Beware of the pitfalls in your paradise

Would-be buyers of that dream villa abroad should make sure they're aware of the potential dangers, says Christopher Browne

Owning an overseas property was once the fulfilment of a long-held and hard-fought-for dream. It often led to months of anxiety over how to cover the school fees, the insurance policies and the home mortgage, as well as a few little barbs about needless extravagance and luxury from the parents and the in-laws. Now everybody's doing it – including the parents and the in-laws.

That three-bedroom villa in Portugal's sunny Algarve region has not only become a hot property but also a second home as we pop over for longweekends, entertain our friends and guests there on summer breaks and even use it to earn some extra income as an occasional buy-to-let.

Handier flights, faster trains and better facilities have made the foreign fields far more than just convenient places to spend a three-week holiday and a high-maintenance 11 months as we struggle to keep them clean, smooth-running and accident-free the rest of the year. These days, instead of those familiar cries of: "Let's see if the kids want to come to Wiltshire for the weekend", we are just as likely to hear: "Just popping over to Montpellier to do some gardening."

We British are today's eurocrats of property. And it is getting easier to finance – backed up by local knowledge, language skills and and careful planning. When Simon Conn, who runs Conti Financial Services, the UK's largest overseas-mortgage broker, and his wife were visiting Portugal recently, a villa caught their eye. It passed its local valuation report and the Contis could have gone ahead and bought it. However Simon prudently had the villa surveyed as well and found it needed £13,000 of renovation. "It is essential people read the small print, otherwise they'll end up getting stung in the sun," says Simon. Knowing some French can also help. One of Simon's clients signed a form in French and handed over a £15,000 deposit for a French home – only to find he had signed a disclaimer saying he didn't want the property after all.

Conti, which arranges deals in more than 20 countries, uses a team of bi-lingual lawyers to cope with the sort of problems that often get lost in the translation. Simon's nine-year-old company is also building up a network of overseas offices, where clients can sign contracts, obtain mortgages and do their property deals on the spot. "Another snag is that people are often light-headed on holiday and sign up for a dream house without really thinking about it or getting any legal advice. In France, for instance, lenders only need a valuation survey, not a full UK homebuyer's report, so purchasers sometimes pay cash for a house that may have a lot of expensive problems."

Buy in haste and repent later would be a suitable maxim for today's overseas buyer. Foreign property laws can be complex and misleading – particularly in Spain, where a property's title deeds are assigned after the contract has been sealed – not before, as in the UK. It can mean a three-month wait before the sale is completed.

Simon urges buyers to beware of cash deals, too. An unwitting owner may find the developer already has a first charge on the property they have just paid for. So they will have to stump up another hefty sum to pay it off. Another snag is sellers with debts, as one couple who bought a luxury apartment in the Costa Del Sol discovered to their cost. On completion, they had to find an extra £19,000 for an unpaid bill owed by the previous owner.

Mortgage broker Dave Smith, who has just started a website for properties in Spain's Costa Blanca, says local knowledge is crucial. He or a co-director meets clients off the plane and introduces them to locals before showing them a selection of properties. He cautions: "Be careful of the herd mentality. Some companies fly groups of people out, follow them around while they are viewing and then try to sign them up the same day."

Though exchange rates are currently high in Spain, the euro has made the average Euro-home deal easier and simpler to calculate. Charles McLeod, chief executive of The4Less Group which brokers deals for overseas buyers, says: "Why buy an over-inflated property in Gloucester when you could be in France's Dordogne area with its views, easy lifestyle and reasonably priced homes."

So what to choose? If you don't want to opt for the Top of the Props (Spain, France, Portugal or Florida), eastern Europe is the new chart-topper.

Contact Conti Financial Services on 01273 772811 or www.mortgagesoverseas.com; The4Less Group on 020-7228 7667 or www.The4LessGroup.com; or DPS Spain Ltd on 01306 501200 or www.dps-spain.co.uk