Words Of Advice When Buying Property Abroad
Phrases like ‘credit crunch’ and ‘global financial crisis’ are having little effect on us resilient Brits, and whilst we may actually be feeling something of a financial squeeze and saving less and spending more cautiously, this has had nothing of a dampening effect on our insatiable desire for a place in the sun it seems!
Whether your reasons for considering buying a property abroad stem from the fact that you can’t get a foothold on the British property ladder, you’re fed up with life in the UK or you want to invest in a property abroad rather than a poor returning pension plan back home, there are some words of advice that we would like to impart for you to think about when buying property abroad.
If you want a jet to let property – i.e., a home abroad that you will rent out and earn an income from – you need to look carefully at the local market you’re interested in and see whether your approach is viable. What’s the competition like? How much rent can you expect? Will this cover your mortgage and maintenance costs? And how will you market your property and make it known it’s available for rent. All of these considerations need to occupy you as does the fact that there may be lean periods when your property is empty – if so, can you afford to keep it?
Another issue you need to think about is in relation to the location you’re buying in – are you buying in an up and coming area or a booming town, a location that has yet to boom or one that is a bit off the beaten track. Think carefully about location if you’re renting your home out as the location will affect who will want to rent your property. Location will also have a very direct impact on resale price and your exit strategy when it comes time to sell.
When it comes time to signing on the dotted line for your home you need to have instructed a solicitor to act on your behalf. This solicitor should be acting for you and no other parties involved in the sale. They should carry out all searches and checks to make sure all is in order with the property – but don’t assume they will do so without being instructed to do so! It doesn’t work like it works in the UK! You need to ask your solicitor about what they will do for you, what you need to do for yourself and who takes up any other slack.
Do NOT sign a contract if you do not understand it. If it is not written in English you need to see an authorised translation. Do NOT sign a contract until you are sure everything is in order with the property you are buying. Do NOT believe open promises. Anything agreed to with the vendor or agent has to be in the contract – and this includes the REAL asking price.
Sometimes vendors ask you to have a separate, lower price written in the contract so that they can lessen their capital gains tax liability for example. Well, fine – but then when you come to sell you will have to get your buyer to agree to the same lie otherwise you will pay substantially more capital gains tax as the difference between what you sell the property for and the low price in your purchase contract will come back and bite you!
Get the property you are buying independently valued and surveyed, make sure you are buying freehold.
Next up you need to think about affording your overseas property – if you’re buying with a mortgage you need to ensure any preliminary contract signed to reserve the home is subject to you receiving financing. If your mortgage is refused you need a clause in the contract saying you will get your deposit money back. And when it comes to deposits – don’t pay anything when you first see a property, not even a small holding deposit. Leave the property, go away for at least 48 hours and consider your options. Get past the excitement and make a calm judgement based on rational consideration and then you will be far more likely to purchase a palace than a pup.