Top 10 Tips For First Time Overseas Property Buyers

For certain newcomers to the business of property purchase abroad, the entire process can sometimes seem a little daunting.  However, rest assured: if you bear in mind some common sense factors and keep a clear head, you will be well on the way to making a safe and sound move into overseas property, today’s most lucrative investment arena.

Below are ten vital tips to help keep you on track:

1.  Keep clear, organised motives

   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 really want a renovation project?
  
• Do you want it to be managed in your absence and rented out?
  
• Who will be doing this?
  
• Last but not least, what is your budget?

2.      Do your own research

Information is power.  Be sure the location suits your above needs and spend time there to check that the information the salesmen or interested parties 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 agent / developer

A reliable agent is often found word of mouth.  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´ track record.  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.  Remember to add on approximately 10-15% to the asking price to cover taxes, fees and other costs.  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.

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, net of management fees and other costs.

5. Consider all mortgages / 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.

Some developers 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.   Always obtain competitive quotes from other mortgage suppliers before simply taking the Developer´s 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. Make a local will

Each country has its own inheritance laws and what applies back home can often be quite different abroad.  Making a will cuts out time consuming and expensive legal problems for your heirs and should mean they pay less inheritance tax than if it is dealt with through the UK system.

10. 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 2,000 euros on a 200,000 euro purchase!

Like this? Then share with your friends and colleagues!