Global markets have started 2016 on the back foot and our Chancellor has warned of a ‘dangerous cocktail’ of economic risks for the UK. Here are five key considerations for Brits planning a foreign property purchase this year.

EU Referendum
The prospect of an EU Referendum – and the chances of a possible ‘Brexit’ – this year is the most talked about hot potato right now, despite the likelihood of Cameron agreeing a new deal in favour of remaining an EU Member before the nation votes. This makes the next EU Summit in February particularly important, since what Cameron gets out of it might decide whether we go to the polls in June, as many expect, or if the Referendum will be delayed until 2017. “For property buyers abroad, the ongoing uncertainty could be a contributing factor to the euro’s strength and the pound’s weak start at the beginning of the year,” said Elaine Ferguson, Head of the Resource Centre at OverseasGuidesCompany.com. “As more news on the Referendum unfolds, we expect more volatility in the exchange rate.”

Rate rises
The other anticipated decision in 2016 is a hike in the UK interest rates, following in the footsteps of the US Federal Reserve last month, who put up the US rates. While any rises would be gradual, people remortgaging their properties in the near future may well find higher mortgage costs as a result, and should ask themselves whether higher outgoings in the UK would make owning a second home too expensive. An interest rate rise could cause sterling to strengthen against the euro, but, as we’ve seen before, other factors taking place in the economic and political sphere would also have an effect.

European monetary policy
2016 is also a bit of an unknown in terms of European monetary policy. Last month, the European Central Bank (ECB) announced a six-month extension to the bank’s Quantitative Easing (QE) programme, which surprised many financial markets, as the expectation was for the ECB to announce an increase in the amount of QE funding, rather than just a relatively brief extension. After this action took markets by surprise, future decisions by the ECB have become increasingly difficult to forecast, making the exchange rate even more volatile, and affecting anyone transferring money between euro and sterling accounts.

US Presidential Election
Later in the year, the sterling/US dollar rate could vary considerably as we get closer to election time in the USA – a consideration for property buyers in Florida and other poplar US destinations. Monetary policy and the ability to maintain the growth of the world’s largest economy will be an important focus for both the Republican and Democrat candidates’ campaigns. The prospect of a new Republican president could cause ripples in the world’s financial markets, let alone unsettle the dollar, which has had a strong start to 2016 against major currencies, including the pound.

New pension rules
For those with overseas retirement plans, 2016 is the year that the new pension rules kick in. From April, those qualifying for a maximum State pension will need 35 years’ worth of National Insurance contributions – something to bear in mind before planning your relocation to sunnier climes!

More info
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.