Top tips for buying a holiday home abroad
Mark Bodega, director at HiFX, gives his advice for buyers looking to secure a place in the sun or snow…
1) Do your research. Buyers should remember that their choice of where to buy really depends on why they are buying and on the degree of risk that they are willing to accept. If you’re looking at the purchase as an investment take the time to look at cold hard facts and figures such as annual rental yield data. Cities generally provide better rental yields than small coastal villages. If it’s a holiday home, how easy is it going to be to get there? Is there more than one airline route in case one shuts down? Nothing beats pounding the pavements. You’ll be surprised how many rational people buy property without having even visited the area!
2) Always ensure that you seek specialist advice from independent solicitors, architects and surveyors before considering a purchase overseas. They should be proficient in your chosen country’s laws and processes and also know the specifics involved in buying a property there. We recommend not to go with a lawyer that the estate agent or developer recommends. If either is unscrupulous, chances are the lawyer will be working in conjunction with them and will tell your clients what they want to hear, not what they need to hear. Personal recommendations are always the best.
3) Make sure you never sign a contract that you don’t understand (for example – if it is in a foreign language). If you’ve seen a ‘must-have property’ and are tempted to put down a deposit there and then suggest a `cooling off` period. Make sure you take your time; this is a huge purchase.
4) If you are arranging finance on the property, ensure that this is stated in any contract and that you have an ‘opt-out clause’ if the loan is not agreed (which will ensure any deposit paid is refunded). Arrange any mortgage finance ‘in principle’, before you agree to purchase the property, or before you sign any contracts and pay over a deposit.
5) Make sure you carry out a survey. I know it seems obvious, but 75% of Brits don’t bother when they buy abroad. In some countries it can be difficult to track surveyors down, but make sure you persevere. An initial outlay of £500 could save them a whole heap of trouble later.
6) Remember that bills do not end at the asking price. Lawyer’s fees, taxes, insurance etc must all be met and can often be forgotten expenses.
7) Don’t forget the impact fluctuating exchange rates can have on the price of the property your planning to buy. On average it takes between six and eight weeks to complete a property purchase abroad. Even over just one month currency rates can change dramatically and have a real impact on the price of a property abroad. We also always remind people that they would never agree to buy a property in the UK if they did not know how much it was going to cost them; if you agree to buy an overseas property without fixing the exchange rate at the outset, that’s exactly the gamble you’ll be taking. Forward contracts enable you to lock in the exchange rate for up to 12 months and are available from many of the UK’s leading currency specialists like HiFX