Packer - Buying a Property Abroad

Steven Packer

www.straightforwardco.co.uk

Straightforward Guides

Straightforward Publishing 2016

All rights reserved. No part of this publication may be reproduced in a retrieval system or transmitted by any means, electronic or mechanical, photocopying or otherwise, without the prior permission of the copyright holders.

ISBN 978-1-84716-644-9
eISBN 978-1-84716-692-0
Kindle ISBN 978-1-84716-693-7

Printed by 4edge www.4edge.co.uk

Cover design by Bookworks Islington

Whilst every effort has been made to ensure that the information contained within this book is correct at the time of going to press, the author and publisher can take no responsibility for the errors or omissions contained within.

In the last 20 years or so, the world has shrunk considerably. Whereas not so long ago, most people, British and others, were buying property in Southern Europe, particularly France, Spain, Portugal and Italy, (with the exception of a few adventurous souls) nowadays virtually the whole of Europe is open thanks mainly to the proliferation of countries entering the European union. The situation in the next few years may change and the process of purchasing a property will alter as a result of the UK exiting the EU. However, this book is written from the vantage point of the UK being part of the EU for the next few years until BREXIT is complete.

It is possible to buy a property, for leisure or for investment throughout the whole of Europe and also, thanks to ever cheaper air travel, in many countries throughout the world. Many people invest in countries where the climate is better than the UK, although just as many seem now to be investing in Eastern Europe, in search of culture rather than weather.

Other factors influencing would be investors or those in search of a second home are stable interest rates and the low costs of borrowing money. Many hitherto inaccessible countries are now literally bending over backwards to make themselves attractive to foreign investors. An influx of foreign capital, along with foreign expertise is exactly what is needed now the old shackles have been removed and membership of the EU created the conditions for future prosperity. The average investment in property in the various EU countries is around 150,000, with lots of variations above and below that price. Whereas it was once mainly the elderly who desired that retirement home abroad, the mix of people buying abroad, for whatever reason, spans all age groups. Indeed, since property prices started to escalate to the absurd situation we have today (writing in 2016), especially in the south of England, and the cost of living has generally spiralled, many people have chosen to leave the UK in search of a better life.

This book aims to provide a general introduction to buying and selling property abroad. Many countries are covered. Obviously, for such a wide-ranging book, it is not possible to go into great depth about the legal and social systems in each country. The main aim is to introduce the systems peculiar to each country to hep give a flavour of property investment and what to look out for.

Many a dream has been shattered by the realties of different countries regimes covering property purchase. For sure there are estate agents now in most countries who will help guide a person through the maze. However, it has to be realised that those agents are also acting in their own interests. It is for this reason that a book such as this is highly pertinent in that it should provide pointers and highlight the possible pitfalls that lurk under the plethora of attractive advertisements that induce people to invest.

There are a number of more in-depth companion volumes to this book which explore in greater detail the processes of buying a home in a particular country. However, this book should provide a firm foundation for you to make up your mind and sort through the many options that you have.

Below are a few tips to ponder when thinking of buying a property abroad.

In the UK, a growth industry, corresponding to the opening-up of the property market, has been that of property exhibitions. Every where you go or look there are now property exhibitions selling the delights of property investment in just about every country that you can think of. Many of these exhibitions will be selling properties off- plan, i.e., before they are built. Clearly this is good for developers in that they have increased cash flow and guaranteed sales. The advantage for buyers, so it goes, is that by the time the property is ready the value will exceed what you paid for it. So you have an instant profit.

Before you buy a property off-plan you are required to have at least 20% deposit and also have all the necessary paperwork in place. You shouldnt forget that salespeople make hefty commissions out of those who buy off-plan and they will be using every trick in the book to ensure that they get your business. The scheme will have been heavily promoted and journalists will often be flown across to give a glowing review of the development.

It is vitally important that you have knowledge of the developer, the country in which the property is being purchased and the potential pitfalls. In many cases the property that you are purchasing may not be ready for several years. Will the developer still be in business? Remember they have your money! Always do your research before committing anything-do not be swayed by heavy selling and the pressure that comes with it.

Whether you are buying for investment or for leisure you dont want to end up poorer for the experience. There are a number of factors to consider and to bear in mind when buying a property abroad:

Never believe that because a budget airline is either planning to, or has, introduced flights to a particular country that the price of property will rise. This is not the case and many airlines will introduce and then withdraw flights if they are not proving profitable;

Always consider the associated costs when purchasing a property, what are the maintenance costs and what are local taxes and so on. Thorough research is necessary here before committing yourself;

In particular, understand the tax regimes of a country before committing yourself. Some regimes are particularly harsh and you could also find yourself in a double tax situation, such as when/ if you choose to rent a property out.

If you are hoping to rent a property out once purchased make sure that you do extensive research beforehand. Many developers are offering so called guaranteed rentals to those who purchased property. Why should they do this if what they are offering is greater than the normal return? This is because, notwithstanding whether they can rent it for this guaranteed rental, the developer has already factored this rental into the purchase price. Another gimmick!

What are the conditions for selling the property. This is very important. Look for signs of over development in a country, as has happened in Bulgaria and has certainly happened in Spain.

What are the general conditions for obtaining a reasonable price for renovation in a country and what is the likelihood of getting ripped off. There are numerous websites which invite people to give their opinions of buying a property in a particular country and also offer the benefit of hindsight. There is a list of websites at the end of the book.

Always try to view a property before you pay a deposit or buy. What you see in glossy brochures and on websites may not be the whole picture.

What is the prospect for future growth? Again, get a clear picture of this very important aspect of investment. Dont rely on the headline figures in advertisements. Many countries are just as prone as we are to boom and bust cycles. Make sure that you have a clear investment plan before committing.