This was the tenth of 12 proposed measures which he highlighted was against the backdrop of a 48% leap in houses prices over the past decade across Europe.

It would be aimed at limiting property purchases by “non-resident non-EU foreigners. The government will increase the tax burden on such purchases, up to 100% of the property’s value”.

He was speaking at the forum ‘Housing, the Fifth Pillar of the Welfare State‘, alongside the senior leadership of his government, representatives from the construction sector, and social stakeholders, to present the main points of a plan which he said was inspired by models from countries like Denmark and Canada.

“The west faces a decisive challenge: to not become a society divided into two classes, the rich landlords and poor tenants”, he said.

This was “an unprecedented measure in our country’s history, already applied in other democracies like Denmark and Canada, and highly appropriate given the housing emergency situation,” Sánchez said, adding that in 2023, non-residents bought 27,000 properties in Spain, primarily for speculation.

But Sánchez did not detail how the tax would work or timeline for parliamentary approval, while the government said the proposal would be finalised “after careful study”.

In early reaction, Mauro De Santis Bo, financial adviser at GSB Wealth said: “With years of experience helping Britons relocate to Spain, we know how popular it is for its lifestyle and climate. However, Spain’s proposed 100% tax on property purchases by non-EU buyers could shift interest toward alternatives like Portugal, Cyprus, or Greece.

“Also, in response to the Prime Minister’s claim that people are buying for ‘mainly for speculation’, this has not been my experience, instead it’s about creating a home or enjoying retirement. We’ll be monitoring these changes closely to help clients make informed decisions and consider alternative destinations if needed.”

The Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) said in a statement on 9 October that the framework was introduced in 2019 with the aim to promote an EU securitisation market that finances the economy without creating risks to financial stability.

“Securitisation can play a crucial role in the development of the capital markets union and the savings and investment union By freeing up balance sheets, banks and non-bank lenders can increase lending to households and corporates, while also providing another asset for investors to invest in”, it said.

The Eurogroup statement of March 2024 and the European Council conclusions in April 2024 on the capital markets union highlighted the need to relaunch the European securitisation market.

This consultation aims to seek feedback from relevant stakeholders on the current EU securitisation framework and identify potential areas for improvement.

The deadline for responding to the consultation is 4 December 2024 midnight Brussels time.

In May 2024, ESMA finalized its long-awaited guidelines on the use of ESG or sustainability-related terms in fund names, commonly referred to as its fund “names rule”. Following the translation of these guidelines this week, funds now have three months to comply with the guidelines, with an additional six months granted to those funds already authorized in the EU.

We support the spirit of these guidelines as they seek to ensure funds “do what they say on the tin” and should support transparency towards retail investors, by aligning fund names with the companies they invest in.

We were nevertheless aware of certain segments of the market hoping to delay the translations in anticipation of further clarifications from ESMA on what implementing these guidelines will mean in practice. We also expect there may be some teething issues as these guidelines come into force, with many funds having to either divest from certain companies or industries, amend the name of their products, or otherwise risk falling short of the guidelines’ expectations.

For example, on exclusions, Clarity AI’s research has demonstrated that – for funds using sustainability, environmental and impact-related terminology in their names – adhering to the Paris-aligned benchmark (PaB) exclusionary criteria, as per the guidelines, may be difficult. We found approximately half of these funds are invested in companies who breach these exclusions, including those exposed to fossil fuels, tobacco, controversial weapons and breaches of the UN Global Compact or OECD Guidelines for Multinational Enterprises.

Ensuring that funds are not exposed to such breaches requires rigorous data collection and ongoing monitoring that will necessitate extra resources for many in the market.

Further complexity arises in instances where asset managers are investing in fixed income instruments, such as green bonds, instead of general equity. ESMA has confirmed that making such investments does not circumvent the requirement for the issuing company to adhere to the Paris-aligned benchmark exclusionary criteria.

This may, however, cause issues for funds who have invested in instruments whose use of proceeds are intended for sustainability purposes, but whose issuer may still be at the beginning of their transition journey and exposed to legacy business lines that breach PaB exclusionary criteria.

Even after applying the exclusionary criteria, some asset managers may be unsure how to evidence their adherence to the 80% threshold related to the fund’s sustainability objective or promotion of environmental or social characteristics. Many may need to seek new data sources to ensure that their sustainability claims stand up to the extra scrutiny these guidelines will bring.

We also expect further challenges, including supervising the guidelines – where different supervisors may take differing views on whether similar terms are captured by the guidelines – and ensuring interoperability, particularly concerning the FCA’s SDR rules on naming and marketing.

In short, while these guidelines provide a basis for ensuring that the EU’s asset management industry evidences any claims it makes about the sustainability of products marketed to retail investors, we expect the road to compliance to be bumpy. Funds may need to change names, divest assets or otherwise run the risk that their investment strategy falls short of supervisory expectations.

By Tom Willman, Regulatory Lead, Clarity AI

On 27 June 2023, UK chancellor of the exchequer Jeremy Hunt signed an agreement financial services cooperation with EU commissioner Mairead McGuinness to establish a “constructive, mutually beneficial relationship between the UK and the EU in financial services”.

The Memorandum of Understanding (MoU) signifies an important step in UK/EU relations post-Brexit. The agreement will establish an ongoing forum for the UK and the EU to discuss voluntary regulatory cooperation on financial services issues.

Hunt said: “The UK and EU’s financial markets are deeply interconnected and building a constructive, voluntary relationship is of mutual benefit to us both.

“In the UK, our financial services sector is a true British success story. Together with the related professional services sector, it was worth £275bn ($348bn, €319bn) last year, making up an estimated 12% of the British economy.

“This agreement with our European partners as sovereign equals builds on our arrangements with the US, Japan and Singapore, helping to support the sector’s role as a global financial services hub.”

Expat advice market reaction

The concept of passporting was a big loss for the expat advice market in Europe – and Brexit itself left many expats asking questions no one knew the answers to.

However, do firms believe the MoU will be a good thing for cross-border advice?

David Vacani, principal at Beacon Global Wealth Management, said: “Any increase in cooperation between the UK and EU is to be welcomed. Hopefully we can build on this new framework and get agreement in many other areas of financial services. We will have to wait and see what impact this voluntary arrangement has on UK expats, but it is a positive move forward.”

Lee Eldridge, group chief executive at Chase Buchanan, said: “Aligned regulation can almost always be a positive for investors, this agreement between the UK and EU provides an extra step to help the financial services sector in the UK return to the alignment we witnessed pre-Brexit.

“The previous cross-border understanding and regulatory cooperation could be advantageous for investors and UK expats living in the EU and will provide assurance for the UK financial sector, which is the stalwart of the British economy.”

John Westwood, group chairman at Blacktower, said: “The signed deal between the UK and the EU on financial services cooperation is expected to have a significant impact for both the UK and UK expats. The agreement signifies a constructive and mutually beneficial relationship between the UK and the EU in the financial services sector. Given the deep interconnection between their financial markets, establishing cooperation is in the best interest of both parties.

“It is likely to have a positive impact on the UK’s financial services industry, ensuring continued access to EU markets and fostering stability and growth. Additionally, UK expats who work in the financial services sector may benefit from the increased cooperation and coordination between the UK and the EU, which could lead to enhanced opportunities and protections for them.”

Jason Porter, business development director at Blevins Franks, added: “While the MoU is a welcome commitment from both sides and should result in closer ties between both sides, we shouldn’t kid ourselves and think ‘passporting’ is on the agenda.

“It does not even mean the 40-odd different areas of equivalence the UK could negotiate with the EU are formally under discussion. It does not create a framework for UK investment managers and financial advisers operating in the EU and vice versa.”

Then they had to get their heads round a whole new set of immigration rules, before they could even start a new life in Europe.

But according to Euronews, rules around long-term residency and moving around the bloc could be simpler in 2024.

The EU reportedly wants to make it easier for non-EU residents to move around the bloc in the future. It is also aiming to cut the time you need to live in a member state before gaining long-term residence status to three from five years.

The report said that the European Parliament have made their position clear but now EU governments will need to agree and negotiate to finalise the changes to the law. It is hoped that the new legislation will be completed by February 2024 – before the next European Parliament elections.

David Vacani, principal at Beacon Global Wealth Management, said: “Any way of simplifying the complicated and confusing laws around EU residency is very much to be welcomed. The ability to move around EU states after a shorter time period for a non- EU resident would be a great step forward in recognising their contribution to the EU.”

Jason Porter, business development director at Blevins Franks, added: “These proposed changes will be gratefully received and provide reassurance that we are still very welcome on the other side of the channel. The fact the permit processing time for the proposed single EU residency permit is restricted to 90 days, and the three-year permanent resident permit to 60 days, if enforced, should mean much quicker turnaround times.”

UK expats

After Brexit eventually happened, the UK nationals became non-EU residents – which made moving to the country a little more difficult.

But this could be a good sign for potential expats looking to move to Spain or Portugal.

Porter said: “Most British expatriates who are retiring to Europe choose where they want to live more on the basis of where they are attracted to rather than which is the best financially or from the perspective of tax.

“But these rules will allow those that require it greater flexibility in moving from one member state to another perhaps to plan for certain events such as a business sale.

“The fact this could include being able to leave the EU for up to 24 consecutive months without losing their status will also be attractive.”

Lee Eldridge, group chief executive of Chase Buchanan, said: “This change, making it easier to move to a European Union country, is welcome news. Particularly since Brexit and the end of freedom of movement. However, when someone decides to move to a new country; as well as where they live and possibly work, there are lots of financial considerations to make such as transferring their pension, taxes and which country to make tax payments in and inheritance planning.

However, a good international finance adviser with UK and local tax and pensions knowledge can make the move easier for them. Professional financial advice should always be sought.”