If you’ve often found yourself staring out at the dreary British sky and dreaming of warmer climates, then you’re not alone. In fact, around 970,000 Brits own a second home abroad. What with the constant stream of stunning blue skies and sandy beaches flooding your Instagram feed, and watching back-to-back episodes of A Place in the Sun, it’s hard not to want to join them. If this sounds like you, be sure to research things like the process to buy real estate in Florida before you get started.
So, should you take the plunge and buy your dream holiday home abroad? Maybe you see property abroad as a great investment opportunity. Whatever the reason, it’s good to get an insight into the pros and cons of any big investment.
If you’re already thinking about getting in contact with an international property lawyer who can guide you through the process, don’t go anywhere. Here, we’ll be discussing the buying process and the benefits and drawbacks to buying a house abroad, so you can be certain this is the choice for you.
Things You Should Know About Buying a House Abroad
There are a lot of factors surrounding buying a property abroad that are similar to buying a property in the UK. That said, there are many elements that are different, depending on which country you are buying in. Here’s a rough guide on what to look for when buying a house abroad.
Know The Basics
Some of the basic parts of the house-buying process are the same abroad as they are in the UK, such as:
You need to carry out searches on the property
You will enter into a contract that is agreed to by both parties
You will pay a deposit
You will sign a Title Deed which will reflect the change of ownership
However, things like the legal process, costs, and timescales can work very differently in various foreign jurisdictions. Do your research ahead of time, and be sure to seek the help of a financial adviser and international property lawyer along the way.
Work Out Your Budget
Although you may see some bargain property prices abroad, it’s important to remember that things like legal fees and taxes are often higher elsewhere than in the UK. Before you get carried away imagining what colour you’re going to paint the walls, it’s important to sit down and work out what your absolute maximum budget is.
Find out what all the extra fees will cost and, if you’re going to take a mortgage out in that country, find out what interest rates you can get. Taking the time to figure out all the finer details before you start looking at properties ensures you won’t land yourself in financial trouble later down the line.
Seek Advice From An Independent Lawyer
It may be tempting to use the lawyer the seller, agent, or developer recommends to you, but it’s vital that you seek advice from an independent lawyer. Often, when a seller recommends a lawyer, they are also acting on behalf of them, and you want to make sure that your best interests are being looked after.
If you’re using a lawyer from the UK, make sure that you check that they are registered with the Law Society and that they specialise in international property transactions. The government website has a guide to buying property abroad, with a list of English-speaking lawyers and translators to help.
Benefits Of Buying A House Abroad
There are many upsides to buying a house abroad such as looking for Playa Del Carmen condos for sale. Some of these upsides may even be financially beneficial to you, so it’s definitely something to think about if you have some extra savings lying around. Some of the many benefits include:
Ready-Made Holiday Destination
One of the main benefits of buying a property abroad is that you will always have a place to stay in your favourite holiday destination. You don’t have to worry about booking ahead of time and what facilities there will be. You will be able to have all your creature comforts in your home away from home.
Source Of Income
If you are splitting your time between your home in the UK and your home abroad, you could always let out your property as a holiday rental when you’re not there. This can be a source of income to help pay for the mortgage. Alternatively, you might buy a property abroad solely as rented accommodation or as a holiday rental.
Long-Term Investment
Having a home abroad is really a long-term investment. When you plan your visits, you will only need to cover the cost of your flights and any spending money you wish to bring. So, if you return multiple times a year for years, you will save yourself money.
Having permanent accommodation waiting for you also means that you can avoid inflated prices during the peak holiday season. Instead, you can travel to your own accommodation, without having to worry about forking out thousands just for a nice hotel.
Invite Your Friends And Family
One of the great things about having a bolt hole you can escape to at the drop of a hat is that your friends and family can take advantage and join you. This is especially great if you’re looking to create some great memories with big family holidays, but without the accommodation costs.
Drawbacks Of Buying A House Abroad
Naturally, everything comes with cons, no matter how amazing the idea may be. Some of the practical drawbacks of buying a home abroad, which you certainly need to bear in mind, include:
Funding Your Property Abroad
One of the main disadvantages of having a second home overseas is that you will be paying for two mortgages, which is a significant debt. Many people will either remortgage their current home (a risky move) or will obtain a second mortgage in the UK or in the country they’re purchasing in.
Getting a foreign mortgage can be quite complex, so it’s important to seek advice from a specialist lawyer or financial advisor before going down this route. Ultimately, though, it’s important not to rely on your rental income to boost your funds. This may not always be guaranteed, and you could end up defaulting on your mortgage payments.
Fluctuations In The Exchange Rate
When you buy a property abroad you will, at some point, need to exchange your English money for the currency of the country you are buying in. Unfortunately, this means that you are at the mercy of the current exchange rate. So, you may get a better or worse deal at the time of purchase, but it is just pure chance and something you can’t control.
No Variation In Holiday Destination
Having a home abroad will make you feel obligated to keep going back to this same destination time and time again to get your money’s worth. That’s why it’s important to make sure you pick the right location that you won’t get bored of. If you’re the type of person who loves to explore new places and have new adventures, then maybe investing in a property overseas isn’t the right move for you.
Maintaining Your Property Abroad
When daydreaming about their perfect holiday home, a lot of people may forget that the property still needs maintenance, even when they’re not there. If you’re only visiting for two or three months of the year, then you may need to hire a property management company for an ongoing fee.
Thinking about the upkeep of your home is also important when you’re viewing properties. Sure, that infinity pool or hot tub may look dreamy, but who’s going to look after it when you’re not there?
Buying a House During The Coronavirus Pandemic: How Things are Changing
Drawbacks Of Buying A House Abroad
Naturally, everything comes with cons, no matter how amazing the idea may be. Some of the practical drawbacks of buying a home abroad, which you certainly need to bear in mind, include:
Funding Your Property Abroad
One of the main disadvantages of having a second home overseas is that you will be paying for two mortgages, which is a significant debt. Many people will either remortgage their current home (a risky move) or will obtain a second mortgage in the UK or in the country they’re purchasing in.
Getting a foreign mortgage can be quite complex, so it’s important to seek advice from a specialist lawyer or financial advisor before going down this route. Ultimately, though, it’s important not to rely on your rental income to boost your funds. This may not always be guaranteed, and you could end up defaulting on your mortgage payments.
Fluctuations In The Exchange Rate
When you buy a property abroad you will, at some point, need to exchange your English money for the currency of the country you are buying in. Unfortunately, this means that you are at the mercy of the current exchange rate. So, you may get a better or worse deal at the time of purchase, but it is just pure chance and something you can’t control.
No Variation In Holiday Destination
Having a home abroad will make you feel obligated to keep going back to this same destination time and time again to get your money’s worth. That’s why it’s important to make sure you pick the right location that you won’t get bored of. If you’re the type of person who loves to explore new places and have new adventures, then maybe investing in a property overseas isn’t the right move for you.
Maintaining Your Property Abroad
When daydreaming about their perfect holiday home, a lot of people may forget that the property still needs maintenance, even when they’re not there. If you’re only visiting for two or three months of the year, then you may need to hire a property management company for an ongoing fee.
Thinking about the upkeep of your home is also important when you’re viewing properties. Sure, that infinity pool or hot tub may look dreamy, but who’s going to look after it when you’re not there?
Buying a House During The Coronavirus Pandemic: How Things are Changing
It won’t come as a surprise that COVID-19 has changed the way we do almost everything in life. Markets all over the world have been affected by lockdown restrictions, and that includes the property market. With lengthy lockdowns in many of the prime destinations, like Spain and Italy, how has this affected it all?
Buyer’s Market But Less Properties
A lot of the sales in countries within the EU are dependent on the sale of UK properties. After the UK government advised against people buying and selling their homes, the property markets abroad have also stalled. Property prices have, therefore, taken a hit, and Brits looking to sell their property abroad may be making a loss.
Virtual Viewings
As the pandemic progresses, things are starting to adapt. For example, many estate agents are now offering virtual house viewings, which are particularly useful if you are looking at properties in a country that is currently under a travel ban. Lockdowns have given people more time to makeover their homes ready for listing, meaning more properties may flood the market when the pandemic eases.
Fluctuating House Prices And Exchange Rates
The uncertainty of the Coronavirus and Brexit means that house prices and exchange rates are likely to fluctuate even more than usual for some time. If you’re looking to buy property abroad, it would be wise to keep an eye on the house prices and exchange rates to try to time your purchase. House prices are likely to shoot up once lockdown restrictions and travel bans ease. A dedicated currency broker can help you manage this.
Brexit And Beyond
Before the pandemic, many people were hoping to make the move to countries like Spain and other EU countries before the end of the Brexit transition period on the 31st December 2020. Although the deadline has passed to extend this period, it may still be an option for the UK government, considering the delays to talks caused by the coronavirus outbreak.
However, this isn’t a guarantee, and buyers and sellers may be more reluctant to proceed with property transactions until they know what will happen. It is clear, though, that lockdown has given people a chance to reflect on what they want from life and what their priorities are, which may prompt them to think about buying a second home abroad.
Weighing Up Your Options
Before buying a house abroad, it’s important to consider all the pros and cons and make a list of all the costs involved before making a decision. The current pandemic situation, and the looming deadline for the Brexit transition, should all be considered.
If you do decide to make your move and buy your dream holiday home, just make sure you seek the advice of an independent international property lawyer, a currency expert or financial adviser. Also, be sure to take your time before making any big decisions.
Have you recently bought a house abroad? How did you find the process? I'd love to hear about it in the comments below!
I'd love to buy a house in Florida. Very useful article thanks
ReplyDeleteIt's a very useful article. I bought my tiny flat in Italy in 2020 and couldn't get there for a year due to travel restrictions. But I am still glad I did it and prices in the particular place I purchased have not gone down at all due to scarcity value.
ReplyDelete