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British second home owners win on currency exchange

The FX team at Close Treasury believes that the value of overseas property owned by British in the most popular locations rose by over £2.6 billion to £42 billion in the 18 months between July 2008 and December 2009. This is because the value of the Euro and the US Dollar against Sterling increased by 13.22% and 16% respectively during this period.

Between 2008 and 2009, property prices in France declined by around 6.63%, but because of the rise in the value of the Euro, if a Briton owning property there had sold-up and converted the money back into Sterling, they would have actually made money.  Close Treasury estimates that there are around 98,000 properties in France owned by British citizens, and between 2008 and 2009, the combined Sterling value of these would have increased by just over £1 billion, or £10,373 per property.

In Spain, where Close Treasury estimates 144,500 properties are owned by British citizens, property prices fell by around 8.35% between 2008 and 2009, but again because of the rise in value of the Euro against Sterling, they would have made a collective gain of £1.1 billion, or £7,668 per property.

Even in America where property prices fell by 14.95% between 2008 and 2009, the rise in the value of the Dollar against Sterling meant that a British Citizen who owns a property there saw its Sterling value increase on average by £1,752.

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The biggest winners were British citizens who own property in Italy, where a combination of rising property prices and a strong Euro meant that on average they saw the value of their properties there increase by £25,597 each.       

Mark Taylor of Close Treasury explains: ‘There has been a lot of volatility in the currency markets recently and many expect this to continue.  This is having a huge impact on the value of property owned by British people abroad and in many cases it is more influential than price changes in the local property markets.

‘With the currency markets being so volatile, around 40% of our FX clients are taking out forward contracts as opposed to paying spot prices.’

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