How could a 'Brexit' affect your French property purchase?

PUBLISHED: 11:30 08 December 2015

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© Dreamstime

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What might happen if there was a British exit from the European Union? Ollie Carpenter looks at how it could impact any future property purchases in France

If you’re considering purchasing a property in France and want to make the most of your money, planning is key – especially when it comes to deciding how to manage your international money transfer.

Exchange rates are extremely volatile and the discrepancy of a couple of cents per pound could increase the cost of your purchase by thousands, so having a strategy and using specialist services to transfer your funds could mean the difference between lounging in the Loire and stressing in Scunthorpe.

With the potential for a British exit from the European Union on the horizon, forward planning is more important now than ever. There are numerous potential impacts of an exit on the pound/euro exchange rate and it will doubtless affect people wishing to purchase property in Europe.

Understand the exit

In the run-up to the May general election, the Tory policy that received the most airtime was the promise to hold an in-out referendum on whether Britain should remain a member of the EU. Since securing victory, Prime Minister David Cameron has vowed that this referendum will be held by 2017.

But why does a large proportion of the UK populace want to leave the EU? Aside from wishing to have greater control over the UK’s borders, many people have expressed concern that the cost of membership far outweighs the benefits. An example of this can be seen with this year’s developments in Greece. As the Hellenic nation struggled to settle on a deal to unlock financial aid, the prospect of a bridge loan was suggested. The money would come from an emergency fund which all EU members have contributed to in tax.

Although Britain is not a member of the Eurozone (the collective of countries inside the euro monetary union) the UK would still have to pay – a fact which some factions of the UK government took issue with.

But what are the benefits of EU membership? Well, if you are wishing to purchase a property in France, one of the most obvious benefits is free movement within Europe. As the UK is an EU member, British citizens are free to move anywhere within Europe without having to scale mammoth amounts of bureaucratic hurdles.

If Britain is to leave the European Union in 2017, purchasing a property in France may become more difficult.

The UK is an important member of the EU because, as one of the stronger economic powerhouses, Britain lends the union considerable support and supplies significant amounts of money to help avert and tackle crises. Many European countries within the eurozone expressed displeasure when the UK refused to become a member of the currency union, so an exit could have a serious impact on Britain’s relationship with EU members.

This could possibly make relocating to European countries more difficult, with expats perhaps even being made to feel unwelcome. It is important to point out that this is purely speculation, however, as predicting the fallout is a near impossible task.

Future safeguards

Predicting the outcome of the EU referendum will be tricky, and forecasting what the consequences of a British exit from the EU would mean for the pound and euro is harder still. However, if you’re planning to move money to France in the future, to fund a property purchase for example, there are ways to safeguard against some of the problems which may arise.

For starters, some reputable currency brokers will talk you through the various risk-management options available and help you choose the best means of handling your international money transfer.

One such option involves fixing a favourable exchange rate up to two years in advance of the actual transaction. This would be particularly useful if you found your ideal French property but knew there would be delays to the purchase process. You could fix an exchange rate far ahead of the EU referendum and know exactly how much the purchase would eventually cost you, eliminating the worry that a negative market shift could push the price out of your range.

Some currency brokers are able to allocate a personal account manager to you, meaning you have a direct point of call with an expert to help you understand where the market is going. In times of great change, it is always comforting to know that you have a familiar voice at the end of the line.

Ollie Carpenter is a currency analyst at TorFX
Tel: 0800 612 9625

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