Play­ing it

Whether you live in France or are about to make the move, the re­sult of the EU ref­er­en­dum could af­fect your fi­nances. Cur­rency ex­pert Re­wan Treme­thick ex­plains why it pays to be pre­pared

Living France - - Les Pratiques -

With the UK’s forth­com­ing ref­er­en­dum on EU mem­ber­ship tak­ing place on 23 June 2016, it is im­por­tant for Bri­tish buy­ers of French prop­erty to un­der­stand how a ‘Brexit’ might af­fect ex­change rates and money trans­fers to France.

Con­cerns re­lat­ing to the po­ten­tially his­toric vote have al­ready had an im­pact upon ex­change rates, with the pound fall­ing con­sid­er­ably since David Cameron bro­kered his re­form deal for UK mem­ber­ship in Fe­bru­ary. By the end of the month, the GBP/EUR cur­rency pair was lan­guish­ing in the re­gion of a 16-month low. With the im­por­tant vote still some way off, mar­ket volatil­ity is un­likely to go away, which could give would-be UK expats a bit of a headache.

Roughly a quar­ter of the two mil­lion UK na­tion­als who live in the Euro­pean Union are res­i­dent in France. If you’re one of them, or plan­ning on mak­ing the move, the re­sult of the EU ref­er­en­dum could af­fect your plans, but equip your­self with the nec­es­sary knowl­edge and you’ll be pre­pared for ev­ery even­tu­al­ity.

WHICH WAY WILL PEO­PLE VOTE?

There have al­ready been dozens of polls con­ducted, each yield­ing dif­fer­ent re­sults. The rep­u­ta­tion of poll­sters took a bit of a hit fol­low­ing the 2015 gen­eral elec­tion, as al­most all pre­dicted a hung par­lia­ment de­spite the Con­ser­va­tive party win­ning by a clear ma­jor­ity. While polls re­lat­ing to the EU ref­er­en­dum are still worth pay­ing at­ten­tion to, the in­ac­cu­racy of the elec­tion tal­lies should be con­sid­ered.

More im­por­tant than how UK res­i­dents will vote is how Bri­tish expats will, or if they will at all. Only 5% of Bri­tish expats had reg­is­tered to vote by the end of Jan­uary, some­thing the UK’s em­bassy in Paris tried to ad­dress with a com­pe­ti­tion to win af­ter­noon tea at Hô­tel de Charost, the UK am­bas­sador to France’s of­fi­cial res­i­dence. The com­pe­ti­tion was meant to raise aware­ness of Over­seas Voter Reg­is­tra­tion Day on 4 Fe­bru­ary. Of course, em­bassies have to be im­par­tial, but en­cour­ag­ing expats to vote is im­por­tant con­sid­er­ing they will be among the groups most af­fected by the ref­er­en­dum.

If you’ve been liv­ing over­seas for less than 15 years, you are still eli­gi­ble to vote. So don’t for­get to regis­ter and make your voice heard, re­gard­less of your point of view.

HOW COULD A BREXIT AF­FECT MY FRENCH PROP­ERTY PUR­CHASE?

There are two key fac­tors which could af­fect your abil­ity to af­ford a home in France: in­ter­est rates and mort­gage avail­abil­ity. It is un­likely the Bank of Eng­land (BoE) would want to in­crease in­ter­est rates if Bri­tain was suf­fer­ing ad­verse ef­fects be­cause of a Brexit. With low bor­row­ing costs mak­ing mort­gages more af­ford­able, you may find it eas­ier to sell your UK home in or­der to fund your move to France. There is a down­side, how­ever. In the midst of fi­nan­cial tur­moil, the banks are likely to be more cau­tious with their lend­ing. They may tighten their lend­ing re­quire­ments and re­ject more credit ap­pli­ca­tions than be­fore, which could see you strug­gling to get fi­nance even if you have a good credit rat­ing.

If you were look­ing to se­cure a mort­gage in France, you could find your­self sub­ject to even stricter lend­ing re­quire­ments if the UK was out­side the EU. In mid-2015 many French banks in­tro­duced a new pol­icy for ex­pat mort­gages. In or­der to get the best deals, you had to put the first two years’ worth of re­pay­ments into a sav­ings ac­count, on top of a de­posit and meet all the other lend­ing cri­te­ria, to prove that you were fi­nan­cially sta­ble. When ap­ply­ing for credit in France, your debts can­not to­tal more than a third of your in­come, which could be­come prob­lem­atic if ster­ling con­tin­ues to weaken and you find your pounds are sud­denly worth far fewer euros than they were.

WHAT ABOUT SEND­ING MONEY TO FRANCE?

It’s also worth not­ing that a Brexit could change the reg­u­la­tions re­gard­ing over­seas trans­fers. Cur­rently, banks can only charge fees for euros trans­ferred within Europe if they would also charge a fee for an in­ter­nal trans­fer. If Bri­tain were to leave the EU, there wouldn’t nec­es­sar­ily be an agree­ment in place be­tween UK and French banks to keep this prac­tice up. This means that you could find your­self be­ing charged money by your des­ti­na­tion bank, with no over­all reg­u­la­tion re­gard­ing the amount that they can charge to re­ceive euro trans­fers.

WHAT WILL HAP­PEN TO STER­LING?

The pound has al­ready fallen in value con­sid­er­ably. As of early March, ster­ling had dropped 7.5% against the euro since the be­gin­ning of 2016 as Brexit fears star­tled in­vestors. To put that into per­spec­tive, £150,000 trans­ferred at the be­gin­ning of Jan­uary would have given you €204,690, but the same amount at the end of Fe­bru­ary would have equated to €189,225. So over the course of eight weeks,

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