MORE THAN four months have passed since the UK’s decision to strike out alone was cast in the June 2016 EU Referendum. For those of us enjoying an expat lifestyle, or who own property in Cyprus, the implications have already been keenly felt.
Sterling hit a 31-year low in the immediate few days post-Brexit, and there is no sign of a recovery that will match the speed of the fall. Exchange rates have since fluctuated and, looking at the months ahead, we can expect this uncertainty to prevail.
While the economic recession that was forecast shows few signs of descending just yet, personal finances have already been affected. Exchange rates are not favourable and many Britons living overseas have experienced an immediate reduction in their pension values.
And for those in the process of buying properties overseas when the referendum vote was cast, currency volatility meant purchase prices rose. With immediate effect, those buyers who had failed to lock in to a fixed exchange rate found their hard-earned cash was not stretching so far as they planned.
So, what next for currency and the overseas property market?
For some time, the strong pound has enabled British buyers to purchase property abroad for bargain prices. But now, several months since the referendum was taken, we’re still seeing a weak pound. For some, purchase decisions will have been postponed, or indeed cancelled, as Britons play a waiting game and watch closely to see what will come next.
For anyone looking to buy property overseas, right now or in the immediate future, it is important to take independent advice from a reputable source and engage the services of currency transfer professionals. Perhaps more than ever before, products that enable customers to fix rates, and guarantee the amount paid for a property, are a real boon.
Sterling remains low and pension values have dropped in line with exchange rates. But while British expats might have less cash to spend, the need to stay informed and try to keep ahead of the trend has not changed.
So, decisions need to be made based on hard facts and good advice – not panic or speculation. And while lots of news and column inches have been given over to the Brexit topic, there is no substitute for staying informed by listening to impartial advice from trustworthy sources.
Looking more to the future, there has been speculation that mortgage rates for British owners of overseas properties might be hiked. But because many UK banks lend across borders, these lenders may not regard Britons as posing higher risks post-Brexit.
But we still don’t know what the Brexit terms will be and for now there is no clear exit strategy or timeline. While this strategy remains uncertain, Sterling’s fortunes could change yet again – and long before any concrete decisions are made about Brexit, the UK and the EU.
About the author
Brandon Richards is a Key Account Manager with FC Exchange Cyprus.
FC Exchange Cyprus offers currency exchange and international payments to private individuals and companies. FC Exchange is part of Global Reach Partners which provides payments and hedging services to businesses and private individuals employing 170 staff in London and overseas with annual currency transactions exceeding £ 5.5 billion.
@Brandon if that is the case who in there right mind is going to buy a property in Cyprus if the mortgage rates are elevated higher for UK buyers?
The mortgage rates in Cyprus are already higher than UK so no value creation in buying a property in Cyprus.
What do they mean that banks may put up mortgage rates for UK buyers? Do they mean on existing mortgages or those who apply in the future? Surely this would be racist??
Ed: The banks look at the risks when assessing interest rates. If Sterling weakens they may have to increase their interest rates to cover their risks. Pay-day-loan companies, who often specialise loaning money to high-risk borrowers, have very high loan interest rates.
@Peter
Sure you are know different to 1000s of expats who purchased properties in Cyprus thinking the only way is up. The reality is that due to all the corruption, no regulations or governance when the property market was booming nobody cared. Today only overseas investors are looking at detressed properties or people selling on the cheap to get out of a financial nightmare with property prices still at rock bottom.
I moved to Cyprus in 2002 and sold my UK home for £330,000 to purchase my villa which I bought for C£200,000.
My UK 4 bed home was value by Zupla and sold last years for £800,000 roughly 3 times more than I sold it for 14 years ago.
My Cyprus villa in contrast which cost me €211,600 brand new plus €16,000 for the title deeds is now valued at €198,000 or €20,000 less than I bought it for. If ever I could find a buyer which is doubtful.
That’s the reality of buying property in Cyprus. Cyprus has shot its bolt with the title deeds fiasco. Developers thought they were being clever.
Would say any wise property investor would already have been holding US Dollars which provides strong currency that is global currency of choice around the world. Now is a great time to buy a property in UK or Europe with the Pound likely to go below 1-20 in the coming months.
We are back to 2011 levels for exchange rate Pound v Euro so not only UK pensions that are badly effected but UK tourists will get lot less for their pound so Cyprus can expect drop in tourism next year.