A guide to investing in property

The UK property market
A round-up of what’s going on in the residential and commercial property markets
Buying abroad
How and why to invest in a residential property in another country
Global hotspots
A country-by-country guide to the regions offering the best investment opportunities
Let it right
Make sure you take the right steps to residential property investment

Going global

Cheap flights and rising house prices in the UK are encouraging people to look across the seas for investment opportunities. Stewart Andersen has some tips for a successful property purchase abroad

Back in the 1950s Britons began to discover the delights of holidaying in the sun. A fortnight sheltering from biting wind on a British beach soon lost its appeal when compared with time spent basking in the sun on one of Spain’s Costas. We also discovered that property was remarkably cheap. So by the time the mid-1960s arrived, people were beginning to buy homes in the sun.

During the 1970s, an increasing number of Britons were queuing up to own everything from beachside properties to apartments and small villas. Much of the business at that time was located in Spain and Portugal, but by the end of the 1980s it was no longer just the Iberian peninsula that was popular. Cheaper flights and quicker planes made long-haul homeowning possible, and Britons were buying properties in places as far flung as Florida and Australia.

Now we’ve reached the stage where there are overseas property purchasers looking for homes all over Europe, the US and the Far East, and in what are being called ‘the emerging markets’, mainly eastern Europe. If you want to join their ranks, there are some rules you should follow to ensure success.

Looking for answers

A new organisation is now being formed that will provide self-regulation, training, a code of ethics and a disciplinary procedure. One of its main aims will be protection for the consumer because, sadly, even with the amount of publicity given to the public about the best ways to buy a home abroad, there are still some who seem incapable of doing things sensibly.

Anyone thinking of investing in a property in the sun should ask themselves the following questions:

Do I have sufficient funds to pay for the property?

This may sound ridiculous. After all, you know the purchase price – the agent has told you what’s involved. But it’s not such a silly question when you take into account the other expenses involved in the purchase apart from the actual cost of the house or apartment. The town hall, the notary – who will ensure the transaction takes place according to local law – and the Land Registry will all impose charges on a purchase

Do I need a mortgage to buy the property?

There are some countries where, as yet, you simply can’t get a mortgage. Take Turkey for example. There are very strong moves being made at present to introduce a mortgage system in Turkey, but as we stand at the moment, they simply don’t exist. In the past, some people have been tempted to put incredibly cheap properties on their credit cards while on holiday on the assumption that they could transfer the debt to a mortgage when they arrived home, only to find they couldn’t. That left them with three choices: continue to pay horrendous credit card charges each month, take out a loan or abandon the project and the money they had already paid.

Mort-gages are available in other countries but differ from those on offer in the UK. Many lenders will restrict mortgage terms to 15 years, and the way to calculate how much you can borrow will be different. Buy-to-let is not a common concept, so many will be unwilling to take into account poten-tial rental income from a property when calculating how much they will lend

How will the exchange rate affect the price?

The exchange rate on the day you complete on your purchase will determine how much you end up paying for the property. Consider talking to a UK-based currency-exchange dealer about your purchase. They can help you to save considerable sums by purchasing your currency at the right time and in advance. Among the serious players in this particular marketplace are HIFX, Moneycorp and Currencies Direct. They all have experience of dealing with private individuals
c Is my intended purchase debt-free? There are quite a few countries where the debt stays with the property and not with the former owner. The last thing you want is to find yourself buying a property that comes with unpaid mortgage costs or taxes

Do I intend to let the property?

Letting a property is a different ball-game from simply owning it and using it yourself. The chances are you will need to find a reliable rental agency to act on your behalf. Beware if anyone says they can guarantee your rent. The truth is, they can’t. You never know what lies ahead, and believing all your overheads will be paid each and every month ad infinitum is just not good business. Things can change, and you could find yourself having to cover some fairly hefty bills. Take all this into account when deciding if you can afford to invest

Closing the deal Once you have considered your answers to these questions, you can start thinking seriously about taking the plunge. But before you do anything, research is crucial. There are 38 overseas property magazines on the news-stands and numerous websites offering background information and advice. In addition, visit overseas-property exhibitions. You can find details of most of these online, and the majority will have legal and financial advisers available to talk you through the process for the country concerned. There will probably be seminars available as well.

Don’t rush into anything. Take your time from the moment you think about buying a home abroad to the minute you decide on the property you want. Don’t be pressured by anyone, least of all yourself, your family, your agent or the notary. Do discuss the purchase with your whole family. You must be sure of your decision, which means spending time learning everything there is to know about the country, the region, your prospective neighbourhood and the property.

Probably the most important piece of advice is: make sure you use the services of an independent legal adviser. However much you may get on with the agent or the developer, however good, kind and virtuous they may say their solicitors are, get your own, and furthermore one who speaks the local language. There are plenty of solicitors in the UK who are qualified in a variety of countries around the world and who have staff or colleagues who can provide translation facilities in a great many countries.

These are just a few pointers to ensuring that you are able to find a property overseas to meet your requirements. Be practical, be patient and don’t rush into the wrong deal. If you don’t get a particular property, it’ll be like waiting for a bus – there will be another one along in a few minutes. Stewart Andersen is editor of overseas property website www.newskys.co.uk.

Charterhouse Communications

www.whatinvestment.co.uk

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