Buying property abroad is likely to be on many people’s bucket lists. Not only does it mean you have a go-to holiday destination year-after-year, but you have a great investment opportunity should you choose to rent it out. Plus, the cost is typically cheaper than buying a home in the UK for those relocating in hopes of a fresh start.
However, it’s not as easy as you may think. Buyers often face many challenges when securing a property in another country. So in this blog will uncover 6 things you need to know before committing to buying a property abroad.
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6 Things You Need to Know About Buying Property Abroad
1. Differences in Laws
Regardless of whether you’re buying a property in the UK or abroad, it’s crucial you research the local laws. This is because each country has varying buying processes that must be adhered to.
So, how can you be sure you’re respecting the local laws when buying property abroad?
Investing in a Trustworthy Lawyer
Attaining the expertise of an English-speaking lawyer who’s familiar with the laws of the country you intend to buy in is your best bet. This will ensure the property purchase is handled correctly from start to finish, as well as help you if you experience any scams. However, you should always check they’re licensed to practice overseas first.
PRO TIP: Never use a lawyer recommended to you by the estate agent or property developer. This individual may be acting for both parties and therefore will not be acting in your best interest. Seeking independent legal advice means your individual rights are being protected at all times.
2. Paying Taxes
Similar to Stamp Duty Land Tax (SDLT) in the UK, you will have to pay tax for the purchase of your property, no matter the country of residence. On top of that, many countries require annual taxes on foreign property. Plus, if you have bought the property to act as a buy-to-let, you’ll also need to pay property income tax. Can you afford to spare the money?
3. Applying for a Mortgage
If you’re not in the fortunate position to pay for your property in cash or by card, you may want to think about taking out a mortgage. This is possible via UK mortgage providers or overseas providers.
It can be cheaper to take out a mortgage overseas. Although, you should remember if the pound falls against the currency of the country you’re buying in, you may end up paying more.
Remortgaging Your UK Home
It may be possible to remortgage your UK home in order to release funds for your property abroad. However, this largely depends on your current financial situation, including your credit rating. Plus, it can be a pretty risky move – consulting a mortgage adviser can help you decide whether it’s right for you.
4. Securing a Deposit
It’s important to note that paying a deposit for overseas property is not the same as in the UK. Lenders typically require a bigger payment from non-residents, no matter the country you’re buying in. For example, those wishing to buy property in Spain will be required to pay a deposit between 30-40%.
You should also never pay the deposit until you’re happy with the property. This is because in some countries deposits are non-refundable for non-residents.
5. Paying Unexpected Fees
Just like purchasing a home in the UK, there are many expenses that often get overlooked. Here are some in particular you should be careful of when purchasing a property abroad:
- Letting Agent Fees
○ Are you renting a property abroad? You’ll need to pay a fee if you want a letting agent to work on your behalf. They’ll help you find suitable tenants as well as assist in collecting monthly rental payments.
- Shipping Fees
○ Never underestimate the cost of overseas shipping. Paying to transport your life across the globe can add up fast. However, there are many factors that affect the overall cost, including but not limited to:
◇ The transportation of any pets
◇ The distance
◇ The type of transportation required
◇ The weight of your goods
- Community Fees
○ In some countries such as Spain, you need to pay a regular community fee if your property is within a communal area. This is typically classified by shared spaces such as a swimming pool. The money will go towards general upkeep including cleaning, gardening, lift maintenance and so on.
6. Fluctuating Exchange Rates
When making a property purchase, stretching your budget is often the only way to afford the place you love. However, it’s crucial to consider the exchange rates at the time of your purchase. For example, if you’re buying a property in Spain where they pay in euros, the pound may fall significantly against the euro. Therefore, you’ll be paying more than you initially thought to make up the money in euros. If your budget was already stretched, this may mean you’re left in a poor financial situation.
Making the Most of Foreign Exchange Rates When Buying Property Abroad
At DT&T, our incredible team understands the stress of fluctuating exchange rates. Despite the agreed price of your property, if the pound falls before the purchase is complete, you could pay way more than you bargained for your overseas home.
Our Multi-Currency Accounts help to ensure you get the best exchange at the time of purchase with the real rate displayed at all times. Therefore, you can hold off before making a transfer. Plus, you’ll benefit from a range of top-tier features making international payments feel effortless.
- Instant worldwide payments
- Low, upfront fees
- 9x cheaper than banks
- 180+ countries
- Selected 24/7 delivery
- Unrivalled customer service
So, are you ready to buy a property abroad? Visit the DT&T website for more information about our safe and secure international transfers.