The overseas property market has always held a certain charm. Who hasn’t dreamed of owning a holiday villa in sunnier climes, or a cosy ski chalet nestled in the Alps? For a lucky few, that dream will become a reality. Property prices abroad have yet to fully recover from the financial crisis, and the strength of the pound against the Turkish Lira, the Croatian Kuna or the Thai Baht means that expats can get more for their money in many of the most popular holiday destinations.
Thing is, buying an overseas property is not as simple as pointing at a map and handing over the cash. There are many different factors to be aware of before entering into the sale. Follow our six steps to make sure your purchase goes off without a hitch.
Examine the market
If you are thinking about buying a property abroad, the chances are you will already have a destination in mind. Spend some time researching your market to make sure it’s the right fit for you. Think about what you’re hoping to get out of your overseas property. Many foreign investors are snapping up properties in British cities such as London, in the hopes of seeing an immediate and regular income. A villa in Greece may cost a fraction of the price, but is unlikely to offer the same rental benefits.
Every property market is different. Make sure you know what to expect before you start to make enquiries.
Hire a local expert
Of course, no one will understand your property market like the local experts. This could be anyone from fellow expat investors, to local residents, to professional estate agents and financial advisers. If you are buying in a country where you do not speak the language, make sure you have a trusted local contact who can speak on your behalf and translate local customs and etiquette for you.
While you may have endless experience of buying properties in the UK, you could be faced with a whole new set of issues with your overseas property. Does the property lie on solid foundations? Is there a risk of regular flooding? Are there any potential issues with the land ownership or tenancies? What is the risk from natural disasters?Get a thorough survey done of the property itself before parting with your cash.
Seek additional consultation
Once you have chosen your property, you will start to assemble your team on the ground: your surveyors; your contractors; your lawyers, etc. But it never hurts to get a second (or even third) opinion. Arrange for at least one independent valuation of the property, and take as much legal and financial advice as you possibly can.
Organize your finances
The chances are that your property purchase represents an investment of some sort, whether it is an investment in your future happiness, or a more literal income-seeking financial investment. Protect your capital by organizing your finances properly. When transferring large quantities of cash abroad, you are leaving yourself open to all sorts of hidden bank fees and transfer charges, as well as variable exchange rates and commission fees. You could potentially lose thousands of pounds by making the wrong decisions about your finances during the purchase period.
Shop around and make sure you know where to get the best rates on your currency transfer, and be careful to you budget for any unforeseen charges.
Overseas taxation law is not for the faint hearted. How much tax you pay (or save!) depends on a multitude of factors, including: what sort of property you wish to buy; where it is located; what it will be used for; how much it costs; how much work you plan to carry out; and what sort of annual income or loss you are likely to receive from it.
Nothing will take the shine off your dream home abroad like an unexpected tax bill. Hire a great accountant who has experience dealing with expat properties and overseas purchases, and stay on top of any changes in taxation law which may affect you.
Finally – enjoy your property! While there is a lot of research and fact checking involved in buying a property abroad, it is best to get all the admin out of the way before you sign on the dotted line and release your funds.
Choose the right property and it will pay for itself in family holidays and investment possibilities for many years to come.