Halfway through 2015, the pound is still strong against the euro, with the exchange rate the best it’s been for nearly eight years. Here’s a recap of how to make this work in your favour when buying abroad
Article written by Smart Currency Exchange
British people buying property in Europe right now haven’t had it so good for more than seven years – prices in popular destinations remain low – although most markets are beginning to turn – and the exchange rate hasn’t been so favourable since December 2007.
The uncertainty surrounding Greece remaining in the Eurozone and the effects of a ‘Grexit’ on the single currency bloc has – thankfully for Brits buying and living in Europe – helped stifle the euro since the start of 2015. This means that between the start of January and end of June, the Pound gained around 10 per cent in value against the single currency, with the rate moving from circa £1/€1.275 to £1/€1.405. Rewind a year, and the benefit to UK buyers is even greater – the rate on 1st July 2014 was £1/€1.253.
“In real terms, the better exchange rate means you need fewer pounds to buy the same foreign property today than you did six months ago, or longer, assuming the price in euros hasn’t changed,” said Charles Purdy, CEO of currency specialist Smart Currency Exchange. “So, at the start of July, a €150,000 villa in Spain was more than £10,000 cheaper to a UK buyer than it was at the start of January, thanks to nothing more than the swing in the exchange rate. Of course, once the saga with Greece settles down, it’s possible the euro will scrape back some value – something future property-buyers should bear in mind.”
To benefit the most from the favourable exchange rate, overseas buyers are advised to use a currency specialist such as Smart Currency Exchange whenever exchanging money and sending it abroad from the UK. Not only will you receive better exchange rates and service than if you asked your UK bank to make the same transfer, but Smart Currency Exchange will allow you to fix an exchange rate for a later transfer, using a forward contract. Securing the cost of a future transfer this way means you can fix the price in pounds of your foreign property purchase and know this will not change before completion day.
Typical of Smart Currency Exchange’s clients are Essex couple Paul and Tracey Herbert, who got peace of mind and excellent rates when they sent euros to Spain to buy their townhouse in the Costa Blanca.
“We found and reserved our property at the end of December 2014,” said Tracey, who, like Paul, is in her fifties. “In the first week of January 2015, we opened an account with Smart Currency Exchange and soon after secured our exchange rate with them, ready for completing at the end of March. In total, we transferred €105,440 to Spain.”
The Herberts, who live in Hornchurch and have five adult children between them, bought their Spanish home through Costa Blanca estate agency HomeEspaña, paying €87,000 for it, plus fees and taxes. Located in Playa Flamenca, the property includes three bedrooms, two bathrooms, two balconies, a front terrace and small yard. The couple will use it as a holiday home for the next eight years, visiting three to four times a year, after which their plan is to retire there.
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For more information on buying overseas property successfully, download the Overseas Guides Company’s free France Buying Guide, Spain Buying Guide, Italy Buying Guide, Portugal Buying Guide or USA Buying Guide – and start receiving free news updates by email.
If you are considering an overseas property purchase in 2015, whether for lifestyle or investment, opening a no-obligation account with FCA-authorised Smart Currency Exchange will enable you to benefit from their competitive exchange rates and specialist currency knowledge, ultimately saving you money and time. For more information, download Smart Currency Exchange’s free report or visit the Currency Zone.