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Brits cashing in on overseas property boom

The number of British holiday home owners downsizing or selling their place in the sun and repatriating money to the UK has doubled in the last year according to currency specialists HiFX...

This year has seen the most dramatic increase in the numbers of people bringing money back to the UK as the first wave of the original baby boomers who bought overseas are now choosing to downsize their foreign properties as they get older.

Mark Bodega from HiFX commented: “The overseas property market really took off about 20 years ago when the first tranche of Brits started looking for their dream home in the sun; particularly in France and Spain.  According to our figures it now seems that these people are either downsizing to smaller properties or selling their holiday homes now that their families have grown up and are sending money home; only to be replaced by a whole new generation of buyers.”

HiFX, which manages the transfer of over £100 million back to the UK each year, has seen a 100% increase in the number of Euro back to Sterling transactions in the last year. The largest numbers of people are sending money back from Spain and France and the average age of those repatriating strongly points towards downsizers.

One in five of those repatriating money from France are aged over 65 and 77% of repatriators are aged 55 or above. In Spain 67% of Brits sending Euros back to the UK are aged over 55.

Bodega continued: “France and Spain were the first overseas property markets to truly mature and people buying there have matured with them – this is the first time that we've really seen the impact of an ageing holiday home owning population.“

Bodega explained: “Over the last 10 years, the Western world has enjoyed the biggest property boom in its history.  In fact, over the last decade house prices have boomed in almost every developed market with the exception of Germany and Japan.  The Economist Research Unit calculates that the value of property in developed economies has increased by $30 trillion over the last five years, hitting a new total of $70 trillion.  The increase is equivalent to a year's GDP for all the countries combined.  House prices in France, Spain, the US and Italy have for example, all risen by more than 50%.”

“Whilst this boom has created a whole generation of potential property investors, it seems that those Brits who bought 20 years ago are now selling up, and choosing to purchase smaller properties.  In Spain, for example, Brits tend to move more inland away from the busy Costas.”

Avoiding the potential pitfalls of currency exchange

However to make the most of appreciation of assets when repatriating it is essential that Brits consider using a currency exchange specialist rather than their bank to send money back to the UK. Currency specialists such as HiFX charge on average 4% less on foreign exchange transactions than high street banks.  On an average transaction size of €200,000 this can mean losing out on as much as nearly £5,000 when they return to the UK.

Furthermore, banks subject Brits to a number of additional bank charges and commission fees when transferring funds. Some overseas banks can charge as much as 2% of the amount transferred in commission plus a transfer charge; usually £25 for each and every transfer. UK banks are also guilty of charging a receiving fee, typically 0.5% of the amount transferred. Currency specialists like HiFX will transfer your money to the UK completely free of charge.

Hide table

Bank charges when repatriating income vs. currency specialist
	Bank	HiFX
Amount transferred back to the UK	€200,000	€200,000
Exchange rate	1.5085 = £132,582.03	1.4899 =£134,237.19
Foreign bank commission	2% of £132,582.03 = £2,651.64	0%
Transfer fee	£25	£0
Receiving fee	0.5% of £132,582.03 = £662.91	0%
Total repatriated	£129,267.48	£134,237.19 Difference = £4,969.71

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As well as falling victim to inflated exchange rates and bank transfer fees Brits repatriating money are also at the mercy of currency fluctuation if they are unable to transfer all their assets in one go. A good currency specialist will provide clients with all the help and expert advice needed to optimize money transfers, even over time.  

Bodega's advice is simple: “When repatriating your wealth - don't let the banks cash in!  Shop around and compare the rates given by your bank with an established currency broker”