Ten top tips to find your new home in the sun
Don't let your dreams of living abroad turn into a nightmare. Do your homework, says Chiara Cavaglieri
Sunday 06 November 2011
A place in the sun is still a dream for many people, and others are willing to take an even bigger step by emigrating and leaving the UK behind. Official figures show that about 124,000 people emigrated last year, but buying property abroad can be a minefield.
Here are 10 things to consider before making that leap.
1 The location
Many of the big-name property portals have overseas sections, including Findaproperty, Primelocation and Rightmove, and you can find international property through UK estate agents such as Knight Frank and Savills. However, buying property abroad is about more than sticking with the area you like to visit during your summer holidays, so you need to look into the local facilities and transport.
"In the more popular areas of southern Europe where you've got a lot of choice, if you can afford it, pick somewhere near an airport," says Nigel Lewis from Primelocation. "It may be more expensive but is better for friends and family visiting and for renting it out. People don't want to spend their holiday stuck on the motorway."
Do your research: there are many horror stories of land-grab planning laws which caused many expats to lose their homes. Once you've picked an area, compare property prices over a period of time and find out if there are any new developments shooting up in that area. If there aren't enough buyers for them they could severely affect the price of your new home.
2 Getting an independent lawyer
Do not sign a contract before seeking legal advice and avoid using a firm recommended by an agent or developer. Get an independent lawyer who speaks English and understands local and international laws. They will ensure that nobody has a claim on the land your property sits in and that all the local planning rules have been adhered to. In some European countries you must use a notary to oversee the transaction, running searches and checking the title deeds, but you still need a lawyer to look after your interests. If you are buying off-plan, get legal help.
3 Choosing an agent/developer
Ask for references from previous buyers and find out long they have been in business for. Don't allow promises of guaranteed rental yields to push you into making a decision before you've ensured that you're dealing with a reputable company. Never hand over a cash deposit directly to the developer as there should be a third party (such as a bank) offering to guarantee the deposit.
4 Getting a mortgage
If you're not a cash buyer you can remortgage your UK home, although you do run the risk of losing it if you get into any trouble with repayments. Otherwise, you will probably need to arrange a mortgage agreement in principle from a local bank as only a few UK banks lend for overseas purchases. If you're borrowing abroad you will need to go through a specialist broker, but post-credit crunch it is much more difficult to borrow.
5 The exchange rate
Exchange rates will have a huge impact on the amount you pay between agreeing a price with the seller and paying the final sum. It may be worthwhile fixing the exchange rate by speaking to a foreign exchange specialist. Most currency brokers will allow you to fix the exchange rate for up to two years. Remember that if you rely on a UK pension in sterling, exchange rates could erode the value of that income so you may not enjoy the same standard of living.
6 Your tax liability
Don't ignore tax rules when buying abroad – it could take a significant chunk out of your budget. Property taxes, usually a percentage of the purchase price, vary widely from about 5 per cent in the US to 12 per cent in Spain and 15 per cent in Italy.
"On buying the property you may have to pay the equivalent of VAT (if it is a newly built property), stamp duty (if it is a resale property) or some other form of sales tax," says Paul Dimambro, the head of Hargreaves Lansdown Currency Service. "Local taxes, such as the country's equivalent of council tax, may be levied."
If you let the property you need to consider income tax, although if you choose a country with a double taxation treaty with the UK, you will be able to offset the tax paid against your British taxes. You may also need to pay capital gains tax when you eventually sell. Seek professional advice from a tax specialist.
7 Your pension
If you are retiring abroad or approaching retirement, you must find out how this affects your pension. You can have your state pension paid into an overseas bank account, but in some parts of the world (including Australia, New Zealand and Canada) your pension payments will be frozen, rather than increasing in line with inflation as it would here. You should take financial advice on whether to move any personal pensions with you or to leave them in the UK. Banking in many countries can also be expensive so keep this in mind when you're setting up an account.
8 Renting instead of buying
Don't think that buying is your only option. In many countries the local residents are more than happy to rent, so this may be the best route for you too. Even if you do want to buy and you're planning to move abroad permanently, you need to visit during different times of the year to get to grips with the local market.
"Estate agents don't like anyone saying this but it is a good idea to rent for at least a year before you move overseas. If you like the feel of the place and get to know what is going on locally, then buy," says Mr Lewis. Even if you're only looking for a holiday home, spend some time there to understand how the area works all year round in terms of services and weather.
9 The healthcare system
You need to investigate the health facilities available to foreign residents in your new country. Many countries operate a national health service. For example, in Australia there is Medicare, so you may be able to claim reciprocal care under our NHS. But if not, you will need either to pay for healthcare privately or take out a local healthcare plan.
10 An exit plan
According to a new study 107,000, Britons headed to Australia between 2005 and 2010, but 60 per cent of them decided to return home. To be safe, think about how long and how expensive it would be to sell up, checking fees, taxes and penalty clauses on your mortgage.
"That is why location is important. You want to buy in a good spot with great demand over a period of time so that you can guarantee a sale at a decent price. In difficult times the prime areas hold their value," says Christian de Meillac from Knight Frank.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Crowd-to-let: How crowdfunding sites can give investors a slice of the property market for £500
General Election 2015: How you vote next week could affect your finances
Social tenants locked into energy tariff for 40 years
Winter heating underpayment brings summer pain
Have you won £1m in the May Premium Bonds draw?
- 1 Katie Hopkins gives rare glimpse of sensitive side with heartfelt open letter to her children penned in case she dies from epilepsy
- 2 Rihanna's Met Gala dress took one Chinese woman 2 years to make, was reduced to omelette meme in 2 seconds
- 3 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to replace Jeremy Clarkson and co
- 4 Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
- 5 Florida couple forced to register as sex offenders for having sex on public beach
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...
Day In a Page
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business