Top tips for buying hot property in the sun
Holiday romances rarely last – and that includes any love affair you might have with a dream property in the sun.
Buying a property can be fraught with problems in the UK – let alone at long distance in a country where you may be unfamiliar with the language, legal system and financial processes.
Many holidaymakers fall in love with the sun, sea and lifestyle in another country and decide to buy a property on the spur of the moment – but if you are considering a second home abroad or even relocating, here are some top tips you should bear in mind:
- Don’t make a decision blinded by sun – enjoying your holiday is one thing, investing in a property and returning to the same place time and again is another.
Collect all the information you need to make a decision then come home, take the sunglasses off and look at your plans in the clear light of day.
Take advice from your family, friends and independent professional advisors who don’t have any interest in your purchase – and preferably advisors who are well versed with buying and selling property in the place you are looking.
- Keep it simple – never sign anything you don’t fully understand
- Keep your cheque book in your pocket until you are absolutely sure you want to proceed and that every protection of you money and interests are in place.
Just like in the UK, if you are financing the purchase with a mortgage, don’t hand over a penny until you have an offer in writing from your lender.
- If you’re buying a second home abroad and still working in the UK then arrange a mortgage in sterling to avoid losing out on exchange rate fluctuations. If you’re moving abroad and earning in a foreign currency, then try to arrange your mortgage in that currency.
- Don’t settle for second best. If you’re not absolutely sure about a property, think with your head and not your heart.
- Check out the tax implications of buying and possibly renting out your property with a tax professional in that country. Few UK accountants are qualified to advise you on overseas tax affairs.
If you are continuing to live in the UK, you need to include details of any rental income and property expenses to HM Revenue and Customs. You will pay income tax on any rental profits and capital gains tax if you make a profit selling the property as some stage in the future.
- Make sure you are completely briefed on the full cost of buying your dream property – in many countries fees and taxes are added to the purchase price that can dramatically increase the cost of the deal.
You need to make provision for all these extra costs in your budget.
- In many countries, developers structure a finance deal with banks that may include putting each plot on the development up as security. Ensure your solicitor checks this out so you do not take on the developer’s debt when you take over the property.
- Set up a bank account in the country where your property is located – pay in all the rents and pay out all the bills.
Summary
- Don’t make any instant decisions
- Don’t sign any papers you don’t understand
- Make sure you have your finances sorted out before proceeding with a deal
- Get a team of independent experts to give you advice
- Don’t forget to find out all the cost and tax implications before you proceed
