Assetz® News - European insurance looks to boost investments

European insurance looks to boost investments

3rd November 2005 |

Property investors are looking set to benefit from the new European Health Insurance Card (EHIC), which will come into force on New Year's Day 2006.

It is thought that the card is likely to increase the number of people travelling between European countries, as it is intended to reduce the need for traditional forms of insurance. As such, it is anticipated that more people from the UK will be interested in buying property overseas, with Spain and France both likely targets.

Cheaper and easier access to travelling abroad should mean that people are more inclined to invest in overseas property, not only because they are more likely to use it themselves, but also because it will be easier for them to travel to view properties when considering an investment.

While the card does not cover every expense that comprehensive health insurance might, it does offer cheaper access to medical care for EU citizens wherever they are in the Union and Switzerland. Those behind the scheme believe it will encourage greater movement of people between countries through a standardised process that frees up citizens from the usual bureaucracy that is involved with inter-European travel.

Nowhere is the new card likely to have a greater impact than in the UK, due to the date of its introduction. Launched on January 1st 2006, it comes into force just a few months before the UK regulations on self-invested personal pensions (Sipps) become law.

Sipps are anticipated to foster a mini-boom in overseas property investments, by allowing people to invest a share of their pensions into property. Together with the new insurance rules, the number of Brits deciding it is just as affordable and straightforward to invest in a property in Europe as in the UK is set to rise markedly in the first half of 2006.

However, whether this expected boom can be sustained for more than a few months remains highly debatable.

Warnings are abound at present that the insurance cards may not prove to be the universal panaceas that many are hoping for. As already mentioned, they will not cover all eventualities and that means there is a danger that people will assume simply having a card is enough to look after them in every situation. As such, there is a threat that, as the limits of the EHIC scheme become apparent over the first summer of their use, many people will be put off, thereby making them less likely to look to the likes of Spain and France to invest.

Further, there have been a number of claims that the initial excitement surrounding Sipps will also translate into a hangover later in 2006, as people realise that they are far more restricted in their acquisitions than they had originally anticipated. Many Sipps schemes are unlikely to allow risky investments, meaning that there could be some disillusionment in the scheme.

Combined with a loss of confidence in the EHIC concept, a promising start to the year in the European property investment sector could be a false dawn unless more efforts are made to ensure people are fully aware of the implications of both Sipps and EHIC before they come into force.