A guide to Overseas and International property
International "Overseas" property guide - We provide the definitive guide to buying a property overseas whether as a property investment or holiday home.
When the time comes for you to take time out and relax, a property abroad can be the ultimate luxury, we have put some information together to make finding a property overseas a realistic ambition...
So the time has come in your life where you wish to buy property abroad, however you do not yet know how to go about the process. We have done some research and have listed here some information that may be of interest and answer a few of the questions you have. It is true that as well as a great luxury item you can enjoy year round, an overseas property can also be a wise investment if thought about carefully. However, we must also inform you of the possible pitfalls involved when buying an overseas property as the dream can quickly turn into a nightmare. We have tried here to provide you with advice and guidance based on recommendations from many sources.
As we have said, there are many advantages to owning an overseas property, like year round holidays, the opportunity to treat family and friends to a "free" visit to your new home abroad: however there are also many disadvantages, pitfalls and traps, not to mention the many characters and the untrustworthy and over-enthusiastic sales agents that are often involved in the overseas property business.
We advise you really think carefully before you make any decision and make sure you arm yourself with a wealth of information and advice from several independent sources; at the very least you should do your research on the area you are looking to buy in, try to learn at least the basics of the local language, talk to the locals and try to find out what the area is like year round. After all, if you only visit the area you buy in for a week before the transaction is completed how can you possibly know what happens the rest of the time? You must also be honest as to why you want one. Is it for your yourself to use as a holiday home? Or are you really looking for an investment property? Answer these questions honestly before you take your property search any further.
Advantages to owning an overseas property
- You get to spend holidays in your own property, with your own posessions
- You can leave some personal belongings there so it becomes a real home-from-home experiance
- You really get to know the area, the locals, meet new friend and even learn a language
- The value of your overseas property can increase and become a true investment for you and your family
- You can get an income by letting your overseas property when you are not using it
- Your friends and family can coame to stay
Disadvantages to owning an overseas property
- It is worth remembering you will be spending all your holidays in the same place
- They are not maintenance free - you will be responsible for the upkeep of the property
- The cost of your overseas property can become a burden if not properly budgeted
- The legal fees, taxes and commission to buy and sell overseas property can be high (expect 10% of the property's value)
- Be very careful who you buy from, especially if you buy off-plan as there have been many cases where off plan sites have crumbled and investments lost
- Other people staying in your property can cause damage
Some tips to remember
1. Keep your goals on motives clear
Before you start looking for a property, ask yourself the following questions:
- How often do you want to use the property?
- Will your family realistically be visiting often to warrant the extra square metres?
- How long should maximum travel times be?
- How much are return flights and other travel costs?
- Is there a limit to lengths of stay in your country of choice?
- Concentrate on its purpose - weekend retreat, summer holiday home, permanent or retirement home, buy-to-let investment?
- How do you wish to spend your time at the property and how far away are your necessary amenities?
- How important is it to be able to speak the language?
- Are there any dangers, such as political unrest, in the country?
- Do you want it to be managed in your absence and rented out? Who will be doing this?
- Know your budget and stick to it
2. Do your own research
local knowledge and information is power. Be sure the location suits the needs you have outlined. It is important to spend time there to check that the information the salesmen gives you is correct. Check out transport links and local facilities, both present and planned.
If you will be relying on a rental market or even a resale, go to other agents as a potential buyer or renter and ask about what is currently available in the area and for what price. If there is plenty of similar accommodation available, is there an oversupply or simply no demand? What makes your property stand out from the rest?
If purchasing an off-plan property, you will often be selecting your unit from a plan, a model and at best, a show home. Make sure the room sizes you get are the same as those you see in the show home and if they are not, find out the exact difference. Make sure you fully understand what you will be getting and that it is well documented in the contract that you sign.
3. Choose a reliable real estate agent
A reliable agent is often found word of mouth - ask around. Research the developers credentials by asking independent local lawyers about them as they are likely to know which developers have a reputation for problems. An internet search could also give you plenty of information on the developers record. find out if they have they built other developments in the area and what do the purchasers have to say about them.
4. Do your sums
Don’t get carried away buying a property you cannot afford. - sick to your budget! Remember to add on approximately 15% to the asking price to cover taxes, fees and other costs you may not have accounted for. Make sure that at the stage of searching for your property abroad, you have enough money available for a deposit payment in order to secure it immediately, and also factor in flight costs and the number of potential trips you may need to make..
If you are to rent out your property, calculate what rent might be achievable over the year, both in peak and off-season, to cover your mortgage payments if necassary. Again, if you have local people you are freindly with ask informly what rent they acheive.
5. Consider all finance options
Many UK banks offer mortgages for overseas property purchase but it is highly advisable to check out local mortgage facilities in your chosen country as interest rates can be favourable compared to your UK bank. A Euro mortgage will offer lower interest rates, but may expose you to exchange rate fluctuations and this will need to be considered for your chosen country. The are also many british builders developing homes overseas, they sometimes offer excellent rates for buying off-plan.Some developers will offer pre-arranged mortgages as part of the off-plan deal. Remember you are not obliged to take this mortgage option, although you will probably save some arrangement costs if you do so. a rule of thumb is to always obtain competitive quotes from other mortgage suppliers before simply taking the the first option.
6. Always use an independent lawyer
A good, English speaking lawyer in the country in which you invest is invaluable and will deal with all legal requirements and paperwork for you. Never sign any documents that have not been checked carefully by your lawyer, who will have made all the necessary checks on the status of the property. The British Consulate in the region you are buying in will be able to supply you with a list of qualified English speaking lawyers in the area. Be sure to clarify their approximate fees before contracting their services.
7. Taxes need paying
Taxes will always need to be paid on your property purchase. Find out your tax liabilities in the country you purchase in, how you should pay them and how you intend to keep up to date with payments. When buying off-plan you will often need to pay VAT at every stage payment and stamp duty upon signing the deeds.
8. Take out insurance
Every property needs insurance for its intended use. If you let your property, make sure it is adequately covered for any damage caused by tenants. Holiday homes left vacant for long periods of time will often also need a special type of cover.
9. Save money in currency exchange
Be aware that with a purchase as large as a property, you could save thousands simply by using a professional currency exchange broker to make your money transfer on the day of completion. With exchange rate fluctuations often as high as 10%, by booking a favourable exchange rate in advance, you could save yourself as much as 1,000 euros on a 100,000 euro purchase!