Britons look abroad to make a profit on property

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Britons are buying second homes abroad in growing numbers, with almost 250,000 households having invested overseas, according to the Office for National Statistics.

Britons are buying second homes abroad in growing numbers, with almost 250,000 households having invested overseas, according to the Office for National Statistics.

The total jumped by 20 per cent last year, the largest surge in purchases for a decade, as buyers rushed to snap up bargains in warmer climes. Martin Ellis, chief economist at Halifax bank, the UK's largest mortgage lender, said it meant people had become more aware of the global property market.

"We've had this explosion in buy-to-let in the UK and it was getting harder and harder to find places where you find big returns in the UK, which has meant that people have looked elsewhere," he said. "[And] the increase in housing equity has given people the ability to buy abroad and made them realise they can have their dream home."

He said the surge was also probably related to the poor performances of other investments such as shares and bank accounts in recent years.

Nick Clark, managing director of the Property Investor and Homebuyer Show North, being held this month, said Spain, France and Florida were firm favourites, but more were looking further afield to long-haul destinations such as South Africa, New Zealand and even Brazil.

"In fact people will look at any country where prices are generally cheap and rising," he said. "This is in part a reaction to the consensus that areas like the 'costas' have seen the top of their market, and the trend among investors is to be the first to call the next hot spot, however distant its shores or its potential may be."

He said half of the overseas property specialists at his exhibition in Manchester are selling in countries from Spain to South Africa and Bulgaria to Brazil. "The dream of owning a holiday home in the sun is increasingly achievable for many homeowners who have seen their own property rise steeply in value," he said.

"As the UK property market has slowed to a steadier pace, investors are looking for alternatives overseas where younger markets can still provide impressive capital gains and rental yields."

A survey of property investors by analysts at the Wriglesworth Consultancy last month showed three-quarters were planning to buy property overseas this year, compared with just 46.2 per cent planning to buy a UK property. The value of second homes abroad has more than doubled in the past four years from £11.1bn in 1999-2000 to £23bn in the latest year, the ONS said.

Spain is the most popular place for Britons to buy a second home, with 69,284 properties owned there, accounting for more than a quarter of the total in number and nearly a third in value. A separate report from Datamonitor says more than a third of the tourist housing stock in Spain is owned by Britons.

Celebrities who own second homes in Spain include Sir Richard Branson, Lord Lloyd-Webber and Michael Douglas and Catherine Zeta Jones.

France was also popular, with 51,322 properties owned by people from the UK collectively worth £5.6bn, followed by Portugal and Italy where 5,132 and 2,566 homes are owned respectively.

Overall, nearly two-thirds of second homes abroad are in Europe, with 6 per cent in the US and the rest in countries such as Australia, New Zealand, Canada, India, Pakistan, South Africa, Sri Lanka and the Caribbean.

The ONS estimates that during 2003-04 people in the UK received rental income totalling nearly £190m from foreign property.