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How to pay in £,$,¥ Pounds, Dollars, Francs, Yuan for my € Spanish property?
How to transfer my cash efficiently to Spain?
Many foreigners: British, Canadian, American, Swiss, Israeli, Moroccan, Chinese, Russian, have a different currency at home than the Euro
Long term, it is a very good diversification strategy to have some assets like real estate in another country, and furthermore in another currency, than in your home country.
Most of your assets are in your home country but:
- Economic cycle is different in Spain than in your home country
- Inflation is different in Spain than in your home country
- Monetary policies are different in Spain than in your home country
- Euro is used by more than 300m people in Europe
In order to help you check the long-term evolution of the main currencies against Euro, we have created a table with up to date Sterling, Ruble, Swedish Krona, Norwegian Krone, Dollar, Yuan and Shekel long-term evolution against Euro.
Check what happened to the Sterling after the Brexit vote in 2016. For sure, the British who bought some properties in Spain before the Brexit vote were pleased of that diversification.
If you are buying a property in Spain, in the short term, this means that you will have some currency volatility and some costs to cover if you are investing from outside the EU zone. Have a look at this paper on why currencies are volatile and how you can manage it.
In 2021, about 15% of the properties bought by foreigners in Spain are bought by the British.
After feeling the effect of the Brexit vote that happened on the 23rd of June 2016, British were less active on the Spanish real estate market and the pound lost 10% of its value vs the Euro, Check a chart on the Sterling evolution vs Euro here from Reuters. Of course, in 2020, activity was much lower due to Covid. But end of 2021, activity was really strong. Anyway, they remain by far the first nationality in terms of purchases done by any foreign country.
Foreigners are buying their property in Euro while having their home currency in their bank account.
What are the solutions for foreigners buying real estate in Euro with a different home currency?
- Ask their bank to exchange their home currency into euro and to transfer the funds to Spain
- Benefit from lower exchange rates thanks to the online platforms like Currencytransfer.com to convert their home currency into Euro and to transfer the funds to Spain
HowtobuyinSpain negotiated with them so that customers get a preferred rate for their property purchases.
What are the biggest advantages of the later?
- No commission system, much lower final cost than with a bank taking a commission for converting your currency into Euro AND for wiring the funds to Spain
- No hidden fees: the exchange rate includes a small margin form mid-bank rate
- Get the best price available at any time on the market: Many well-known FCA regulated currency providers compete for the flow
- Segregated account: your money is on a transit account bearing your name of a FCA regulated currency entity, it is never on the balance sheet of the platform itself.
- Transfer the correct amount in the local currency
- A dedicated relationship manager will help you out to manage your hedging the most efficiently as corporations do.
- You can instruct your Relationship Manager to wait for your precise exchange rate, (to gain more or to lose less)
- If your account is open, you can lock a rate once your account is open and transfer the money after
For all the foreigners looking to buy with non-Euro currencies as Sterling, American Dollar, Canadian Dollar, Shekel, Yuan, Ruble, Swedish Krona, Norwegian Krone and other Asian currencies,… when you are buying a property in Euros, you will need to exchange your currency into Euros and transfer the money to buy your property. Most of the time, this involves huge bank costs: up to 5% and mostly close to 3%.
Have a look at our partner based in London: Currencytransfer.com! We have negotiated with them the best service and the best rates for our customers. They take a very low commission rate and transfer the funds without any costs. You can create your account for free and lock your exchange rate into Euros even before wiring funds with your local currency. Have a look at their website and don’t forget to mention “HTBIS” in the field “Where did you hear about us?” to get the best rates we negotiated with them for the members of our network.
How does it work in practice?
- Open your free account on Currencytransfer.com and mention HTBIS code in the field “Where did you hear about us” to get the best rates,
- Lock an exchange rate between your local currency and Euro (or instruct a threshold exchange rate to be traded later)
- Wire the funds in your local currency on your segregated account in a top tier bank
- Receive the funds in Euro on your account in Spain, on the account of your lawyer,…
Let’s have a look at an example of trade with CurrencyTransfer.com
Let’s say you’re a British looking to purchase your second home in Spain at a cost of €200,000.
- STEP 1 You book a deal on the CurrencyTransfer platform to buy €200,000 at an exchange rate of €/£ 0.8800. This will cost you £176,000.
- STEP 2 Behind the scenes, your selected FCA payment provider buys €200,000 from one of its market counterparties to ensure they have funds available to honour your deal.
- STEP 3 The next step is to pay your winning payment provider the £176,000. You pay this directly to their Segregated Client Account. These are all secure, separate client accounts, held with stable, tier-1 banks (such as Barclays or RBS). This ensures that your money is safe from any business liabilities that the payment provider could be affected by.
- STEP 4 With your payment of £176,000 now safe in the payment provider’s Segregated Client Account, the broker now needs to pay the €200,000 that you booked across to your Spanish lawyer, notary or even your own Spanish account on the date that you have chosen.
- FINISH Once the payment has been delivered to the beneficiary the transaction is complete
As of January 2022, here is the business update from Currencytransfer
- Clients: 6,500+
- Currencies: 28
- Value of the currencies exchanged by the group since start: more than £3 bn
- *Average saving: £1,260
- Proud to have saved our clients over £15 million in hidden currency fees
Other uses? Transfer cash (minimum €10.000) to relatives everywhere around the world.
Looking for a lawyer, an architect, a property hunter in Spain? Ask us directly!
Senior analyst and strategist at HTBIS
Check the full HTBIS team here