Louise Reynolds is an independent, UK-based agent who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own. Here she shares some top tips on how potential holiday home owners or investors, can buy overseas property with confidence.
Language barriers are often seen as a hindrance when conducting a property transaction abroad, however it doesn’t need to be a show-stopper. With nifty tools like Google Translate around, the general gist of words can be worked out. Although it has to be said, it is never advisable to use free web tools such as this for important legal documents. It is best to get a competent bilingual lawyer, who is versed in the local laws, so that all formal legal contracts protect your interests.
Culture and Local Practices
There are often soft issues, like the in-country culture and communication which get overlooked. In Spain for example, it has not been unheard of in the past, to find a lawyer working for more than one person involved in a property transaction, so it is important to establish if there are any potential causes of conflict.
Raising Finance Overseas
Getting a mortgage in the UK can be challenging owing to tight underwriting criteria. Around the world things have tightened for borrowers. In Spain, banks are now far more cautious and buyers need to take care that they have sufficient personal funds, should a bank valuation of the property to be purchased, gets revised down at the last minute, so they are not left high and dry. In countries like Poland, investors are likely to be asked to provide more credit information e.g. credit reference reports, which would normally be done automatically by UK banks.
A significant difference between the UK purchasing process and many in Europe, is the need to go before a Notary (a specially licensed lawyer) to sign the preliminary and final contract or agreement, or provide Power of Attorney to someone to go on your behalf. In the UK contract exchange and completion can occur without the buyer having to be present, as long as all the necessary documentation has been properly signed and witnessed.
Property Buying Costs
Costs related to the purchasing process can also differ significantly from buying in the UK. Whilst stamp duty tends to be higher in the UK, the overall conveyancing costs are cheaper, generally speaking. So in the UK, property buying costs may represent up to 7% of the value of the property bought (including 3% stamp duty on properties up to £500,000), this could be between 5-12%, or more abroad.
What’s In A Finish?
Build finish standards differ. In Spain construction methods are not always the same as in the UK, so it is important to check the build and finish quality you are getting. Elsewhere in Poland or Bulgaria, apartments can be finished to “black standard”, which means the building is plastered, but may not be supplied with flooring, kitchen or bathroom. So check you are getting “white finish”, more like a “move-in finish” or you might end up with having to pay more than you have bargained for.
Getting on the property ladder overseas can be a lot easier than in the UK, with prices starting at £50,000 for studio apartments in cities, such as Istanbul, Turkey. This can help the “generation rent” or the BARBie trend that has been talked about (Buy Abroad Rent in Britain), as a viable alternative to buying in the UK for first-time buyers, who are increasingly being squeezed out of the market.
Understanding the idiosyncrasies of buying overseas property, or at least working with someone who does, can help ease the process, so that there are no unnecessary surprises.
Louise Reynolds is an independent, UK-based agent who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own. As a Member of the AIPP, Property Venture, Louise’s company, has been vetted, approved and voluntarily commits to the Professional Code of Conduct. Visit www.property-venture.com.