With UK-EU trade talks going down to the wire, there is still no clarity over exactly what will happen when the transition period ends on December 31 2020.
Will it be a no-deal Brexit with Britain falling onto World Trade Organization (WTO) rules when it comes to trade? Will it be a Canada or Australia-style deal, or something more bespoke?
One thing we do know for sure is that the UK will no longer be part of the single market or the customs union, and that freedom of movement (as it was before) will no longer apply, but there are many other things – from visa-free travel to EU countries, fishing rights, state aid, university funding, roaming charges and the impact of Brexit on industries from car-making and food production to property – which remain shrouded in mystery and uncertainty.
In an attempt to clear up what Brexit could mean to British investment in the Portuguese property market – one of the most popular overseas countries for people to buy a second or holiday home – PIT spoke with Bruce Hawker, a director at Fine & Country Carvoeiro (where his wife Zoie Hawker is managing director) and the founder and publisher of the popular Essential Algarve magazine.
Will Golden Visas become available to Brits after Brexit?
One of the big questions when it comes to Portuguese investment post-Brexit is whether Golden Visas, available to non-EU citizens investing a certain amount in the country since 2012, and providing a residency permit for a family including dependent children, will be on offer to Brits when the UK becomes a non-EU country from January 1 2021.
“Some law firms are suggesting to British nationals that the Golden Visa may be a solution for them, but we do not agree with this,” Hawker says. “But that said, we are still not sure if the Golden Visa will be applicable in the Algarve next year. What is looking likely at the moment is that it will be banned in big cities like Lisbon and Porto and probably in more densely populated areas elsewhere in the country, including some of the Algarve. But so far nothing is certain.”
After Brexit, and the end of the free movement principle which allows Brits to move freely around the EU to live and work, will it be harder for those from the UK to settle in Portugal for the long-term?
“Our view is that Brits will still be welcome here and that the Portuguese government will make special concessions to make it easier to take up residency here for Brits than for other non-European nationals,” Hawker says.
“This has already been stated by the Portuguese government, as was also the case in Spain. But in the worst-case scenario, Brits would be treated the same as Americans, for instance. They would need to get a residential visa and all they need to do for this is provide proof of income to support themselves and a residential address, either by buying a property or by signing a residential rental agreement.”
He says many people from the USA, South Africa and elsewhere settle in Portugal like this, without taking up the Golden Visa.
“In fact, I have been a resident here since before Portugal joined the EU. I moved here as a kid and my parents took up residency without any problems,” Hawker adds. “There will also be nothing to stop people buying a holiday home, just as they did before.”
Will the market be affected?
Hawker says the Algarve is no longer so dependent on UK buyers as it once was, meaning the market should be less affected if Brits put off investing or moving to Portugal because of Brexit.
“Last year we sold to buyers from 21 different countries with the UK making up around 30%. It is our biggest single market, but we do not depend on it. That said, enquiries from UK buyers are currently at an all-time high and as soon as travel restrictions are lifted we are expecting to be very busy with Brits.”
He insists the market is still very buoyant with no signs of a downturn or of any drop in prices.
“There may be some Covid-related fire sales next year, as some owners of holiday homes depended on rental income to pay their mortgages and 2020 has been a very bad year for holiday lets.”
In a recent market report piece for the online version of Essential Algarve, Hawker argued that the region entered the Covid-19 pandemic – from a property perspective – in a healthy state, with strong growth from diversified markets. As a result, the challenges and obstacles thrown up by Covid have been easier to negotiate.
“Estate agents and property developers across the region seem to be bucking the downward trend in business being experienced in the tourism industry,” he wrote. “During the lockdown period, those agents and developers that kept up or increased their digital marketing campaigns were rewarded by a large increase in enquiries from buyers.”
He went on: “People in the UK, around Europe and elsewhere were stranded at home. Many of those working remotely started to realise that they did not need to be doing so from where they currently lived and this created a trend that has seen the beginning of a small exodus from urban areas the world over.”
He said many are upping sticks and moving to parts of their own country offering more space and a more relaxed lifestyle, whilst others are looking to move further afield. “And it seems that Portugal, and especially the Algarve, is very much on the radar for such buyers,” he added.
Following the lifting of lockdown measures in Portugal back in May, estate agents reported a flurry of activity in the market, caused in part by pent-up demand – but also coupled with an ongoing surge in enquiries.
“Most agents have responded to the difficulties imposed by travel restrictions with increased investment in technology. Virtual viewings, either with a simple smartphone or using 3D guided tours, are now the norm and whilst most buyers will stop short of actually going ahead with a purchase without visiting a property, there are many cases where deals have been done,” he wrote.
“If anything is holding back sales at the moment, it is the expectation amongst some buyers that prices are about to fall. But those waiting for this to happen would be well advised to look at the property market in their home country.”
He concluded: “Outside of urban areas, prices in the UK, for instance, are holding up and even increasing; it is all a question of supply and demand. And the demand for property in the Algarve seems to be stronger than ever.”
This post has originally been featured in Property Investor Today.