Buying a property abroad as a permanent home, retirement home or even an investment is an exciting idea. But here some very important questions to ask if you’re interested in buying a property abroad.
1.Why do you want to buy a property abroad? Is your property going to be a holiday home, a permanent home, a holiday-to-future-retirement home, a buy to let or a pure investment? Before you start your search have a clear idea of what your objectives are, then look in the locations and at types of property that best fit in with those objectives.
2.What is important to you when buying abroad? Just as with buying in the UK buying a property abroad involves compromises. Your dream home overseas probably doesn’t exist! Make a list of ‘must haves’ and a list of ‘nice to haves’. For example, are your priorities space, location, community, culture, solitude or access? Would a house or apartment suit you better?
3.New build or old? There are pros and cons involved with both types of property. New builds meet modern standards and offer maintenance-free ownership. But they may lack character and it’s difficult to know what the area will be like when everything is finished. Older property can offer character and an established location but will probably need more maintenance and building standards in some countries may be far behind modern standards.
4.What about accessibility …. now and in the future? How will you travel to your property, and what costs are involved? If you’re planning on travelling there by air airlines can (and do) introduce new services one season then withdraw them the next. Also, genuinely cheap air fares can be hard to find and often need to be bought a season in advance.
5.If you’re looking for a holiday home what will it be like off season? Many if not most holiday homes abroad are bought in the summer/autumn, on the back of an enjoyable summer in that location. But even in the warmer European countries most holiday resorts are quiet (even completely closed) in the off season, and can also suffer from bad weather. Is this a location you will want to go to in winter too, or not?
The reverse applies if you are buying a property with the winter in mind, such as in a ski resort. Will you also want to go there in summer?
6.Do you want or need to let your property out? Letting out a property abroad can be a good way to subsidise the cost of your property abroad, but it involves extra hassles, wear and tear and expense. Check the local market carefully – is there demand for rentals, and what are rent levels like? In resorts remember rents can be very high over a short summer season then very low for the rest of the year – if there is any rental demand at all.
Be extra careful here if you will be relying on letting income to afford the property or pay the mortgage.
If you’re offered a period of guaranteed rental income by the developer (on a new property) check how this compares to the actual market rental for the property.
7.How much are local property purchases taxes and legal/buying costs? Deduct these from your budget before deciding what the maximum you can afford to pay for a property is. Costs and taxes vary by country: They are rarely less than 5% can be up to 20% in some countries. Always check.
8.Can you speak the language …. or are you willing to learn it? Buying and running a foreign property will always be more difficult if you don’t.
9.What about care and maintenance? Who’ll look after your property while you’re not there …. or in the event of any emergencies? What will this cost – if, for example, you’re going to use a managing agent?
10.Before you buy …. what’s your exit strategy? How long will you want to keep your property abroad for and, if not ‘for ever’, when/why might you want to sell? Will there be a market for your property then, and what might it be worth? Who might want to buy your property, eg. a local, another foreigner or an investor?
In some countries where, for example, renting is more common or mortgages are hard to obtain, the resale market for property can be very limited.
11.What are the prospects for making money on your property, ie. capital appreciation really like? Bear in mind that in many European countries property prices have fallen drastically over the last few years but, even in the good times, only rose very slowly and far less than in the UK.
12.What might happen to exchange rates? Exchange rates are another important issue to bear in mind. Timing your purchase to coincide with advantageous exchange rates can increase your buying power considerably (and vice versa).
Think of any investment in a foreign property as an investment in the currency of that country.
13.What might happen when the UK leaves the European Union? This could have implications for foreign property buyers both in the EU and elsewhere.
14.Is the asking price fair? Property in many foreign countries is cheaper than the UK and appears to be ‘bargain priced’. But you must see the price of a property you’re interested in in relation to local property values. For example, a villa with pool for £100,000 looks incredible value in comparison to UK prices but it could still be very overpriced in comparison with local property values in some countries.
Be aware that in some countries/locations a much higher price may be given to foreign buyers than would be given to local buyers.
To make sure you’re getting a good buy shop around, look at lots of properties, and compare the asking prices with other properties for sale in the same area/same country.
As with any major purchase or investment in any country do your own research and take impartial, independent legal and financial advice before buying a property abroad.
For more useful information on buying property abroad keep checking back with Property Insider.