Thanks to more favorable exchange rates and the relative ease of doing business and buying property elsewhere in the European Union, the last few years have seen a surge in UK citizens buying property abroad, with Spain and France remaining at the top of the list for real estate investors. However, more experienced buyers are looking even further afield to more exotic destinations such as South Africa, the Dominican Republic and Thailand, among others.
If you’re looking to buy property abroad, you’ll need to feel comfortable with your decision, because the process will likely turn out to be different than buying a house or investment property back home. A whole new range of considerations apply, including different legal systems, language barriers and restrictions on foreign purchases. Even if you’re a UK citizen buying elsewhere in the EU, buying any property anywhere abroad is not for the faint of heart.
Although buying property abroad presents a set of risks, it also presents a world of opportunity to those who do their homework correctly to seek out the best deal. Whether you’re looking for a holiday home or an investment property, or if you’re planning to relocate permanently, there are many things you will need to think about. Consider these tips before you start hunting for properties overseas:
Investigate the Market
Unscrupulous companies peddling so-called investment properties lure less-experienced buyers into buying off-plan developments that either are far behind schedule or, worse still, never built. If you’re informed on the matter, you’ll already have heard the horror stories of people who buy off-plan property in Spain, for example, only to lose everything they invested because the developers go bankrupt. If you aren’t familiar with such things already, then now might not be the best time to start thinking about buying property abroad.
There is no substitute for getting a first-hand look at the property market you intend to invest In. Buying something remotely, in a place you don’t know, Is risky at best. Spend time researching the local real estate market. If you don’t get your own feet on the ground when searching for foreign real estate, you’ll likely end up overlooking such important factors as local facilities, laws and customs.
Know the Laws
Different countries apply their laws differently. If you’re buying property outside of the EU, you’ll probably find the process unlike what you might be used to back home. To protect yourself, become thoroughly familiar with any local laws concerning foreigners buying property in that particular country. Being unfamiliar with the language can also complicate matters, so you’ll want plenty of local information at your disposal, as well as a reliable independent translator. You should be particularly wary of potential scams
Buying real estate abroad if there are no title deeds offered Off-plan properties being developed by companies without planning permission or companies with demolition orders in place. Properties that have any taxes or other bills owed, which are to be passed down to the buyer.
Many countries place a range of restrictions on foreign buyers and impose bureaucratic channels which can complicate matters. You’ll need to thoroughly familiarize yourself with these restrictions and laws before you make any serious decision to invest in the country of your choice.
Buying in Cash
As a foreigner; getting a mortgage in another country is often complicated, if not or impossible. Even if you can get funding locally, you’ll likely still be subject to certain restrictions that require you to jump through a whole medley of bureaucratic hoops to get a mortgage. Many sellers won’t even be interested in selling unless you can pay in cash. On the other hand, lenders back home rarely are willing to give mortgages for property abroad, so you’ll likely have to find an alternative source of funds If you already own real estate back home, you may be able to secure funding against that, in which case it will be entirely your own business how you decide to spend the money.
P.S. The author of the post is not recommending people to “Buy in Cash”, but merely eliciting the fact that “Buying in Cash” is 2nd option if No loans.
Seek Independent Advice
No matter how well you think you know the foreign market, you’ll probably want to seek independent legal advice, just as many people do when buying property in their own countries. An independent solicitor should have no interest in helping an estate agent sell a property, instead representing no other party but you. Unless you are fluent in the local language, you’ll also want to seek out a reputable solicitor who is proficient in English and has plenty of experience dealing with foreign buyers. A lamer should be able to recognize any potential problems with properties you are interested in buying. such as those that are or have been developed illegally. Spain is a classic example of a country in which many UK nationals have run into serious problems by investing in properties developed by ruthless organizations flouting the law. Finally, make sure all important documents are translated into English, and pass them through your solicitor to ensure that they are accurate.
Factor in All Costs
Just as laws differ from one country to the next, so do real estate practices You’ll need to factor in all of the buying costs before making a commitment, taking into account things like insurance, mortgage fees, legal costs, estate agent fees and any taxes that may apply. In many countries, including those in the EU, buyers often have to pay all or a portion of the estate agent fees; in the UK, these are typically the responsibility of the seller.
Closing costs can reflect up to io percent or more of the value of the property, all of which you probably will be expected to pay upon finalizing the purchase. Another important consideration is currency fluctuations. Because of the volatile nature of many exchange rates, you’ll also want to get your timing right when transferring money overseas. Even a relatively small rate fluctuation of 5 to 10 percent can make a difference of many thousands of pounds. You may want to seek specialized advice on securing an optimal exchange rate.
Whether you’re looking for that perfect holiday villa on a Mediterranean beach or an investment property to renovate and rent to tourists, you must keep your ambitions realistic and be prepared to do plenty of research. Buying a property in a foreign country for the first time often presents a significant challenge; be thoroughly familiar with the market and any local laws and customs that concern you before making any commitment. With some professional advice on hand, a degree of patience and a realistic goal, you should be able to realize your dream of owning real estate overseas