Buying a Foreign Property
Foreign property may be demanded by people residing in a particular country for several reasons. Here are some of the main ones:
Whatever the motive, there are many advantages and disadvantages that should be considered carefully before taking the huge step of purchasing foreign property. A property is one of the biggest financial investments that an individual can make during their lifetime.
Factors To Consider When Purchasing An Overseas Property
The factors that will determine where an individual buys a foreign property relates mainly to their motives for purchase. Someone who buys a property with financial gain solely in mind may not give much attention to the climate or sociological factors of a potential place. They will look at the likely capital growth and yield that the property is likely to offer.
In contrast, an elderly retired couple, one of whom has arthritis would pay very close attention to climate considerations of the region the property is in – as well as other social factors, such as the lifestyle enjoyed by its citizens. Capital appreciation is not likely to be high on their agenda for choosing a retirement property.
Here are some of the considerations that should be kept in mind when deciding where to buy a foreign property:
• Language spoken – you may find the most picture perfect place in the world, but is it of much use if the buyer is unable to converse with the locals?
• Investment potential – this should be a factor not just for those who use property as an investment vehicle. It could be a very painful mistake if property is purchased in a location that is experiencing a horrid downturn in the property market. This could result in capital losses if for some reason the buyer wants to liquidate the property soon after its purchase. On this note, rental yields must also be considered.
• Socio-political issues – the crime rate, attitude towards foreigners and economic prosperity should also be taken into account. Is the town and country bustling with prosperity or is it on a downward trend? These issues often filter down and affect quality of life experienced by the general population and property values.
• Climate – anyone who has experienced a bitterly cold London winter will have this planted firmly on their list of important factors. In fact climate is one of the major reasons cited by Brits for choosing to live in alternative countries such as Spain, Portugal, Italy and even Greece among others.
• Those who are moving but will still need to work must investigate how marketable their job skills are in their new location.
• Moving to another country can have an impact on the persons status in their home country. For example, claiming welfare and benefits may elapse by moving abroad.
• Those with children will have to investigate the availability of suitable schools.
• Different countries have different rules regarding not only tax matters but also procedures relating to withdrawing pensions. It is vital to investigate these matters thoroughly prior to making any commitments.
• Availability of quality health and other services as well as transport infrastructure are also important considerations, especially for elderly people that face more often health problems
• Other factors such as the cost of health care, taxation, environmental pollution and general cost of living will also need to be given due thought before deciding on any particular location to move to.
Important Contacts To Make Your Foreign Property Purchase Go More Smoothly
Purchasing a property abroad is somewhat more risky than doing so in your own backyard. Countries have their own strange laws, loopholes, legislations, land development and property ownership regulations that can turn any potential property purchase into a possible minefield.
It’s always best to take the advice of certain professionals while undertaking a foreign property purchase. The following group of contacts will be able to offer valuable advice on various issues:
• Estate Agents – Depending on where the property is located, various estate agent groups exist to help you find not only a good property but also a region and city that caters more to your desires. Some bodies you can contact are the CEI (Europe) and the FAMB for Florida.
• Tax experts – Will help you understand all tax implications of your purchase, including income taxes and pension taxes if your purchase is associated with permanent residence and retirement
• From an investment point of view you certainly need to consult with local property market and investment consultants about how the market is moving and trends in property values
• Local banks – In purchasing a foreign property, many times it is easier to get a loan from local banks in order to finance such a purchase; thus having these contacts will help you arrange the necessary financing in favourable terms
• Lawyers – will help you address all legal issues associated with the transaction so your rights to ownership are secured by the law
• Other contacts that can help include notaries, architects as well as relevant embassies and government bodies.
• Property shows and exhibitions can be a valuable source of research for your property hunt. However it is important to go with a neutral stance and not be “hooked” by the impressive marketing and sales tactics some merchants employ to get you to buy their properties. Purchasing property should NOT be an impulse buy!
Some Handy Tips For Purchasing A Property Abroad
There are several general tips that you can take on board before sealing the deal on your foreign property purchase. Here are a few things to keep in mind:
• Be wary of signing a contract that you do not understand completely. This is particularly the case when you are signing a contract in a foreign language.
• It’s important to be aware that, when it comes to finance, the house price is not the only expense. You will have to factor several other costs into your budget – such as expense incurred in travelling to view the property. Legal costs, insurance, taxes and surveying charges are a few additional items that you will need to take into account too.
• Read specialised magazines related to purchase of property abroad. These have many articles and a great deal of advice about a variety of issues relating to foreign purchase and also provide country specific information. You can also find out more information by visiting property exhibitions and by researching the internet.
• Ensure that the property does not come with an inherited debt – your legal contact will be able to check this out on your behalf.
• When purchasing a new property try and obtain a bank guarantee. This is to ensure that should the developer run into any financial difficulties you can recoup any monies handed to them.
• A bank account will need to be opened in the country that you are purchasing the property in. You may also need to obtain a “certificate of importation” for the money that you bring in from your home country. Additionally, you may wish to set-up direct debits for standard bills related to your property. If you forget to do this you may actually risk your property being repossessed.
• This may seem like an advanced strategy, but you can maximise the value of your property purchase by choosing a favourable time to buy in terms of exchange rate. While no one can call the market with absolute certainty, getting the advice of a currency expert could ensure that you make your property purchase at a rate that benefits you.
• If you visit home shows and exhibitions do not be tempted to sign up on the spot no matter how much of a great deal it may seem at the time