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What to consider before buying a holiday home

Happy summer holidays in the sun can often spark off the dream of owning somewhere of your own either as a place to escape with the family or retire in the future. If you’re thinking about buying a property overseas, read our top tips before getting started.
 

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Set a budget 

It sounds obvious, but this is the single most important factor. Not just the amount that you’re happy to invest but how much you can risk borrowing and what are likely to be the monthly outgoings to cover the cost of running the property.

Rent before you buy 

In some circumstances, it might be possible to actually rent the property itself before buying. But, failing that, be sure to rent somewhere nearby to really understand what the area is like and whether it will suit. Another tip is to try it out during the off-season months. If you’re planning on making full use of the house, you’ll want to be somewhere that has a bit of life, with plenty of restaurants that stay open, in the quieter winter months, too.

Accessibility is key 

Don’t underestimate how important this is. For somewhere to escape to for a long weekend, you ideally want to be able to travel door-to-door within six hours. It’s what makes Malaga (2h50min flight) so appealing to British buyers.

To let or not 

Be clear about how you’re going to use the house. Is the purchase a lifestyle choice which will be used when convenient and left empty for the rest of the time regardless of costs? Or is it intended to make some money by being rented out when not in use. The location, access from the airport/train station, condition and local rules governing rental licenses will be major factors in this decision (in Mallorca, for example, only houses that have been granted specific licenses can be rented out commercially—and this is strictly enforced by the local government). Also find out what the Income Tax implications are if you rent the house out.

Find the right agent 

Establish a good relationship with a local agent—just like many other situations, the key to finding the right house will be helped immeasurably by feeling confident about the agent who is handling the sale. It’s not just about finding someone who is really knowledgeable about the local area but also finding someone who you trust has your best intentions at heart.

Do your legal homework 

Understand the differences in the transaction processes, as well as the taxes that will be charged to you as the purchaser. Many countries in Europe for example have higher costs involved in buying (and selling) and some will charge you an annual ownership tax which can be different from those we pay in the UK. Do your research first.

Get the right independent professional help 

It’s not worth risking anything getting lost in translation so if your knowledge of the local language is at best rusty, be sure to get all the contracts and relevant documents translated by a certified professional and find an interpreter to accompany you to all meetings as, unlike the UK, it’s likely that you’ll have to be present with the vendor at meetings. A list of English-speaking conveyancing layers, notaries and interpreters is available via the Foreign & Commonwealth office website.

Borrowing money 

UK banks will generally be more prepared to lend money for buying a property in established property markets such as Spain or France but buying in countries beyond those will likely require approaching a specialist lender. That might involve either remortgaging your property in the UK or taking out a foreign mortgage. Brokers exist who can negotiate suitable mortgages from banks based overseas but be aware that if you’re borrowing in a different currency, you’re exposing yourself to fluctuations in exchange rates.

Currency costs 

Figure out what the best way of sending money overseas to cover the running costs is for your circumstances. A changeable exchange rate can impact on the costs of owning a home overseas. Use specialist FX dealers as they’ll offer lower charges and better exchange rates than high street banks. It’s worth having a bank account in the local currency so that any money acquired—for example through renting out the property when it’s not being used—can be used to cover these expenses.

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