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UK attracting Overseas Property Investors

UK attracting Overseas Property Investors

High Rental Yields Producing Property Profits

Chinese, Malaysian and Far East property investors are buying large swathes of investment properties in the UK as they are being drawn in by strong rental yields and weak economy as the price of Sterling (GBP) is overshadowed by the strong Yen.

This influx of Far Eastern property investors is driving the demand for new build investment properties in the UK’s major regional cities and their appetite for property profit is outpacing demand from Greek, Italian, German and other European property investors who are also keen to snap up property bargains.

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Five Important Aspects to Consider before investing overseas or buying a foreign investment property

Property Investors Dream Of Owning Property Overseas

Property Investors Dream Of Owning Property Overseas

Many UK property investors often dream of purchasing a single property abroad or even investing overseas in a ready made property portfolio. Although it is true that a great deal of money can be made by investing within the right market, this sector is not always plain sailing and inexperienced property investors can often find themselves getting into difficulty.

For this reason, it is crucial that buyers maintain a high level of caution before deciding to take the plunge and part with money to invest in a property overseas.

Five important aspects for consideration by property investors.

1. Think About The Reasons for Wanting to Invest Overseas

It is vital that property investors think carefully about the motives which make you want to invest in foreign property.

  • Do you want to invest because you have witnessed the positive market trends?
  • Do you feel obliged to invest in a particular country?
  • Will it be cost effective to own a property overseas rather than renting one yourself?

Before investing you need to do some vast research to ensure that there is a genuine demand for rental properties in your desired location. Carry out detailed calculations before buying to ensure that you will be making a long term profit on your foreign property.

2. Consider Travel Costs When Visiting and Maintaining a Property Overseas

Air travel is becoming more expensive, due to the price of fuel and carbon offsetting, for this reason, you must consider this aspect when purchasing an investment property abroad.

You may be required to visit the property for maintenance purposes or you could even be summoned to attend a court case in the country of purchase.

Think carefully before investing overseas as travel costs can quickly mount up, devouring any profit.

3. Be Realistic and Don’t Get Carried Away By Investment Hype

We all have seen the glossy magazine adverts pushing overseas property investment, however you must remain realistic and do a great deal of research regarding the location and costs in the area in which you would like to invest in a property. Talk to local residents and business owners and before signing contracts seek legal advice to ensure that you fully understand any clauses.

4. Check Market Viability Before Purchasing a Foreign Property

Before closing the deal you must find out how simple renting a property in your desired location is. Are there many empty properties in the area?

This is currently a large problem within the Spanish and Italian markets. Talk to a number of property agents in order to understand the local market before buying.

5. Think About the Potential of the Property in Question

How much money making potential does the property genuinely have?

If you are in the market solely to make a profit, consider low maintenance properties to keep costs down. Do your own due diligence, market research and operating and maintenance calculations to ensure that the property is worth investment.

At the end of the day, it is vital that you use your common sense within this competitive market and do not purchase a property unless you are 100% convinced that it is the right thing for you to do in today’s tough economy.

If you are ready to invest you can always find many reasonably-priced overseas properties for sale by clicking here.

Property Investors Dream Of Owning Property Overseas

Property Investors Dream Of Owning Property Overseas

The ‘Buy-To-Let’ or ‘Jet-To-Let’ market has boomed over the last decade, not just in the usual holiday markets such as Spain, France, Italy and Greece, but now there are endless possibilities in other countries such as Turkey, especially now with the recent Turkish Government announcement that the country wants more foreign investment. Right now purchasing Kalkan Properties look like a fantastic option for owning a holiday home in a tranquil resort with a superb Mediterranean atmosphere.

A small peaceful Mediterranean resort and fishing town on the beautiful Turquoise Coast of Turkey, Kalkan has not been touched by mass tourism. More sophisticated than the usual resort town, Kalkan appeals to travellers looking for more than a “sun and sea” holiday.

Buying the right property abroad and letting it out can potentially provide you with a good source of income and a holiday home. You will need to establish how the income will be taxed in both that country and in the UK.

Buying a property in another country is a lifelong dream for many property investors. With the promises of a better climate, cheaper property and a lower cost of living, it is easy to see why many investors are opting for a life-changing move abroad.

However, with the property market suffering in the UK and abroad, it is important to make sure you are getting the right advice and making the most of your money. Buying abroad can be a complex process and there are many investors who have made mistakes along the way.

There are several factors to consider which might enhance the potential of a successful buy-to-let property. The ideal area should attract tourists and have a fully developed tourist infrastructure, with lots of airports, regular budget flights and international attractions. Investors need to consider their purchases carefully, and determine the demographic market they wish to attract.

Property investors purchasing in a foreign country need to decide if they want to attract sun worshippers, golfers, families or retired couples? Would investors prefer a short but high rental season or a lower but steadier year round income? Foreign rental properties by the sea tend to experience short bursts of high rental yield, interspersed with periods of no rentals at all, dependent on the tourist seasons of the location.

Inland rental options, on the other hand, tend to provide lower, but continual rental returns. Obtaining information on the area and the potential rental income achievable is essential before you buy, and investors are urged to conduct thorough Due Diligence.

At some point you will need to convert your UK currency (GBP) into another currency to pay for your property, or to pay your overseas mortgage. It is important to remember that a change in the exchange rate between deciding to buy a property and the final payment could substantially increase the cost of the property purchase.

Each year, thousands of would be property investors head abroad without a definite idea of what they are looking for. At best they waste time; at worst they waste money and end up purchasing a property with which they are not entirely happy with. To work out whether the dream of buying a property abroad can become a reality, you first need to consider your investment objectives.

• Why do you want to buy abroad?

• How much will it cost?

• Can you afford it?

• What are the tax implications?

• Do you have a particular country and region in mind?

• Are you looking for a holiday home, a buy-to-let, an investment property or a permanent home?

• What size house are you looking for – how many bedrooms?

• Are you looking for a modern development or a more traditional property?

The more decisions you make now and the more research you do, the more you can narrow your search and be better equipped to save time and money later on.

For more on buying property abroad please visit our property sourcing overseas information pages

Property Investors Dream Of Owning Property Overseas

Property Investors Dream Of Owning Property Overseas

Imagine owning Property in Fethiye, a small Mediterranean resort on the beautiful Turquoise Coast of Turkey, or a stunning residence in Tuscany with beautiful sea views. Both have plenty of appeal for holidaymakers and offer a perfect retreat from the hustle and bustle of the daily grind.

Buying property in another country can be a very rewarding experience and an exciting prospect, but the purchased accommodation needs to be able to pay for itself when you are not using it, so do your research thoroughly and purchase wisely!

Many property investors dream of owning their own piece of their favourite holiday destination, but investors should be warned not to let their hearts rule their heads.

It’s crucial to seek the right advice and try not to cut corners. The principles that property investor should stick to in the UK also apply when purchasing overseas property.

Below are a few tips to ensure that purchasing a property in a foreign country is as hassle-free as possible.

  1. 1.   Contracts

Never sign a contract that you don’t understand. If two versions are provided, i.e. English and local language, ask your solicitor to confirm the English version is a true translation, as you need to ensure it doesn’t contain errors, omissions or extras.

Always read the contract. Ensure you are fully conversant with the terms and conditions you are about to agree to.

Specific points to be clear about include:

  • What deposit is required? Is it refundable and under what circumstances?
  • For new properties, what stage payments are required and when?
  • What is included in the price and what is the cost of the extras?
  • Check the due completion date.

 2.   Obtain an Approval in Principle

If you require mortgage finance, obtain an ‘Agreement in Principle’ for the mortgage before agreeing to purchase the property, or before signing any contracts and paying a deposit. This will tell you exactly how much you can borrow and the price range you can realistically consider.

It will put you in a much better position with agents and developers, proving to them that that you’re a serious buyer, and you’ll be better placed to negotiate price. It’s tangible evidence that you can take along when house hunting and it can also lead to your application being fast tracked once you’ve chosen your property.

3.   Valuation

Before proceeding with the purchase (especially with a re-sale property, regardless of age), ensure an independent valuation of the property is carried out, which should point out any problems with the property – e.g. subsidence, damp, wiring defects – and could also highlight any possible boundary disputes.

4.   Legal advice

Seek specialist counsel from an independent English-speaking solicitor who is not connected to your seller, estate agent or developer. If required, you can also consult valuers, surveyors or architects. They should be proficient in your chosen country’s laws and processes and also know the specifics involved in buying a property there.

It’s essential that they confirm to you that all required permissions, licences and planning consents have been obtained. In particular, your lawyer should check that you’re buying a property with the correct title. And that you are being registered as the official owner.

One of the biggest advantages of taking out an overseas mortgage is that the lender will do its own checks on the property, ensuring that a proper legal title exists, that the property is registered in the buyer’s name and that a valuation of the property takes place.

5.   New build properties

If buying from a developer

  • What’s their track record?
  • How long have they been trading?
  • Are references available from previous buyers?

Check comparable properties in the area and any re-sales offered on the same development.

If the developer mentions ‘rental returns’, what are these based on? Check they’re feasible and have been achieved in the past.

Before making any commitment to purchase, allow for a cooling off period, just in case you see a must-have property and are tempted to put down an instant deposit.

6.   Research

Conduct thorough due diligence and research on local facilities and transport links. People gravitate to locations with a nearby airport, (especially if it’s served by a budget airline), but remember there are no guarantees that cheap flights will continue indefinitely to any one location. Proximity to basic facilities like restaurants, shops and a beach are also important.

Talk to people who already live or own property in your chosen area, to get a better understanding of what it’s like to live there. Also consider the property off-season, many resorts are seasonal and virtually close when the tourists return home.

7.   Exchange rate fluctuations

Even small changes in exchange rates can make a big difference to

  • The purchase price of your property overseas
  • Monthly mortgage payments
  • Future rental income.

Consider the benefits of financing your property with a mortgage secured in the local currency – e.g. if you’re planning to rent out a European property through agents local to the property, the euro income can be used to service the monthly euro mortgage payments, avoiding any fluctuations in currency.

8.   Local money

Open a bank account in your chosen country and, where relevant, ensure you obtain a Certificate of Importation for the money you bring in from your home country.  

Set up standing orders in your local bank account to meet local bills and taxes. Failure to pay your taxes in some European countries such as France, Portugal and Spain, could lead to legal action by the Government authorities.

9.   Tax

Check the inheritance and capital gains tax laws of the country where you are buying. For example, in France your children automatically inherit rights to your house; your estate may not automatically pass to your spouse and you may, therefore, need to compile a separate will.

If you take a mortgage out on a property in France or Spain, it may reduce your inheritance tax liability as there is a debt on the property. If you rent out your property you will be liable for income tax.

Seek professional tax advice so that you’re fully compliant and to take advantage of all the possible deductions.

10.    Extras

Bear in mind that bills don’t end at the asking price. Solicitor’s fees, local and national taxes, insurance, etc must all be met in the host country and can often add at least a further 10% to the cost of acquisition. Ensure you are aware of the costs charged by the legal and Government authorities for purchasing a property in your chosen country.

According to the latest property report from property advisors Colliers International, the UK is still seen as a safe haven for property investment.

The Colliers report shows that overall property transaction levels remain fairly limited as property investors take stock.

London continues to lead the way for the UK for international property investment, however, regional markets are seeing some movement and prime rental yields are stable.

In the residential property sales market property price declines are expected to be modest in 2012 as banks and other lenders begin to push up mortgage rates.

Director of research and forecasting at Colliers International, Walter Boettcher, said: “The UK economy remains flat with GDP in the first quarter of 2012 falling by 0.2% quarter on quarter. In contrast, the weighted average of purchasing manager indices over the first quarter was 54.5 consistent with economic expansion. Retail sales volume rose 0.8% over the quarter; and unemployment improved slightly, falling from 8.4% to 8.3%. Capital markets showed few effects of the announcement. Positive news from the US and successful bond auctions in the Eurozone suggest that weak performance is accompanied by stability. The downside has already been factored in and other data sources suggest greater underlying strength. The French election has also had a very limited effect. If anything, the result has boosted safe haven property investment both in the UK and Europe”.

UK investors are facing stiff competition from foreign markets as international property investors, who are able to obtain finance, look to the UK for bargain property prices and high rental yields

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Spain has had a bad reputation for many years in the Overseas property market but the country is now offering reform in order to lure British buyers and investors back to the recession-hit holiday hotspot by promising that their investments will be safe.

Housing minister Jose Blanco opened the Spanish Property Roadshow in London, claiming that now was an ideal time time to buy in Spain due to low prices and new legislation to protect investors.

Mr Blanco said new ‘solid framework’ guaranteed that ‘it is safe to buy a house in Spain’.

The promise comes despite an ongoing scandal in the country which has seen some British homeowners evicted from their homes and, in some cases, having their properties bulldozed.

Many foreign buyers have been affected by lax legislation which allowed properties to be built on rural land, only to be declared illegal once completed.

As many as 300,000 illegal properties are said to exist in the Andalucia region, in southern Spain, alone.

Other problems have involved rural banks, known as cajas, collapsing after taking on too many risky mortgages and construction companies going bust after accepting deposits from buyers.

However, Mr Blanco maintained that of the 850,000 Britons currently living in Spain, only one per cent were affected by the scandal.

He also promised that new legislation had increased transparency in the market and unveiled plans for an online registry allowing British buyers to check if there are issues with a property before purchasing.

Property prices in Spain have dropped by around 24 per cent in most regions, with Marbella prices plunging 40 per cent and Ibiza properties valued at 29 per cent less in the last two years.

However, Mr Blanco said the Spanish economy is showing some signs of recovery, something Andy Bridge from A Place in the Sun magazine has also noted.

‘We have seen the market coming back fractionally. Our property show was bigger this year than in 2010 with more advertisers and we are starting to receive more enquiries from potential buyers.’

Referring to Spain’s bid to encourage Britons back, Mr Bridge said: ‘It is definitely a positive step, but the public are likely to be sceptical.

‘Having said that, Spain is still our favourite holiday destination and is likely to remain so. People are looking for an excuse to start buying again.’

The resell market among private vendors is doing particularly well, according to Mr Bridge. With many people who emigrated selling their properties because they want to return home as they get older.

Source The Daily Mail

 

Despite the economic downturn, searching for property abroad is at an all time high as a record number of UK residents are looking to move abroad to beat the blues.

 

According to recently released figures, UK internet searches for property abroad are up over 100% from this time last year.

 

Data from the property website primelocation’s international search index shows that searches for property in Spain increased by 151% compared to June 2009, and the country accounted for nearly a third of searches overall.

 

Despite the rise in capital gains tax and a fragile economic situation in southern Europe, investors appear to be taking a long term view on the market, while hoping, in the short term, to take advantage of the weak euro.

 

While the market in Spain has suffered from some bad publicity, with most of the problems experienced in recent years centred on the Costas, there has been no significant drop in the number of people searching for property in the country.

 

There are many reasons why Spain remains attractive to British buyers, including the warm climate, great beaches and unique culture, all just a short flight from the UK; these factors still draw in international buyers whatever the economic situation.

 

Property in France, USA, Portugal and Italy have all figured highly in search queries over recent months, with investors searching for investment property within the Eurozone.

Searches for property in the USA have increased by nearly 200% on 2009 figures.

 

Conversely US internet searches reveal that European property is high on their agenda with investment property in the UK being a popular American search query, with the UK offering better rental returns than those property deals that are currently available in most parts of the USA.

 

The research by Primelocation.co.uk revealed a third of all those considering buying property abroad are looking to emigrate permanently. Just under 25% of the 1,500 investors questioned were looking for an overseas holiday home, 13% were searching for an investment property and a further 15% were foreign buyers looking to purchase a UK property

 

The upturn in international property searching contrasts sharply with the volatility experienced during the height of the banking crisis when searches fell by almost 40% between July and August in the late summer of 2007.

 
Flipping Property To Be Made More Difficult By Government

Flipping Property To Be Made More Difficult By Government

Flipping Property To Be Made More Difficult By Government
In A Bid To Boost Revenue

In the week when I have just purchased my first property to flip, the UK Government announced that they are planning to crack down on the profits made by property developers and property investors who flip property.

The Government want action due to the demand for housing greatly outstripping the supply to market and they want a slice of the revenue that they feel the country is missing out on. This could greatly affect my business plans, so I thought I would examine the issue in more detail:

Flipping property is considered by Government to be the process of changing your main residence before selling a property in order to avoid paying capital gains tax (CGT).

However, as many property people will tell you, “flipping” is buying a property at one price and reselling it again within a relatively short time frame (6 month rules apply) at a higher price, whether you have done any work to improve the property or not.

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Being a keen property investor it is difficult to switch off from opportunities even when on a family holiday in Majorca. The whole idea of taking a break was to get away from property for a while… The truth is when you spot a bargain it can be difficult to ignore…

Within 5 minutes walking distance from our hotel base, I spotted dozens of commercial and residential properties that were excellently placed to take advantage of the seasonal influx of global tourists as well as providing living accommodation for workers and their families.

This got Rachel and I talking and the discussions about ownership of overseas property began in earnest.

Property prices started as low as 23,000 euros for a 2 bed seafront apartment in good condition in S’Arenal in the South of Majorca, an area popular with German tourists. Commercial real estate on the island also offers a fantastic opportunity for entrepreneurs to reach out and tap into the tourist market. Lease and unit rental prices were a little vague but from speaking to a couple of vendors, such costs were easily covered within 3 months of trading.

Ownership of property in a different country to where you are based should always be thoroughly investigated and steps taken to ensure legitimate claim to, and protection of, the property from all parties including the notorious Spanish government, who have in recent years been hitting the property headlines by grabbing land back from foreign investors and reselling back to Spanish nationals.

Buying abroad is no different to buying in the UK, You still need to conduct your own Due Diligence. It is always a good idea to visit the area you wish to invest in, to evaluate the potential of the surroundings and to make sure you are buying a property that will deliver the income needed to make you a tidy profit as well as covering its own maintenance and operating costs. With the cheap flights offered by specialist carriers such as EasyJet, this part of the Due Diligence process has now become much faster, easier and cheaper to achieve.

I saw several beautiful apartments that would grace any investment portfolio and now that we are back home the due diligence continues… (watch this space for news in the coming months)

If you want to take advantage of overseas property bargains we recommend viewing our Overseas property pages where you can find hundreds of verified companies offering fantastic deals for UK based property investors.

 

The Centre for Economics and Business Research has joined forces with Estate agent, Chesterton Humbers, to forecast house price movements in England and Wales in the year ahead.

Fired by the near accuracy of its predictions for 2010, the firm dismisses suggestions that public spending cuts, weakening employment and a rise in forced sales could result in house prices falling by 5% in 2011.

Instead, the estate agent expects the Bank of England not only to keep interest rates on hold at 0.5% throughout next year, but also to resume quantitative easing (before April), loosening the money supply.

As a result, credit conditions should ease, making the mortgage market more competitive, while a shortage of properties will also help to underpin prices.

Turning to London, Chesterton Humbers expects recovery to be stronger in the Capital than elsewhere, as it is “relatively well insulated” from public spending cuts.

In addition, sterling’s weakness against major currencies will make London an attractive destination for wealthy foreign investors, while the return of bank bonuses pushes demand even higher.

The firm expects London house prices to gain 1.2% in 2011, with growth for the rest of England and Wales at 0.8%; for 2012, the forecast shows gains of 7% and 4.7% respectively.

by Gill Montia

Source:Homemove

 

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