By Iain Yule
The British love affair with buying property overseas is far from waning, according to research by Barclays. It reckons the number of Britons who own property abroad is set to double to 4.4 million.
Five per cent of those surveyed already own a home abroad, which is the equivalent of 2.2 million people in the UK. And a further 5% said they are definitely going to buy in the future. Those considering a purchase abroad amounted to 37% of the survey sample.
Barclays found that the main concerns of those considering foreign property purchase were: getting caught out by local legal or tax issues; keeping the property secure while it is empty; not being able to understand the local language; and being taken for a ride and paying too much for a property.
Even if you have identified your ideal property overseas there are still the questions of how to fund the purchase and to conduct the conveyancing. Useful guidance on these questions can be found at the website of intermediary Conti Financial Services, at www.mortgagesoverseas.com. Here you will find details of what loans are available in which currencies for property purchase in almost any area of the world.
Conti suggest that you always check with the estate agent or vendor that you have been fully informed of the costs charged by the legal and government authorities for purchasing a property in your chosen country. These vary enormously from place to place. You should also open a bank account in your chosen country and make sure you get a certificate of importation for the money you bring in. Next, set up standing orders in a local bank account to meet bills and taxes. Failure to pay your taxes in some countries, such as France, Portugal and Spain, can lead to court action and possible seizure of your property.
Conti also point out that bills do not end at the asking price. Lawyers’ fees, taxes and insurance must all be met in your host country, and can add substantially to your outgoings.
Some top tips from Savills Private Finance on the foreign property purchase process.
Decide on your budget
This is an important first step. There is no point in viewing property you can’t afford.
Get a mortgage agreed in principle
Mortgage lenders will tell you whether you qualify for a mortgage and how much you can borrow even before you make a formal application. An agreement in principle lasts three to six months, which enables you to view overseas properties confident that a lender has pre-approved the finance.
Find a property
Arrange to view properties, possibly sign a reservation contract and pay a holding deposit. You must seek independent legal advice before putting down a deposit or signing anything.
Make a full mortgage application
Once you have made an offer on a property, the next step is to complete the full mortgage application form. If you have followed the above steps, this should be straightforward.
Valuation
The lender will require a surveyor to value the property. This takes place once a mortgage application has been submitted, although in certain circumstances this valuation can be enacted at the first stage of the process.
Completion
A date will be set for you to complete and for the property to be transferred to you.
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