Buying property overseas has been popular with the British for centuries. In the past these purchases included things like India and large tracts of Africa. The locals, quite rightly, eventually put a stop to this but, undeterred, the British have continued to purchase (admittedly smaller) places in the sun. In recent years the popular destinations have included Spain, France and in some circles if you haven’t got a little bit of Tuscany to call your own, well, quite frankly “who are you?” Probably it’s a lot to do with our own climate that makes the grass seems that bit greener and the sun that bit brighter which has led to the British obsession with all things foreign. While buying abroad is a great way to find a holiday home that doesn’t come with grey skies as standard, and is an excellent investment, there are plenty of pitfalls along the way. Here are the basic things to consider.
Off-piste thinking
As mentioned, a second overseas home is often located in France, Spain or Italy. The small matter of an economic crisis means that there is a glut of properties in these regions. That’s relatively good news if you want a property for keeps, but for investment purposes it means these properties could well be for life and not just a couple of seasons. In Spain particularly, there’s so many available that you’ll not be likely to see vast returns in terms of either rental income or sale proceeds (if you can sell at all). Spain is not as hot as it used to be; so the answer for investors? Albania, Poland, Bulgaria and Russia. Property investment in Europe at the moment requires a little off-piste thinking. Albania, formerly a repressive communist one man dictatorship is the real poor man of Europe and property prices reflect this. This means that a room (or rather a whole apartment) with a view of Corfu will set you back under £30, 000. Albanian property is a longer term investment as although the country is ‘up and coming’, it’s got quite a long way to go. When it comes to on-piste thinking, there is a whole range of rapidly developing ski resorts in the eastern European countries, from the Czech Republic right through to Bulgaria. These are offering excellent facilities at much more affordable prices than traditional skiing resorts and property prices can still be attractive. Wherever you look in Eastern Europe there are a range of surprisingly affordable cities in tourist “hotting-up spots”. Even in cities such as St Petersburg, property prices are still well within reach.
Overseas property essentials
Wherever you intend to buy you need to be sure that you have the best, local advice. Local in this case means a legal team who are experienced in dealing with overseas property purchasers, not just the local market. You need to employ a team who can speak your language and knows the local market, regulations and property laws. Property regulations and ownership laws vary across Europe widely – you can’t buy in Spain without making a will and in some jurisdictions you can inherit the previous owner’s debts. Leaky water pipes become insignificant compared to facts like these if you haven’t bothered to employ the right team.
As we all know, when it comes to property and investments costs can go up and rarely come down. You need to be sure of all the related costs of purchasing a property in the region you have chosen. In the UK these include survey fees, legal fees, land registry fees and stamp duty. In other countries taxes may be applicable at local and national levels. There may be additional costs or taxes to pay if you are non-resident in the country and if you are letting out the property you’ll need to be aware of where you’ll be liable for income tax (if you advertise in the UK this will normally mean income tax will be applicable on a “home and away” basis).
Essential Latin Phrases
Finally ensure contracts are clear and you understand what you are paying for and what is not included. The show home may have featured a fitted kitchen, but have you ordered one for your own pad? How much extra will the kitchen cost, and does the funny old lady living in the hut at the end of the garden have an inalienable right to remain indefinitely? These are small details but the devil is usually to be found just behind them. Ultimately when it comes to buying property in any country there’s only one foreign phrase you’ll need to know; “caveat emptor”. It’s Latin and it means “buyers beware”. When the i’s are dotted, the t’s crossed and the little old lady packed off to a home, don’t forget the final touch – overseas property insurance.
Overseas property insurance should be the last thing on your mind when you purchase a home from home, although it shouldn’t be forgotten. Finding a bargain in Europe is not hard, in the current economic climate, but casting your net further a-field can be the best way to see returns on your investment.
Simon blogs about lifestyle and property covering everything from overseas property insurance to high tech gadgets for the home. When he’s not online Simon enjoys swimming, running and travelling in Europe.