There are various reasons why you might want to purchase an overseas property. Perhaps you simply think that the lifestyle and job opportunities are better abroad. Alternatively, you might be an investor and eager to pour your money into a property market outside that of your home country.
Whatever the reason, you should be careful in your approach to purchasing a property that is in a foreign land. Otherwise, you could too easily stumble, as the following points make clear.
Your precise budget
You should be very aware of this before your property hunt commences. This bears emphasis because you might currently be considering a particular property that, upon closer scrutiny, you realise is actually only just outside that budget.
One big reason for this possibility is that it is not only the property’s sale price that the budget needs to cover, but also the purchase cost. A Place in the Sun cautions that this cost could reach 14% of your overall expenditure for a property purchase in areas of Spain.
The type of property
A property where you would love spending time during weekends away might not strictly be the best kind of property to purchase, rather than rent as your preferences take you.
So, if you are eyeing a quaint cottage in quiet and peaceful countryside, then stop to consider whether you – or people with the option of buying or renting the property – would genuinely be content with sticking with it for the long haul. The initial novelty could too quickly wear off.
Sticking with the point of the country cottage, do you think it would be satisfying for many people to spend much time living there if vital amenities are scarce locally? There could be few shops or public transport routes – and tenants in particular might not be happy with a need to keep hiring a car.
Healthcare facilities could also be hard to come by; this could be especially concerning for old people who might come to rely heavily on readily accessible healthcare.
Buying the right property is not necessarily as simple a case as, first, finding something you like that is within your previously decided budget and, secondly, signing on the dotted line.
You could find a property that lacks one or two things you had previously deemed vital, but – on closer inspection – you could add yourself without too much hassle or expense. For this reason, you might be willing to settle for a property that, despite its obvious drawbacks, actually seems better value for money than an alternative which would already come with everything you need.
Even if you can afford the upfront asking price for a property, surprisingly hefty running costs could ultimately rule out a move on your part.
These costs can prove especially problematic if you will be running a couple of properties simultaneously and, therefore, have to pay two separate sets of tax, bills and broadband fees. Nonetheless, you might be able to recoup some of the losses by renting out one of the homes.
Independent legal advice
No property purchase should go ahead without you having previously received relevant advice from an independent lawyer. This point still stands even if you will be buying in a country where using your own lawyer would be neither customary nor standard.
A lawyer not associated with the property’s agent or developer can carry out necessary checks for preventing you buying a property on what turns out to be a financially unsound development.
How you conduct tax matters relating to the property could depend on the country in which it is based. Some countries would require you to fill a yearly tax return, regardless of whether the property brings you any income.
Also, should you be set to spend half of each year in the overseas property, you can prevent tying yourself in financial knots if you decide which country in which you will be deemed tax-resident.
It would make sense for you to get a property insured after buying it. However, homes often left unoccupied can bring costlier home insurance premiums as a result.
You could circumvent this by taking out what has been referred to as unoccupied home insurance. The UK-based broker Call Wiser can, from insurers, source policies that provide this kind of insurance for 3, 6 or 9 months; so, select the most convenient of these options depending on for how long the building will be unoccupied.