Regardless if you want to buy a home abroad to retire to, as a holiday home or too rent out to make some extra cash, you have to remember that countries have different rules and regulations that need to be followed. Finding the right property in the location you want can be a challenge, even if you are resident in an adopted country.
Some experts believe that buying to rent is the key to success while others look at how cheap the property market is in some places, and how much less expensive the day to day costs are if you decide you want to make a permanent move. Property prices abroad have made a better recovery after the last recession than in the UK and it is why many people are heading for places such as Spain and Portugal.
Whatever the reason for considering buying property abroad, you need to research the area you of thinking of first.
The first thing you should do is find a professional company to assist you. They should have a good reputation and a proven track record so that you can be sure that your interests are considered and the new property purchase is hassle-free. Look at reviews and see how good their after sales service is, as in a new country you may need their help more after the purchase than before you have signed the dotted line.
It does not matter if you are looking to buy a terrace house or a villa in the suburbs, the same local knowledge will be needed to ensure that your purchase does not fall foul of any laws of that country.
You will also need to know about schools in the area, growth forecasts. Crime rates, job opportunities, amenities, infrastructure, transport and any future developments that may have been planned. This is where a good professional will come into their own, as they should know all this local knowledge, and if they don’t will at least know where to find the answers. Many lawyers abroad will let you have one consultation free of charge, so that you can discuss your situation with them.
You should perhaps speak with local shopkeepers or bar keepers as well. They will be amongst the best people to let you know more about the noise levels, parking and rubbish collection. Knowing these details before you make a final decision can stop you from making a mistake with the location you buy a property in.
Put Things In order
Before you visit another country, whether that is to view a property or to make a move there, you have to make sure all your own paperwork is in order. Check that your passports are valid, and that there is plenty of time left for renewal, as many countries have a six month limit and will not let you travel is there if less than that time left.
Your right to free healthcare will vary from country to country and you should make sure you have at least 6 months private healthcare cover until you have that sorted.
If Spain is the country of your choice for instance, as soon as you arrive you will need to register your residency with the local authority and obtain an NIE number for each family member. Without this number, there are so many simple things you cannot do, such as buying a car or opening a Spanish bank account.
Be Aware Of Exchange Rates
The exchange rates between countries can make a big difference to the amount of currency you have. Back in 2009, just as an example, the exchange between the euro and the pound was 1.4, which meant that you got many more euros for each pound you exchanged. Since then the exchange rate has dropped dramatically, and now is more in the region of 1.1. A strong pound gives a better rate, and many expats all over the world are hoping to see the strength of the pound improve soon.
The UK is different from most other European countries in that it is the seller of the property that pays the estate agents fees. If you are buying abroad be aware that it is often the buyer that has to pay the agent, as it is seen as a finders fee. There will also be notary fees, search fees and registration fees to settle, and you may need quite a substantial sum on top of the purchase price of the property.
Fees and local taxes can differ greatly from authority to authority, even with the same country. Make sure you know how much you are going to have to pay on top, as otherwise, you could be in for a nasty shock.
Funding Your Purchase
It is not unusual for people to release capital from their UK property to help fund a purchase abroad, and then to raise a foreign mortgage for any shortfall. The regulations regarding property funding differ greatly from country to country and although a foreign mortgage may seem desirable, you have to be aware of any legality related to it.
Research your funding options carefully and never hand over money to anyone without the express consent of your lawyer.
Don’t Rush Or Be Pushed Into A Deal
Don’t rush or be pushed into any deal you are not sure about. Buying property abroad can be an exciting time, but you need to make sure you understand all the local taxes, costs and fees involved. The golden rule is that if there are any doubts in your mind, don’t buy. There are plenty of other properties you can view and you should wait until those doubts have disappeared before you commit yourself to anything.
Holiday Home Or Somewhere To Live?
There are different things to consider depending on the reason for the purchase of a property abroad. It is a mistake often made when people are buying somewhere to rent out as a holiday home, they still pick somewhere they would like to live. That is not so bad if the eventual aim is for it to become a permanent home.
If it is purely to be for holiday rentals though, the location is all-important. It should be in or very near to a resort with a beach and if it is within easy reach of the airport that is a bonus. Ideally, there would be shops, restaurants and bars within walking distance.
If it has any bonus features such as a pool or a hot tub, expect to pay more for it, but it will be easier to let.
When you are buying to rent out, keep the number of returns you can expect in mind. Remember that the holiday season is shorter than the off-season and although you might get a few letting at times like Christmas, most of the year it will be empty. You also need to consider maintaining the property. Who will clean it between lets? Who will deal with a leaking pipe or an electrical fault if you are in the UK? You could put it in the hands of an agent to get these things sorted or arrange for someone local to look after the property when you are not around.
If you buy your property to rent in the Balearic Isles, for instance, you will also have to think about what has become known locally as the ‘tourist tax’. You have to be licensed to be allowed to rent a property out for less than 30 days at a time, and the amount the licence will cost you depends on how many beds the property has. Then each tourist that stays there has to pay a tax. This is collected by the property owner, or the hotel if that is where the tourists are staying and handed over to the relevant government department.
This tax will not actually cost you any money, as it is the visitors that have to pay it, but you need to make them aware that it will be added to the amount you are charging them for your holiday rental.
Think Of An Exit Strategy
Before you buy any property think about how easy it would be to sell if the need arose. If the property you are considering has been on the market for a couple of years, it obviously has reasons for not being a good seller. Think about the reasons people would want to rent or buy the property from you, but be realistic. Just because you have fallen in love with it does not mean someone else will.
If the reason it has been standing empty for so long is because it needs a facelift, reflect that in the price you offer, and never be afraid to offer less than is being asked for. In some countries bartering for goods of any sort is seen as normal, and that includes properties that are for sale.