Dream homes can be a nightmare

The fantasy of buying abroad tempts most of us. But the reality can be tough, warns Stephen Pritchard
Click to follow
The Independent Online

The idea of buying a second property or even a permanent home in an idyllic part of the Continent crosses the minds of thousands of holidaymakers each summer. Unfortunately, even buyers who research the market with care can find the process turns into a nightmare.

The idea of buying a second property or even a permanent home in an idyllic part of the Continent crosses the minds of thousands of holidaymakers each summer. Unfortunately, even buyers who research the market with care can find the process turns into a nightmare.

Property ownership, conveyancing, mortgages and tax rules vary widely, even within the EU. Language barriers can confuse negotiations and the cost of buying, especially in terms of transaction taxes, can be much higher than in the UK. Buyers who plan to renovate often find that these costs come to far more than they had anticipated.

James Mossman, who is buying a property in the Limousin, France, has found that the process takes longer and involves more bureaucracy than buying here. "It is the sheer volume of what has to be done: everything has to be signed in triplicate and sent by post," he says. "On the plus side, it is all fixed much earlier in the process so there is no danger of gazumping."

Sometimes holidaymakers are swept up in the romance of buying abroad and make offers without considering the practicalities or their budget. But at least buyers who fall in love with a property on their holidays will have seen it. Mike Boles, head of the international department of mortgage broker Savills Private Finance, says many buyers do not even take this step.

Visiting a property at different times of the day, days of the week, or even in different seasons is time well spent. In countries such as France, where surveys are rare, it can pay to hire an English-speaking surveyor or architect, or ask local, reputable tradesmen aboutthe plumbing or electrics. If a building is old, contact the equivalent of the local council's conservation officer to check for restrictions on any work.

John Tunstill, a property professional, who has worked in Umbria for close to 25 years, cautions that starting any building work without the relevant permissions is risky in the extreme. It is possible to take on a rundown property in Italy, but buyers will need plenty of patience to navigate the bureaucracy.

For most Britons who run into trouble buying abroad, problems start long before builders arrive on the scene. The most common problems are with arranging finances, and negotiating what can sometimes be tortuous buying processes.

In several European countries, offers are binding at a much earlier stage than in the UK: well before the exchange of contracts. In France, buyers only have a seven-day cooling-off period. Pulling out after that risks a loss of deposit.

Anyone looking to fund an overseas property with a mortgage needs to make sure that the contract allows them to pull out, if finances are not forthcoming. It also makes sense to hire an independent lawyer.

Buyers might have to pay fees to the estate agent, even though the agent is working for the seller, as well as paying local taxes and fees. Savills Private Finance recommends allowing 10 per cent of the purchase price for buying costs.

Currency fluctuations can also add to costs: Bill Jackson, a member of the National Association of Estate Agents' international division, says that a change of 10 per cent is quite usual, during the time it takes to complete a new-build property, even if that property is in the euro zone. This can catch buyers out, especially if they plan to raise their finances in sterling.

There are ways round this, including converting funds into local currency at the start of the buying process or using a local-currency mortgage. Savills Private Finance recommends the latter approach, especially for buyers who plan to let out their homes abroad and will have rental income in local currency.

US dollar and euro mortgages are available through specialist brokers in the UK, as well as local banks. Local lenders, though, may well want to see evidence of a local income.

Buyers should think about what will happen if they need to sell the property, and what will happen if they die. A local will is vital, but this needs to be drafted so that it does not revoke the owner's UK will. David Garfitt, of solicitor Langleys, in Leeds, recommends using a local as well as a UK lawyer, despite extra costs.

Comments