Overseas - Thursday, June 16, 2005

New pension rules regarding property ownership have some very attractive implications for those who want to buy overseas, according to Assetz

The change in pension rules to allow investment in residential property through self-invested personal pensions (SIPPs) will trigger a wave of new overseas buying, according to Assetz, a property investment specialist dealing with properties in France, Spain and Cyprus.
Assetz believes that second homes in favoured holiday destinations such as Spain are likely to be top of the shopping list after ‘A’ Day, when the rules change on 6 April 2006. Research from the company shows that Spain’s mature market makes an excellent choice for SIPP investors, with capital growth still high and forecast to grow at ten per cent a year for at least the next five years. Year-round sunshine and the high numbers of world-class golf course developments makes 30 weeks or more annual rental a realistic goal, with potential gross yields of ten per cent plus. This rental income would be immediately reinvested back into the SIPP and used to pay off any mortgage.
Stuart Law, Managing Director of Assetz comments, ‘Off plan purchases at discounted rates still offer the best opportunity to maximise profits. It is possible to buy off-plan today and then assign the contract to the pension after the rule changes, as long as the completion date is after ”A Day”.’
SIPP investors will benefit from full UK income tax relief on the purchase price of the property, before going on to collect rental income tax-free in the pension fund. Any profits made from the sale of the property will also be free from UK capital gains tax but may incur Spanish tax. However, there are ways to reduce this to 15 per cent of the gain. What’s more, says Assetz, the pension fund will be able to borrow to invest, so buyers will be able to gain access to holiday homes that would otherwise have been out of their reach.

One Spanish hotspot is Murcia, with its abundance of world-class golf resorts, which is an excellent choice for SIPP investors who are looking to pay off a mortgage with rental income.
The acclaimed Hacienda Riquelme Golf Resort in Murcia will be the main focus for major golfing ceremonies and events in the area when completed in 2006. The development is built around an 18-hole golf course designed by Jack Nicklaus with shops, restaurants, spa and swimming pool complex, tennis courts and gym.

One- and two-bedroom apartments are priced from €155,000, with rental income expected to reach £500 plus in June and £700 plus in August.
Stuart Law continues, ‘Investors should be aware that they will need to pay rent at the going market rate when they make use of the property themselves, but this money will be pouring straight back into their own pension pot. It needn’t even be an additional cost, since investors can simply pay their pension contributions for that year in the form of rent.’
For more information about Hacienda Riquelme or other Spanish buying opportunities call 0161 456 4000 or visit assetz.co.uk.

The super success of the Fairmont Palm Residence is the more proof that Dubai is the place to buy.

Exciting buying opportunities in the hotspot of Dubai have been unveiled to UK buyers with the launch of IFA Hotels & Resorts’ Fairmont Palm Residence. This latest project in IFA’s $1 billion in The Palm, Jumeirah will consist of luxury apartments, town houses and penthouses.

The 558 spacious luxury apartments within the Fairmont Palm Residences include one-, two-, three- and four-bedroom apartments, as well as town houses and penthouses which will have direct beach access and unrivalled sea views. Apartment sizes in the development will be among Dubai’s biggest – for example, a large luxury three-bedroom apartment overlooking the sea will offer 4,000 sq ft of space, making it on average about 30 per cent bigger than similar properties.

Town houses, priced at £1 million and up, boast private swimming pools and gardens as well as direct access to basement parking. The penthouses, meanwhile, are priced from £900,000 and have private swimming pools and offer spectacular ocean views from the top two levels. The Fairmont Palm Residence will feature a complete array of top facilities, including a members-only health club, gymnasium and swimming pools, as well as extensive children’s play areas and a diverse selection of restaurants and cafés. Investors in this world-class residence will also enjoy concierge and housekeeping services plus child care facilities.

IFA has set up a unique rental scheme for the residences, managed wholly by Fairmont Hotels & Resorts, which allows investors to rent out properties either furnished or unfurnished. The furnished options offer medium- to long-term leases or short-term rentals, with the owner receiving a return based on occupancies. ‘The short-term furnished option will be beneficial for overseas investors as it allows them to use the property when it isn’t rented out,’ explains Werner Burger, vice president of sales and marketing for IFA Hotels & Resorts. ‘This can produce significant returns for investors with demand for short-term accommodation in Dubai increasingly on the rise.’

For more information about this amazing new opportunity visit fairmontpalmresidence.com.

 

For those in the market for an overseas property, preparation is crucial. We ask a solicitor what Brits should do – and not do

British people buying property abroad are falling foul of foreign laws that could leave them limping back home with their tails between their legs and severely out of pocket. Solicitor Adrian Taylor, an overseas property expert and partner at national law firm Rowe Cohen, says that a combination of factors have led to an unprecedented number of Brits leaving the UK to set up home overseas.
‘We have an aging population, poor weather, open borders across Europe, cheap flights and a very buoyant recent property market here that has enabled people to release equity in their homes. Add to this the fact that European banks have comparatively low interest rates and it's easy to see why so many people are wooed. It all seems so attractive and easy.’
However, there is a downside to this apparent EU-topia, warns Taylor. ‘Too many people take the plunge with too little preparation. We have all seen horror stories on reality TV programmes featuring people who have simply upped sticks and turned up in a country without even speaking the language. It's nothing short of insanity.
‘The culture across all aspects of life, particularly the law, is very different. Things are not done in the same way as here.’
Taylor says that people thinking of moving abroad or investing in property overseas should appoint a decent British-based lawyer before they do anything else, even before speaking to their bank manager. He offers the following advice for choosing a suitable lawyer:
Make sure you seek advice from a UK solicitor who is bilingual and experienced in the law of your chosen country – ask for evidence of her/his experience
Check that s/he has hands-on, practical experience of the country and has credible contacts there – again, ask for examples

Make sure your legal adviser is able to offer you the advice you need – whether it's buying a house or buying land on which to build. Does the soliciator understand, for instance, the ins and outs of local searches and contractual law there?
Ask if s/he is able to put you in touch with other professionals in the country, such as architects, builders and accountants. If not don't worry; this is just a good added extra

‘If people do their homework and get good advice right at the outset, they can save themselves a great deal of heartache, time and money further down the track. With good advice, the world can be their oyster.’
Taylor believes that Croatia, Turkey, Bulgaria and Czechoslovakia will be the next countries to be targeted by Brits struck with wanderlust.

In this beautiful Mediterranean location a development of wonderful villas is now on the market.
Malta is a Mediterranean island famous for its beautiful architecture, history, lovely climate and relaxed pace of life. Ancient villages, joyous summertime fiestas, quiet swimming and diving – these are just a few of the many attractions that draw Britons, whether for a holiday or a new life.

For those who wish to purchase a holiday or retirement home, Frank Salt (Real Estate) Ltd offers the ideal property. Santa Marija Gardens  is situated in Mellieha, in the north of the island, right on the periphery of the quaint old village. Mellieha has long been host to the most luxurious villas found on the island of Malta.
Santa Marija Gardens is a unique new development whose concept is to offer a lifestyle to suit discerning persons. It offers just 12 luxury and exclusive villas perched on high grounds, all commanding sea and country views. These villas are nestled among beautiful landscaped private gardens in a traffic-free and secure environment. The location tranquil yet close to wonderful beaches, public transport and all other amenities.

Each villa boasts and outstanding design and will be finished to a luxurious specification, featuring private swimming pools and Jacuzzis. The generous accommodation comprises spacious sitting room and dining room leading onto a large terrace enjoying breathtaking views, study area, kitchen/breakfast complete with pantry, master bedroom with dressing room and bathroom en suite, two further bedrooms all with bathrooms en suite leading and a terrace with private Jacuzzi. Communal satellite outlets and computer network points will also be installed. Each villa incorporates spacious garages.
This development is perfectly suitable for investment or as a holiday/retirement home. Prices start at £400,000. Call Frank Salt on 020 7935 5333 for more information.

In this beautiful Mediterranean location a development of wonderful villas is now on the market.
Malta is a Mediterranean island famous for its beautiful architecture, history, lovely climate and relaxed pace of life. Ancient villages, joyous summertime fiestas, quiet swimming and diving – these are just a few of the many attractions that draw Britons, whether for a holiday or a new life.

For those who wish to purchase a holiday or retirement home, Frank Salt (Real Estate) Ltd offers the ideal property. Santa Marija Gardens  is situated in Mellieha, in the north of the island, right on the periphery of the quaint old village. Mellieha has long been host to the most luxurious villas found on the island of Malta.
Santa Marija Gardens is a unique new development whose concept is to offer a lifestyle to suit discerning persons. It offers just 12 luxury and exclusive villas perched on high grounds, all commanding sea and country views. These villas are nestled among beautiful landscaped private gardens in a traffic-free and secure environment. The location tranquil yet close to wonderful beaches, public transport and all other amenities.

Each villa boasts and outstanding design and will be finished to a luxurious specification, featuring private swimming pools and Jacuzzis. The generous accommodation comprises spacious sitting room and dining room leading onto a large terrace enjoying breathtaking views, study area, kitchen/breakfast complete with pantry, master bedroom with dressing room and bathroom en suite, two further bedrooms all with bathrooms en suite leading and a terrace with private Jacuzzi. Communal satellite outlets and computer network points will also be installed. Each villa incorporates spacious garages.
This development is perfectly suitable for investment or as a holiday/retirement home. Prices start at £400,000. Call Frank Salt on 020 7935 5333 for more information.

Those looking for overseas property should investigate the lush tropical paradise of the Dominican Republic.

Holidays, investment, retirement – whatever your reason for considering buying abroad, the destinations that are available to you have become more and more exotic. France and Spain are still very popular but there are many new corners of the earth that are making themselves known to today’s purchaser.

One spot in particular that is catering to those with a taste for balmy breezes, unparalleled natural beauty and a laid-back lifestyle is the island of Hispanola. The island has long been known for its gorgeous beaches, fascinating culture and fantastic climate. And the latest ‘in’ place can be found on the easternmost tip of the Dominican Republic.

The new resort of Cap Cana is the world’s next great destination. This exciting, extremely luxurious project has been created by a ‘dream team’ of the world’s most experienced and innovative resort designers. Cap Cana is envisioned as a world-class resort celebrating the rich cultural heritage and traditions of the Caribbean, with the added style of European resorts such as St Tropez and Marbella.

Not only is the weather nearly perfect; the facilities on offer are second to none. The world’s largest marina, three Jack Nicklaus signature golf courses, one of the finest white sand beaches in the world – if these sound your sort of treats, Cap Cana is the place to go.

Water sports will be high on the list of activities, with snorkelling, diving, sailing, boating and deep sea fishing. There will also be polo and other equestrian activities, as well as tennis, fitness centres and spas.

A green ecological reserve area meanders through the entire Cap Cana development; within are caves, natural springs and bird species not found anywhere else on earth – including the Palm Chat, the national bird of the Dominican Republic.

The resort will offer a wide choice of luxurious accommodation, including private villas on the grandest scale, finely crafted villas in the tropical palapa style, sophisticated town houses and chic apartments, with harbourside, beachfront and village locations. All homes have been designed to blend with the natural contours of the site and local tradition. Yet they also incorporate the highest standard of construction, built to the Florida hurricane standard.

Homes in the marina, which will eventually accommodate over 1,000 vessels of up to 150ft, will be located in a European-style village, with a waterfront promenade offering elegant boutiques, fine shops and restaurants, not to mention one of the world’s top casino hotels. Bungalows and apartments on Star Island, in the middle of the marina, will allow residents to be in the centre of one of the most fabulous resorts in the world, while still remaining completely private. There is also Yarari, a self-contained village of single-storey semi-detached and detached villas set behind the Punta Espada championship golf course. Yarari is a buggy-only zone that will include a village centre with its own fine restaurants, shops and leisure facilities.

Specification is extremely high, with such touches as private Jacuzzis, wooden-decked terraces and an emphasis on views and light.

Find out more about Cap Cana by calling 0700 422 7226. Visit capcanasales.com.

 

More Britons than ever are opting for either an overseas investment vehicle or a complete change of lifestyle. But what should the prospective purchaser watch out for? Russell Wilson, managing director of Royal Bay Oroklini in Cyprus, offers some tips.

Hectic lifestyles, rising house prices and the British weather are just a few reasons that nearly 200,000 Britons a year are moving overseas. Analysts predict that the exodus is set to grow, as the UK’s ageing population means there are more retirees able to move abroad and the growth in budget airlines makes it cheaper to get to Europe and the Mediterranean.
Figures released in November 2004 by the UK Office for National Statistics showed that 190,000 Britons moved overseas last year – and this figure does not take into account people who are spending between six months and a year abroad. The figures show a 50 per cent increase in the number of Brits moving overseas since 1998.

But prospective overseas buyers must be vigilant and thorough if they are to find a foreign property that they will be happy with. Presently, some overseas buyers show signs of a condition that I call Air Madness. This debilitating syndrome seems to strike during the plane journey to sunnier climes, and strips the human brain of the capacity for all the usual rational thought processes that people go through when purchasing a property in the UK. The result for sufferers is that they settle for a sub-standard residence, albeit in a warmer climate. People would not settle for an uninsulated, uneconomical, damp property without a proper Title in the UK, so why do they abroad?
Having been in the property business for over 15 years, I have seen signs of Air Madness more than a few times. Warm weather coupled with a two-hour or more plane journey seems to influence people into buying a property that they wouldn’t think twice about in the UK. How many people do you know that would happily buy a property in the UK that was prone to damp, subsidence, structural cracks and cost a fortune to heat in the winter or cool in the summer? Nobody, you would think. But thousands of people are doing just that all over Europe and the Mediterranean. Some don’t seem to realise that even the hottest climates have distinct seasons and the homes there require heating in the winter, just like in England.
That’s when they realise just how much this costs and begin to regret the purchase. But by then it is too late.

Purchasing a property in the UK is a lengthy process, taking on average two to three months from agreeing the sale to moving in – and that’s usually only if everything goes smoothly. It takes this amount of time to conduct all the surveys, legal proceedings and estate agency dealings. With newer properties it is vital to check that all the planning permission has been granted and that building regulation requirements have been met.
However, on a break from the office and awash with the local tipple, it is tempting to sign on the dotted line for a property you have only seen once (if at all), never mind having a structural survey completed or assessing what the area will be like out of season. The laws regarding the purchase and sale of property in some countries are full of holes and an open invitation for dishonest sellers to exploit a foreign buyer's ignorance. And that’s when the dream can turn into a nightmare, before you have even moved in:

Home buyers in the UK can get frustrated at how long it can take to buy a home, but they should be glad that the process is thorough and governed by law. In foreign countries, I have heard of all sorts of sorry situations: people signing up for the wrong house, signing contracts written in a foreign language without an interpreter – and even handing over cash deposits, returning to the UK to say goodbye to family and friends only to find when they return to move into the house of their dreams, it doesn’t actually exist and the so-called agent has scarpered. Others have discovered that the resort out of season is not much more appealing than Morecambe in March – or that the house is actually falling down!

It sounds unbelievable that British people could be that gullible, but the frequency of these occurrences is frightening.
If you are considering a move abroad, make sure you look into the local laws concerning financial transactions and the legal status of foreign buyers. As for the property itself, find out the following:

What will the house be like in winter? Is it insulated and how much will it cost to heat? Similarly, in summer, what will it cost to run the air conditioning?
What is the area like out of season?
Will the house rise in value? Don’t assume it will just because the British house market is buoyant. Other countries have house price cycles out of step with the UK.
What land is the house built on? What was there before the property was built? Is the Title guaranteed?
What materials is the house made of? Concrete houses fail to meet most EEC building regulations.
Does the property meet any building regulations?
Is there any kind of security system?

It is estimated that nearly one-fifth of people who move abroad regret their decision within the first year for a number of reasons. However, by applying the same approach to buying property abroad that you would in the UK, Air Madness, or the loss of a sane, logical, thorough approach to home-buying, can be cured and your move abroad will be a successful one.

Royal Bay Oroklini is a luxury development of 30 detached villas located in the Larnaca region of Southern Cyprus. These homes are environmentally friendly and the build project is supervised by a quality UK-based company who have appointed a team in Cyprus to manage the design and construction. Villas at Royal Bay meet all UK and EU standards and are backed by a ten-year building guarantee similar to NHBC’s.
Phase one is almost complete and phase two has just been released; off-plan prices start from CY£230,000 (approximately £276,000 sterling). For more information about Royal Bay Oroklini visit luxurycyprusvillas.com

Fancy a second home – or even a new life in sunnier climes? Hilary Osborne of What Mortgage magazine explains your mortgage options.

Most of us return from an overseas break desperate to go back. Some people simply book another holiday for later in the year; others consider buying a new home for holidays or even relocating completely. Fortunately, those who do want to put down foundations in a foreign country have a number of places to turn to for funding.

Can I get a UK mortgage to buy an overseas property?

A UK lender will not offer a mortgage on property in another country because it will be unable to repossess should you default on the loan. To raise money against an overseas property you will need to approach a local lender.

Some of these are subsidiaries of British banks and building societies. For example, Norwich & Peterborough Building Society has a lending arm covering Spain and Gibraltar, as do Halifax and Leeds & Holbeck Building Society among others. HSBC owns French bank CCF, while Barclays has a presence in Spain, Portugal and France, and the Woolwich in Italy.

You may prefer to use one of these lenders because you have some knowledge of their parent company and you can easily obtain information on their services in the UK. However, you can also access overseas lenders while still in this country by using a specialist broker. Conti Financial Services can source loans in 27 countries, including places as diverse as Australia and Dubai, while Propertyfinance4less can assist with purchases in seven countries, including popular places such as Florida and Cyprus.

Alternatively, you can use your UK property to raise funds for your overseas purchase. This may be your only option if you are self-employed and looking for a self-certification deal.

How does that work?

If you have enough equity in your property to partly fund the purchase of a second home you can release it with a remortgage. This will help you avoid the potential confusion of arranging a mortgage in a different language, and will mean one mortgage payment each month. Ipswich Building Society offers a deal specifically for this purpose. The Sunshine Mortgage is secured on your UK property and allows you to borrow up to 80 per cent of its value. This can be released in stages, so you can draw down money for a deposit when you need it then take the rest on completion.

You don’t need a special remortgage deal to achieve the same as Ipswich offers but you may need to negotiate with the lender if you don’t want to release all of the cash at once.

How do I apply for an overseas mortgage?

‘A lot of the process of buying a house in Spain with a Norwich & Peterborough mortgage is the same as buying a property in the UK,’ says the society’s spokeswoman Anna Guthrie. And the same is true in most countries. A broker will usually pre-qualify you for a loan – this means getting an agreement in principle on your behalf – and you can do this yourself if you apply direct. The lender will ask details of your income and outgoings, as in the UK; it will want details of the property you intend to buy; and it will instruct a valuation.

What’s different?

The main difference is the law. In Spain contracts become binding much earlier than in England and Wales, while in France there is a compulsory ten-day cooling-off period between the day the mortgage offer is issued and the day you can accept it. Different laws exist from country to country, so you need to find a lawyer who can explain it all thoroughly in English. ‘Do not sign anything you do not understand,’ says Simon Conn, senior partner at Conti Financial.

In general, to buy abroad you need a larger deposit than is required in the UK. French lender CCF caps borrowing at 80 per cent loan to value (LTV) and the maximum Conti Financial can secure in France is 85 per cent LTV (70 per cent if the loan is not in euros). Barclays offers up to 70 per cent LTV in Spain, Norwich & Peterborough up to 75 per cent and Conti Financial can source mortgages to a maximum of 80 per cent.

The term of the mortgage may also be restricted. In Europe, some lenders limit terms to 15 years. But if you want a longer term you may be able to find one be shopping around.

Does it matter if it’s a new home or a second property?

Not really, although according to Simon Conn you may be offered a higher LTV if you are resident in the country. If you are relocating the lender will need to know where your income will be coming from. Income from an employer you are continuing to work with is fine, as is income from a personal pension.

Problems arise when you decide to relocate to change your life. ‘If someone is going to start a hotel or bar we won’t be able to help them until they have built up a track record,’ says Conn. ‘If they’re relocating with an existing employer that’s fine.’

The lender won’t be concerned if the property is to be a holiday home, but it won’t take rental income into account when calculating affordability. It will consider rental income on a UK property if you are relocating and letting your existing home. ‘If the mortgage is being covered by the rent they won’t take the mortgage payments into account,’ says Conn.

Overseas lenders often look at affordability and limit the total borrowing to a set percentage of your income. CCF’s approach is fairly typical: it insists loan repayments on the French mortgage and all other loans do not add up to more than 33 per cent of joint or single monthly income.

What else should I know?

Getting a mortgage shouldn’t be a problem unless you are unable to prove income; but making a success of your overseas purchase requires a clear head. Don’t commit to anything before you have looked carefully at the details of the offer. Have the contracts checked and translated, commission a survey and be aware of the potential costs. As Simon Conn says, ‘Do the same things overseas that you would at home.’