Guide: Avoid a foreign faux pas

By on January 30, 2013
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The Good Property Guide on the dos and don’ts of buying a property abroad.

Do all your homework and buying a property abroad could be the most rewarding experience you’ll ever have. Get it wrong and it could turn into an expensive nightmare.

Quality legal and financial advice is imperative, but before you start talking to solicitors and estate agents, have a read of our quick guide to buying abroad. It should steer you on the right path…

Take your time

Buying property is a decision that shouldn’t be rushed, so don’t make any snap decisions because they might come back to haunt you later. Instead, do some research on the area you want to move to and make sure you spend some time familiarising yourself with the location both in and out of the holiday season.

This will give you chance to discover how practical it would be living there. Ask yourself questions like; how easy is it to get to the airport? Reconnaissance missions are also a good chance to see if the estate agents are being liberal with the truth or not – is the beach really a “short stroll away?”

While you’re there don’t be afraid to chat to the locals – they might be your neighbours one day. What’s the inside information? What are their favourite things about the area? And their pet hates?

Think tax

Make sure you are familiar with local tax laws. If you are thinking of earning a rental income from your place abroad then you need to ascertain what you can expect to pay in tax on this income.

And what about capital gains tax? What’s the tax man’s cut if you make a tidy profit? And, God forbid, what happens if you die? It might make for some uncomfortable research, but it’s worth establishing what local inheritance tax laws are.

Beware of holiday romances

A few glasses of wine and a bit of sunshine can be the catalysts for an ill-fated holiday romance. What would ordinarily be a hugely impractical and obscenely expensive property can become love at first site, only for the honeymoon period to wear off leaving you with the dull realisation you have bought a shed.

If you do fall for a property, take a step back and give it some careful consideration. Ask yourself the questions that you don’t really want to ask. Is it out of my price range? Does the roof look like it might need replacing in six months? Will this be practical a few years down the line when we have kids/become senior citizens?

Don’t rely on a rental income

Do your homework and the chances are you will set yourself up to make a decent rental income from your foreign investment. But don’t rely on it to pay your mortgage. Although it’s unlikely, if something were to happen that’s out of your control (say, an airline suddenly pulls out of the local airport), then you could be left struggling to pay your monthly installments.

 What about the hidden extras?

When buying abroad don’t forget about extra costs such as legal fees, valuation fees, taxes and insurance. It’s worth bearing in mind too that most banks will charge a commission for transferring money abroad – be aware of these hidden fees and factor them into your budget before you start to think about property.

 Learn the lingo

Even if you’re only going be staying there for a few weeks a year, learning the local lingo will certainly help you make friends. These friends could be particularly useful, even when you’re not using the house – if there is a problem in your absence they could call to inform you.

Ask experts

Before you commit to anything, it is imperative that you seek advice from independent solicitors and surveyors. Even if you’re grasp of the local language is pretty good, it’s worth hiring an English-speaking legal eagle, preferably one with an international reputation.

 Get an agreement in principle

Before you sign the dotted line, make sure you get an agreement in principle for your mortgage. If you’re living abroad for good then find a mortgage broker in the country you’re moving to – you’re likely to get a better deal.

Photo credit: Valentina_A / Foter.com / CC BY-NC-SA