By Bea Patel, Property Editor and Director of Shop for an Agent, the estate agent comparison site
Buying property abroad is tempting. With undervalued properties with long-term financial potential, many people spending more time in their favourite sunny destinations, and when the currency is stronger from the buyer’s country, the prospect for buying overseas is attractive.
Jordan Tilley, head of UK and Europe at UKForex gives his five top tips for investing in property abroad:
1. Research the mortgage market
Don’t just assume you’ll be able to borrow money straight away, especially in Europe. Speak to banks, international mortgage brokers, and local agents to find out about specific requirements and costs. Ask yourself how these costs measure up against your likely rental income.
2. Check the exchange rates
Check exchange rates when you start, and budget for a rate five per cent lower than this so you aren’t caught out by a falling pound in the future. Further into the purchase process, you can fix a rate on the day for settlement up to one year later to secure this budget – known as a forward contract. A quick tip: the best exchange rates will rarely be with your bank.
3. Don’t get caught with legal matters
Speak to lawyers from an early stage to map out the purchase process and costs, as well as your rights and obligations as a landlord. Ownership rights can vary significantly from country to country. If you plan to rent out the property long term, what are the laws for adjusting rents and evicting bad tenants? If they’re short term holiday lets, do you need specific licences in your area for doing this? Also speak to other owners in the area – sites like Angloinfo are a great resource.
4. How to make cost-effective money transfers
Costs for money transfers can soon add up. These can be from poor exchange rates, bank fees and intermediary charges. When choosing your money transfer specialist, make sure they can bring your money home quickly with excellent rates and low fees, even when you’re out of the country.
5. Look into local letting agents
If you’re looking for long-term tenants, go out and speak to local agents to choose a reputable one that can respond to tenant issues quickly. For short-term rentals, there are plenty of useful sites such as HomeAway and Airbnb who can help you manage these.
Another crucial element of the process is paying for your overseas property. It’s one area where you can throw away money unnecessarily. Darren Kilner, currency expert at FAIRFX shares his two top tips:
1. Don’t leave your money transfer until the last minute and risk leaving your money exposed – mitigate your risk
If you know the date you’re due to transfer money for the property you’re investing in, don’t wait until the last minute. Speak to a currency expert in advance to make the most of favourable exchange rates and mitigate your risk should the market turn against you by utilising payment options, such as forward contracts and limit orders.
2. Make sure you compare rates from different providers on a like-for-like basis
In the foreign currency, market rates often change from one minute to the next. So if you’re looking to find the best rate from a foreign exchange supplier, remember to compare rates at the same point in time. This is easier to achieve online, but if you’re calling around for quotes, keep calls as short as possible to get an even comparison.
When investing in property abroad, there are a number of factors to consider such as language barriers, currency, location, risk factors and yield. I spoke to four experts at overseas developments who each give their top tips for buying property abroad.
Anwar Harland-Khan, ceo of L’Amandier, Marrakech says: “Firstly, get to know the developer personally as this will give you a real insight into the development. It will also mean that you’re likely to be fully updated throughout the process in regards to completion dates etc.
“Secondly, it is essential to make sure that you conduct proper due diligence. At L’Amandier we provide detailed information to all of our clients and ensure that they use lawyers who understand the local legal system, and can guide them clearly through the purchase process. This makes sure that the experience remains as stress-free and straightforward as possible.
“For L’Amandier, it’s really all about location – the development is found on a spectacular plateau with outstanding views and unmatched natural surroundings, complemented by zen-like architecture.”
Karima Laamiri, sales manager at La Manga, Spain says: “Be sure to choose a country that is economically and politically secure, so as to ensure that your investment carries minimal risk.
“Something else important to bear in mind particularly with British buyers is the climate. Ideally investors seek somewhere with a good year round climate, meaning they aren’t restricted to just spring or summer usage. Finally, be sure that wherever you’re buying offers competitive pricing.
“At La Manga, there are a number of aspects which appeal to investors, such as high quality services and sports facilities, 24hour security, an ideal location for a holiday home or year round residence, climate, close to the beach and different property styles spanning from traditional to modern.”
Adam and Alex Pinion, founders of Pin & Pin, Croatia say: “As in the UK, there will always be demand for property in prime locations abroad. Whether it’s close to the sea or near to an attractive old town, it’s important to buy in the best location your budget will allow to make for the best investment.
“When buying off plan from a developer always check their references, or ideally ask to view some of their previous developments to see the quality of building and finish. A popular feature with a Pin & Pin villa is the option of a fully customised and equipped interior. It can be very difficult to find quality furnishings in Croatia, so we import high quality furniture and soft furnishings from around the world.”
Elodie Casola, director of marketing for Abama Luxury Residences, Tenerife says: “Choose somewhere that is easily accessible. You want to be able to reach your property without having to spend days travelling with long airport transfers. The Abama Resort is located just a half an hour drive from the airport, where flights arrive regularly from the UK.
“Value for money is also an important point to consider. Where possible try to make sure that your purchase will deliver a regular rental yield, or has the potential for strong capital growth. Abama properties are very high calibre with the architecture, interior design and landscaping adapted according to clients’ specific demands.”
Peter Walshe, marketing director of Lalzit Bay Resort & Spa concludes: “Before purchasing a property abroad, we always suggest that potential buyers spend some time familiarising themselves with the local area. A great way to do this is to hire a car for the day and explore what the area has to offer, discovering key local knowledge along the way. It’s important to feel comfortable within the surroundings of the property before finalising any purchases.”
Images courtesy of L’Amandier, La Manga, Pin & Pin, Abama Luxury Residences and Lalzit Bay Resort & Spa