nomad visa passed through the Spanish parliament and is expected to be introduced this year — though the scheme has already been criticised by some expat workers for its tax implications.

At the same time, the application process for the NLV through the Spanish consulates in the UK has been streamlined — for the London branch there’s a new live online appointment booking system, with visa approval times reducing considerably from the two to three months being reported in the middle of last year. Karen McDonagh from Leicester received her NLV in eight days and moved with her partner to the Valencia region in October.

“We are shopping for a villa plus a property to rent out,” she says. “After a year we intend to change our visa to one that permits us to be self-employed (autónomo) and earn income in Spain.” The autónomo visa requires a government-approved business plan.

From November it also became possible for over-65s in receipt of a UK state pension to apply for an NLV without being required to take out private medical insurance (as younger visa applicants for this visa are required to), meaning that moving to Spain for retirees is not quite as expensive as it was a year ago.

This is not the case for people moving to France, says Verity Reeve, the owner of the Brittany-based agency LBV Immo. “The need for both proof of financial resources and medical insurance [for a long-stay visa] have caused some people to back off from plans to relocate fully.” Last year, a couple over 65 had to show net household income of about €1,350 per month, she says; for working-age people, it was €1,230.

Among buyers spending €1m or more on a property in France, there’s been a marked drop-off in those relocating full time, says Tim Swannie of buying agent Home Hunts. “But some Britons have bought properties to use as second homes for now, hoping that visas will be easier to obtain in a couple of years.”

Tim Whitmore (left) and Paul Antonio moved from south London to Setúbal, south of Lisbon, in August. They have applied for a golden visa after purchasing a €500,000 farmhouse
Tim Whitmore (left) and Paul Antonio moved from south London to Setúbal, south of Lisbon, in August. They have applied for a golden visa after purchasing a €500,000 farmhouse © Sanda Vuckovic for the FT

‘Brexit was never a deal breaker,’ says Erik Larsson, who moved from Sweden to London in July for a job in banking, helped by his employer through the three-month visa application period
‘Brexit was never a deal breaker,’ says Erik Larsson, who moved from Sweden to London in July for a job in banking, helped by his employer through the three-month visa application period © Harry Mitchell for the FT

In Portugal, Britons are applying for both the D-7 visa (which allows applicants to work remotely) and a golden visa to obtain residency in the country.

Tim Whitmore and his husband Paul Antonio moved from Brixton in south London to Setúbal, south of Lisbon, in August. They have applied for a golden visa after purchasing a five-bedroom farmhouse on two acres of land for just under €500,000. Whitmore, 58, had been made redundant from his job as visual director of Topshop, while Antonio’s hospitalisation with Covid a year ago prompted a life change.

“Portugal came out on top for its relaxed way of life and so far we feel very safe and content here,” says Whitmore, who is renovating their new home. “Paul’s [calligraphy] business would also have faced import/export problems with products being sold between the UK and the EU so that was another reason to make the move.”

The property investment golden visa has ended in high-density areas such as Lisbon, Porto and the Algarve, so UK buyers are now using the investment fund route — which requires applicants to invest in renovation projects or contribute €500,000 to investment funds — according to Global Citizen Solutions, an immigration consultancy.

Lisbon, Portugal
Lisbon, Portugal: migrants can apply for a D-7 visa (which allows applicants to work remotely) or a golden visa to obtain residency © Camera Press/Dagmar Schwelle/laif

Buyers face tougher lending criteria

It is perhaps no coincidence that in the first year of Brexit, German buyers have taken over from the British as the biggest group of overseas buyers in Spain for the first time, according to Q3 2021 data from the Spanish land registry.

More stringent overseas travel restrictions and the 90-day limit have no doubt played their part, yet estate agents reported a busy final quarter for UK transactions. The busiest period for currency transfers for British property purchases buying abroad in the past two years was October and November 2021, says Robin Haynes, founder of Currency Index.

“In this period, better exchange rates combined with a period of relatively free travel to [continental] Europe converged to produce a wave of buying fuelled by pent-up demand.”

But borrowing has got tougher. Some Spanish banks will now only lend up to 60 per cent LTV to borrowers not earning income in euros, says Kevin Monger of Mortgage Direct, though this is down to regulations in the mortgage industry introduced in 2019, rather than Brexit.

“But we are doing more high-net-worth mortgages [€2m plus loans] than ever,” he says, “with buyers looking to avoid paying Spanish Wealth Tax, which is only charged on the equity in a property.” This tax varies by Spanish region, at 0.2 to 3.75 per cent of assets for non-residents.

In France there are fewer options for British borrowers, says Fiona Watts, managing director of brokers International Private Finance, for whom mortgage inquiries are down 15 per cent on 2019. Yet the average loan size has increased from €450,000 to €600,000 in that period.

Tuscan countryside farm landscape in Italy
Tuscan idyll: mortgage lenders have put in place stricter rules for purchases abroad © Getty Images/iStockphoto

“Most lenders now require British borrowers to fall into one of two categories — that they are a high-net-worth individual, or that they can show that the property they are purchasing will generate an income,” she says. “But Covid has arguably had a larger impact on banks’ willingness to lend [than Brexit], with a number of mortgaged British second-home owners defaulting due to the drop in holiday rental income during the pandemic.”

The changing balance of UK immigration

Financial Conduct Authority regulation on mortgages means it is more difficult for EU nationals who are not already established in the UK on a work visa to buy a home there, says Richard Campo, managing director of broker Rose Capital Partners. “UK nationals or EU residents outside the UK can prove very problematic to the point where banks won’t lend.”

He says the problem generally only relates to the in-between period of being an EU and a UK resident, so arrivals may need to rent a property first to establish a financial footprint. Many arrivals rent first anyway, says Sylvie Froger of Simply London, a relocation agency. Most of her clients are working for tech or fintech companies on a three-year placement — but Americans have replaced many French.

“English education is still a driver for some European families, but unless the parents are sponsored by a company it’s hard to move over. Not every company — including mine — can afford the thousands of pounds needed to employ EU staff.”

The City still feels dynamic after Brexit. The salaries for our jobs are higher here than in Paris

The drop-off in arrival of workers in lower-paid occupations such as hospitality, retail and seasonal work has been well documented. In 2019 there were 3.7m EU nationals living in the UK; in 2020 there were 3.5m, according to ONS data. While net migration of EU citizens was at its lowest for 16 years (at 48,000) in 2019, new non-EU migration, at 282,000, reached its highest level since records began in 1975.

For EU nationals, the sponsored work visa and the student visa are the most popular types, according to Faydelys Robinson of Eversage Associates, a specialist in inbound UK migration. A sponsored work visa for five years can cost up to £9,500 in government fees (not including legal fees). For a family of four, this cost rises to more than £20,000.

Government fees are generally paid by the company, and for high-earning professions, the visa process itself is not a deterrent. Erik Larsson moved from Sweden to east London in July for his first job in investment banking. He received assistance from his employer throughout the three-month visa application period. “I wanted to work in London as the banking job market is the best,” he says. “Brexit was never a deal breaker.”

Frenchman Grégoire, who did not want to give his surname, also chose to move to London in 2021. He and his wife rent in Islington, after receiving sponsored work visas from the banks they work for. “The City still feels dynamic after Brexit,” he says. “The salaries for our jobs are higher here than in Paris.”

According to the Home Office, 6.34m applications to the EU Settlement Scheme — the process by which people from the EU, EEA or Switzerland can live in the UK — had been received up to November 30 2021 — with Poles, Romanians and Italians the biggest groups. This is higher than the 3.5m-4.1m that were expected, but could include some not living in the UK at the moment.

But there are also many who are planning to leave. Elena Remigi, founder of the In Limbo Project, a platform addressing the issues of EU citizens living in the UK and British nationals in the EU, says some EU nationals are just waiting to find another job, or for their children to finish education. “They are fed up with the red tape needed to apply for a new job, rent or get a mortgage.”

While the Home Office has plans to introduce new visa categories this year to attract highly skilled people to the UK — such as the High Potential Individual Visa — the problems of shortfalls in certain sectors are already being felt.

The percentage of EU NHS medical staff has fallen since 2016 and in social care — where 80 per cent of non-UK labour was from the EU until 2016 — a shortfall of workers is expected to rise, with many falling below the salary threshold of £25,600 that gives them UK settlement rights. With an ageing population, the UK will have to rely more heavily on non-EU migration.

But for some EU-born residents, it was not red tape but a change in atmosphere after Brexit that made them leave. Polish-born Marcin Barszczewski and his wife, both scientists, spent 15 years in Northern Ireland building a life for their two young children.

“We hung on after the referendum, but we felt the mood change, and we felt less welcome so we moved to Germany. We really miss Belfast but think we did the right thing,” says Barszczewski, adding that part of his identity will always be rooted in the UK.

Martellini feels the same: “I don’t feel wanted in the place I have grown to love, despite its flaws,” she says. “It’s like finally accepting a relationship has irrevocably broken down.”

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