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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.

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