Experts reveal dos and don’ts of purchasing abroad.Buying a property overseas is more popular than ever, with increasing numbers of people following their dream of owning a holiday home or rental property abroad as part of their short-term or long-term investment plans.
However, although international property investment sounds like an exciting prospect for many people, it can also be risky if not approached carefully. Experts at the Property Investor Show, which takes place this autumn in London’s Docklands, reveal some top tips to help steer investors in the right direction.
Know your objectives
Ensure you know why you are buying and what you are hoping to achieve with the purchase. Is it an investment vehicle or are you looking for somewhere to visit or live? If it’s for investment, is it for short term capital gain to provide a one-off profit over a particular time? Or is it to provide long-term regular income?
Sort out your finances
Work out how much you can afford to buy and arrange your finances, such as your mortgage, before you travel abroad to search for your property. This will ensure that you are ready to act immediately if you find the right property. Also ensure that all finances are arranged before signing any contracts and paying over a deposit.
Don’t be hasty
Stay focused on what you originally had in mind. Stick by your objectives. It can be all too easy to be tempted in the sunshine to buy something that is not what you really want. See your chosen area at different times of the year to ensure that you like it whatever the weather. You should also try and give yourself a cooling off period to ensure you are making the right choice.
Check transport and local facilities
Make sure there is a choice of airline routes and access points to your chosen area. People who rent property will want somewhere that is easy to get to and will often gravitate to those places with a nearby airport served by low cost airlines. People will also want to be near basic facilities such as restaurants and shops. Proximity to areas of natural outstanding beauty, tourist attractions or renowned eateries will add to the property’s rental attraction.
Talk to fellow investors
Speak to those who have purchased in the area that you are interested in. If you are opting for a buy to let investment, you can learn a lot about rental success in your area and get a realistic idea of the likely income that will be generated.
Allow for the extras
The cost of buying a property abroad (taxes, conveyancing, lawyers fees, agents fees, VAT etc) is much higher than in the UK, so you will have to ensure you have budgeted accordingly. Also ensure that you are aware of the costs charged by the legal and government authorities for purchasing a property in your chosen country.
Check taxation and inheritance laws
Ensure you understand the tax implications for when you decide to sell. You should also check the inheritance laws of the country where you are buying. In France, for example, your children automatically inherit your house; it does not pass to your spouse. You many need to compile a separate will.
Weigh up risk versus return
If buying for investment, it is important to understand how comfortable you are with risk and investment accordingly. Some properties in, for example, eastern Europe offer high potential returns but potential losses too. You need to be well informed and comfortable with the risk factor.
Do your homework
Ensure you research the area well before visiting the country. Time spent researching the area while at home is much cheaper and more efficient than time spent overseas. Make a check list of questions that can be answered when you arrive at your destination.
Speak to the experts
Always ensure that you seek specialist independent advice from English-speaking solicitors, architects and surveyors before considering a purchase overseas. They should be proficient in your chosen country’s laws and processes and also know the specifics involved in buying a property there.
Nick Clark, managing director of the Property Investor Show, comments: ‘Purchasing a home abroad can be both an excellent investment or provide a great holiday home, although it can be overwhelming to a novice investor. The Property Investor and Homebuyer Show will have all the information that potential buyers need to choose and purchase a home overseas.’
Trisha Mason, founder and managing director of VEF French Property, says, ‘Property investment overseas can be hard work but the rewards are there for those who do the research and are willing to put in the effort to succeed. However, our overarching advice for overseas property investors can be applied to many things in life: use your head, do your research, seek professional advice and don’t act on impulse.’
The Property Investor and Homebuyer Show will be held 22-24 September at London’s ExCeL Centre. Visit propertyinvestor.co.uk to register for fast-track entry