Whether impartial, a ‘Remainer’ or in the leave camp, the outcome of the big Brexit debate for the UK to withdraw from the European Union will no doubt affect us all at some stage.
While the value of Sterling took an immediate hit following the referendum in June, the drop was maybe not quite as disastrous as many had feared. In fact, the Great British Pound has recently been described as fairly robust, considering the continued uncertainty regarding the ramifications of the decision.
Of course, this would not necessarily be the viewpoint of everyone. The property market in Mallorca has risen steadily in recent years, and continues to do so, with the largest year-on-year growth of any Spanish destination. And this was partly fuelled by the many Britons keen to take advantage of the pre-Brexit Pound / Euro exchange rates.
Then of course the referendum happened, immediately wreaking havoc on budgets and offers from British buyers.
So, what happens when you have agreed on the purchase price, believing your budget will be comfortably achieved, but then the exchange rate moves against you before the purchase is completed? Unfortunately the 1.42 GBP/EUR exchange rate highs of November are long gone and it may be quite some time before we see that level again.
The savvy homebuyer of course, would have had a currency strategy organised from the very beginning, in order to eliminate the possibility of this scenario occurring. By speaking to a specialist Currency Broker, a plan can be made and tailored to your specific requirements – the savings can be substantial. Take this real-life story as an example.
A British buyer decided to buy a holiday home in Mallorca after enjoying a wonderful summer here last year. As their search got started, they agreed to fix the exchange rate to give them budget certainty. With a target purchase price of €950,000, and their base currency in Pounds, the rate was fixed for 9 months at 1.4150, meaning they could spend up to £672,000.
The perfect villa was found and the sales process began. By the time of completion in July, the market exchange rate had fallen to 1.1700. But of course this did not concern them. They were “Brexit-proof” and effectively saved a huge £140,000!
Of course, given the events of this year, the above example is quite extreme, however it does illustrate that with some good professional advice and a little planning, it is possible to avoid a nasty surprise taking the shine off your dream home!
This article was written on the 20th of October, 2016.