Homeowners who are selling can take advantage of the new favourable tax regime, while buyers have several ways to protect themselves. Here we offer some tips.

Is it a good time to sell?

Liam Bailey at estate agent Knight Frank said: “If you were thinking of selling anyway, you may as well take advantage of the strong euro. However, we expect the European property market to continue to make steady gains in the long term.”

How do the tax changes affect me?

The tax on selling second homes has gone down from between 24% and 40% for a higher-rate taxpayer to 18%. You may be liable for tax in the foreign country, after which you must pay any additional tax due in Britain to make it add up to 18%.

In Spain, for example, capital gains tax (CGT) is 18%, so you will not have to pay any tax in the UK. Before this month, however, you would have had to pay at least another 6% to make it up to 24%.

In France, the standard tax is at 16%, so if you sold you would have to pay an additional 2% tax in Britain, compared with an additional 8% before April 6.

For example, if you bought in 2000 for €180,000, and sold for €260,000 today, you would pay CGT in France on €80,000, which would be €12,800. You would then need to pay another €1,600 in the UK.

How does equity release work?

If you already own a property on the Continent, you could remortgage on a cheaper euro deal and release equity to pay for a larger deposit on your UK home and secure a better deal.

If you bought a property in Spain for say €200,000 in cash five years ago and it is now worth €300,000, you could release up to 70% of its value at a rate of 4.4% through specialist broker Assetz.

If you were coming off a cheap fixed rate in the UK, on a mortgage of £200,000, you could be facing monthly bills of £1,409 if you remortgaged with Bristol & West, for example, with a rate of 5.79%.

If instead you released €150,000 from your French home through Assetz, at current exchange rates this would give you £120,968 cash and cost you £759 a month.

If you used this money to reduce your UK mortgage to £79,032, your monthly bill would be £557. The total mortgage bill would therefore be £1,316, giving you an annual saving of £1,476.

Will I still be able to get a mortgage?

Lenders are tightening their criteria, but if you have a big deposit and use a broker you should still be able to get a decent deal.

If you are worried about the euro strengthening, which will increase the deposit you have to put down, you can fix the exchange rate using a forward contract letting you buy the currency and pay for it later.

If you need a 10% deposit of €20,000 to secure a property, you can fix at today’s rate of €1.24 to the pound. This would cost you £16,129.

If sterling fell to say €1.20 by the time you needed to pay the deposit, you would have had to pay £16,666. However, as you had fixed beforehand, you would save yourself £537.

You can fix a rate for up to two years. Bear in mind, though, that rates may start to change in your favour, in which case you would not benefit.

Can I negotiate?

If a British vendor put a property up for sale last October for €200,000, they would have expected to receive about £137,931. If the vendor managed to sell this month, they would receive a windfall of £23,360 assuming they are taking the money back to Britain.

Mark Bodega, from HiFX said: “Buyers should remember that a drop in demand will mean vendors are also feeling the pinch. This leaves buyers in a position to negotiate prices.”

In order to secure the deal, therefore, buyers could point out that the seller can afford to drop the price to €171,034 and still receive £137,931.