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How will post-Brexit banking changes affect British people in Italy?

As some UK banks warn they are closing down accounts for British customers living in the EU, we look at which types of accounts are affected, and what this means for pensions and rental property income.

How will post-Brexit banking changes affect British people in Italy?
Decisions made by UK banks could have serious consequences for British people living abroad. Photo: AFPPhoto: AFP

As the end of the Brexit transition period looms, the UK has so far failed to negotiate access to the European passporting scheme for banks. Here's what that means if you are British and live in Italy.

Over the weekend it was reported that, with just three months to go until the Brexit transition period ends, the UK has so far not managed to negotiate a continuation of EU banking rules – known as passporting.

Whil many people living abroad just keep a UK account out of habit, maybe to use as spending money when they come back to visit the UK, for others it could have more serious consequences – for example those using their UK account for regular income – in particular for pensions to be paid into or income from UK rental property.

Here we take a closer look at who may be affected.

Tell us: Are you affected by the closure of a UK bank account?

Is it all banks?

No, it's important to be clear that there is no blanket closure of accounts for all Brits living abroad, it depends on who you bank with and the type of account you have.

And it's not all account types, either.  Again, this depends on the type of account you have, with straightforward current/checking accounts less likely to be closed.

Why is this happening?

.Essentially, applying for new licences will create a lot more admin for banks.

Banks already have to do this for many non-EU countries so clearly it is possible to do. But it seems that some banks are deciding that it's not worth the hassle of doing this for all 27 countries in the EU separately, especially ones where they only have a few customers.

As a country that has a realtively small number of British people living here (estimates vary from 150,000 to 300,000) it's not certain whether banks will decide that it is worth their while to obtain a licence for Italy – as well as other EU countries – after Brexit.

Is it only if I use my Italian address?

Many British people living abroad use a 'care of' address in the UK for their banking, for example the address of a family member who will forward on all correspondence they receive.

At this stage it seems that only people who have officially changed their address to an Italian one are receiving letters from their bank.

Photo: AFP

Which banks are affected?

The Local has asked all the major names in UK banking what their policy is for customers in Italy, here are the responses we have received so far. We will update this page as soon as we receive more responses.

Santander – the Spanish banking giant said it was keeping the situation under constant review but told The Local: “We have no current plans to close any of our retail [personal banking] or corporate accounts.”

Lloyds – the bank is understood to be closing business accounts – not personal accounts – of customers living in the Netherlands, Germany, Ireland, Italy and Portugal. However the bank said it had no current plans to discontinue any services for customers in Italy.

A spokesman said: “We have written to a small number of customers living in affected EU countries to let them know that due to the UK’s exit from the EU, regrettably we will no longer be able to provide them with some UK-based banking services. We want to keep customers informed and offer advice on next steps.”

Barclaycard – Barclaycard is separate to Barclays bank and it is understood that Barclays current accounts are not affected, although the company has not commented on the record so far.

Nationwide – a spokesman said no decisions had yet been taken on accounts held by UK nationals living in the EU. They told The Local: “We are closely monitoring all developments regarding Brexit and are prepared to deal with any outcome.

“Part of this preparedness includes reviewing the ongoing availability of products and services for those members who are resident in the European Union and the European Economic Area.

“Because the outcome of Brexit is not yet clear and the position continues to evolve, there is currently no certainty as to any actions we will be required to take. Regrettably we cannot provide any further detail on the impact on specific products and transactions at this point. However, we will communicate with members as soon as possible about any necessary changes that impact them.”

How could this affect pensions?

“State pensions can be paid overseas, so you can get your pension paid directly into your European account in euros, but not all private pensions have the capability to do this,”  international money management specialist Jason Porter tells The Local.

“It's mainly the smaller pension funds, I'd say 90 percent of private pensions can pay to overseas, but not all can so if you don't have a UK account this could be a problem.”

Photo: AFP

What about income from rental properties?

Many people living abroad rent out their old home in the UK, and while for some this is an investment, for others it can form the bulk of their income, Porter explains.

“If your rent money cannot be paid into a UK account then you have two options – have the money paid into your European account and pay international transfer costs each month – these are a lot less than they used to be as everything becomes computerised, but would still add up over time. Or you could hire a UK management agent who would collect and transfer the money for you – but they will charge you a fee to do this, often 10 percent or more of your monthly rental income.

What are your options if you're affected?

Most British people living in the EU will already have a bank account in the country where they live. If you do, Porter explains, “you need to transfer all the payments, direct debits etc that you can to this account.”

“It's important to point out that this is happening quickly – account closures are likely to take place in November and some people get just a couple of weeks notice.”

“You need to go back through your bank statements for the last few months and make a note of all payments so you can transfer them to your EU account and avoid missing payments and getting hit with charges when your UK account closes.”

READ ALSO: Why UK bank account closures could hit the most vulnerable Britons living in France

For those who cannot use their European account for everything, there are international accounts and 'expat' accounts, but these often require a minimum deposit level, he says.

“Similarly there are 'international' credit cards to replace something like a Barclaycard, but again these are often limited to high net worth accounts.”

“One option that could be worth exploring is Isle of Man accounts – these are sterling accounts but often operate in Europe so already have the European licences that they need.”

 

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PROPERTY

EXPLAINED: Will the latest change solve problems with Italy’s superbonus?

With lines of credit blocked and renovation work delayed, Italy’s political parties have agreed on further changes to the ‘superbonus 110’. Will this be enough to resolve issues for homeowners?

EXPLAINED: Will the latest change solve problems with Italy’s superbonus?

After weeks of intense back-and-forth, parties have finally agreed on the latest amendment to Italy’s famed building superbonus, the government’s financial incentive offering a rebate of up to 110 percent of the cost of works increasing a property’s energy efficiency or reducing its seismic vulnerability.

The scheme has proven incredibly popular over the two years since its introduction back in May 2020. But access has often been hindered by technical issues, with a number of authoritative political figures, not least outgoing premier Mario Draghi, criticising the bonus for its structural complexity. 

READ ALSO: Italy’s building superbonus: How will it change after the election?

A major issue concerns the credit transfer system, with many banks across the country recently refusing to buy or lend credit, and billions of euros’ worth of fraudulent claims – causing many financial operations, and therefore building work, to be frozen altogether.

These setbacks have left many homeowners concerned about whether they’ll be able to finish their renovation projects in time and even caused some to abandon their plans

Furthermore, as many as 40,000 construction businesses are said to be currently at risk of bankruptcy due to credit transfer blockages. 

Worker standing on scaffolding in Spain.

The latest government measure seeks to reopen lines of credit and save as many as 40,000 businesses from bankruptcy. Photo by Pau BARRENA / AFP

The latest amendment, part of the government’s new cost-of-living-crisis aid package (the decreto aiuti bis), is intended to unclog existing lines of credit and save businesses from folding.

The change was approved by the Italian Senate on Tuesday, with the go-ahead from the Lower House now being the last remaining step before the changes are made into law – deputies are expected to greenlight the amendment on Thursday.

READ ALSO: Italy’s building superbonus: What’s the problem with credit transfers?

So what does the latest amendment entail and, more importantly, how is it expected to affect homeowners using the bonus?

The building scheme’s latest amendment is set to remove joint and several liability (‘responsabilità in solido’ in Italian) for all parties involved in the credit transfer chain, retaining the provision only for cases of “wilful misconduct or gross negligence”.

In other words, should cases of insolvency occur, the parties involved in the transfer of credit will no longer be collectively liable to pay the amount owed unless fraud or serious neglect can be proved. 

Naturally, the measure’s primary objective is to allow for easier circulation of credit in order to restart financial operations. 

It isn’t yet clear however whether the amendment will ultimately save those businesses whose credit had been previously blocked and allow homeowners to complete construction works by the given deadlines. 

Construction worker wiping sweat off his brow.

As things stand, 30 percent of renovation works on single-family homes must be completed by September 30th, 2022. Photo by Valentine CHAPUIS / AFP

On this note, it is worth mentioning that there was no provision made under the amendment to extend timeframes for claiming the bonus.

As things stand, those renovating single-family homes still need to complete 30 percent of renovation works by September 30th and must achieve 100-percent completion by December 31st in order to benefit from the funds.

READ ALSO: Nine things we’ve learned about claiming Italy’s building ‘superbonus’

Those renovating certain other types of buildings, or those in areas with higher seismic risk, have until 2025 to claim.

Looming deadlines notwithstanding, both the Italian Banking Association (Associazione Bancaria Italiana, ABI) and the National Constructors Association (Associazione Nazionale Costruttori Edili, ANCE) have expressed cautious satisfaction over the latest amendment, with the former praising the measure as a “step forward”.

Five Star Movement leader Giuseppe Conte, who was responsible for introducing the bonus while prime minister in 2020, commended the amendment, saying that a solution had finally been found for the “businesses, workers and families who had been forgotten by all”. 

Others aren’t sure however that the latest update will solve the issues for good. 

Notably, the president of the National Council of Surveyors (CNG), Maurizio Savincelli, said the amendment would not fully resolve the credit transfer blockage as “banks will likely wait for new measures, including memos from the Italian Revenue Agency” before they reopen lines of credit.

Please note that The Local cannot advise on individual cases. For more information on claiming Italy’s building bonuses, homeowners are advised to consult a qualified Italian building surveyor or financial advisor.

See more in our Italian property section.

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