With a strengthening pound and a burgeoning choice of keenly-priced holiday homes to choose from – buying abroad is witnessing a revival. Property expert Laura Henderson reveals her top tips for finding that perfect place in the sun
There’s something quaintly reassuring about the Herculean mound of paperwork that comes with buying property in the UK, from land registry checks and structural surveys to arranging finance and buildings insurance. If nothing else, you at least know where you stand. Buying abroad doesn’t always come with that same ‘tick-box’ seal of quality. Individual countries can differ greatly in their ‘due-diligence’ procedures, which makes a background check-list an essential first step before choosing location options:
Look at the bigger picture. Research macro factors such as a country’s political and economic situation. Investigate tourism statistics, stability of currency, as well as property growth trends and the government’s stance on foreign ownership. Go to www.fco.gov.uk and www.aipp.org.uk for up-to-date location profiles.
Sort your finances. If you’re arranging finance on a property, ensure that this is clearly stated in any contract. Where possible, seek an ‘opt-out-clause’ if the loan is not agreed. This will ensure any deposit paid is refunded.
Know your legal rights. Some emerging markets offer limited protection to overseas buyers, so find out what restrictions are put on foreign property holders, including the maximum length of stay, visa requirements and what appropriation rights the government holds in the region. Where do you stand if the developer or vendor fails to deliver on what they’ve promised? What is the dispute resolution process?
Appoint an independent solicitor. Choose someone located in the country you’re buying who can represent you throughout your purchase. They shouldn’t have anything to do with the property or the developer and must be proficient in property transactions with foreigners. The Law Society and the British Consulate can supply names of country-specific solicitors.
Check title deeds. It’s essential to verify that the home you are purchasing has clean title i.e. that ownership is undisputed, boundaries are clearly delineated, and that you won’t inherit any debt. Check the planning status of new build property. Does the developer have full title to the land or property? If the property has been built in the last twenty years, you should insist on seeing evidence that it has the correct planning consent. If you’re intending to carry out restoration or extension work on an older property, now is also the time to check that this is allowable and to apply for permission.
Tackle the tax system. Find out if your country of purchase has a tax treaty with the UK to ensure you’re not taxed twice on any income. The UK, for example, has a double taxation treaty with France and Italy, but still doesn’t have one with Costa Rica. Some places have a ‘two-tier’ tax system where rates paid by locals are substantially less than those paid by foreigners - so make sure you’re analysing the cash flow based on the latter. It’s also important to find out if you’ll be liable for capital gains and inheritance tax when you come to sell. Inheritance laws are often far less flexible than in the UK, so if you live or hold substantial assets abroad, it’s worth having a local will drawn up.
Laura Henderson is a property columnist, author and investment expert. Her latest book Tricks and Mortar: The Little Book of Property Wisdom (£12.99, Book Guild) is out now.
Daily tip from the lady archive
“PEOPLE cannot help being influenced by their surroundings and their environment; therefore how all important it is that both of these should be healthy and cheery, for health and happiness both go hand-in-hand.”The Lady. The Blessing of Old Health, 18th November 1920