Do your Research:
Before entering in to any property transaction whether here in the UK or overseas it is vital that you have carried out as much research as possible, and to also realize that it can be a significant financial commitment. Researching on the internet is a good way of gaining some knowledge however if you don’t do at least the most rudimentary of initial visits then you are not being sensible with your money and run a higher risk of regretting your purchase decision.
Try to talk to other foreigners about their experiences of purchasing in your chosen country, if at all possible try to rent a property for a month or two so that you can get accustomed to the area and gain a personal insight as well as acquiring some vital local knowledge.
Choosing the right property:
The dream of owning a holiday home, relaxing by the pool and enjoying tranquil settings is normally at the forefront of our minds, however you can only achieve the benefits of owning a property overseas if the right choices are made. When looking at available properties try to realise that you may not be living there permanently, therefore you should look at whether or not the property would be rentable in your absence. If buying an existing property it would always be advisable to have a full structural survey carried out as the build quality in some countries can be very poor.
More & more people are heading towards new off plan developments, most are generally drawn towards this type of property because they are usually offered at below market value and generally come with a payment plan of some sort normally offered by the developer. However if you haven’t visited the site yourself in person then you could be in for a big shock once the development is complete.
Make sure you have viewed all of the required plans for the site along with any proposed contracts informing you of your obligations and that of the developer. Where possible try to visit the site prior to committing yourself and also try to get as much information on the developer’s track record. Remember that you may be told various things about the planned development of the area, i.e. new airport, golf course, 5 star hotels and so on, none of which you can have any guarantees for. Therefore know that you are only buying based on what is in your contract of sale and that you should not be basing the value of your property on projected future growth or anything that is currently intangible.
Try to get some comparables before agreeing the purchase price as some owners, agents & developers will over inflate the prices when selling to foreigners.
Legal aspects:
Laws on foreign ownership vary from country to country, therefore it is vital that you have the correct information before committing yourself. You need to know your rights about owning a property as well as issues relating to taxes & fees for registration. Some countries do not have a stamp duty but do have the equivalent so it is always advisable to know what this would cost at the offset.
You will need to agree the lawyer’s fees prior to proceeding as some may want to charge you extra should the process be delayed. Try to talk to several lawyers in the country of your choice, check if there are any lawyers in the UK who specialize in that particular country. If you choose to use the services of a UK based lawyer make sure that they are registered with The Law Society. Once you have decided upon which lawyer to use make sure that the contract of sale is in accordance to the civil law of that country. In some countries the law states that there must be a dual contract of sale, this means that the contract would be written in both English & the language of that country. Your lawyer should advise you on whether the contract is suitable to enter in to or not, in order to do this he/she will need to be certain that there are no restrictions imposed on you selling the property at a later date, that there are no hidden taxes & fees which had not been previously disclosed, he/she will need to have verified that the property has a clean title and is free from any debts or disputes.
In some countries a property may be owned by several different members of a family, therefore it is imperative that the lawyer has ensured all owners have signed the contract allowing the sale to proceed. Before handing over your contract or any other legal documents always make sure you have taken copies and also a receipt from the lawyers confirming that they are in possession of your original documents.
Paying for your property:
Most property purchases overseas are normally priced in the local currency, therefore you may be asked to transfer the equivalent in sterling pounds. Before transferring try to check the exchange rate on the day, you should note that exchange rates listed on any currency converter would be without any bank charges or broker fees, therefore it is advisable to base your calculations on 3-4 points lower than what is being displayed i.e. £1.00 to $1.00 may be showing as 1.80, your calculation should therefore be based on a rate of 1.75 – 1.76.
If you are transferring to your estate agents ask to be provided with a bank exchange rate receipt showing the sterling amount exchanged along with the rate & amount received. The other option would be to use a money exchange company here in the UK from whom you would purchase the exact amount in your required currency, most companies will then also forward your payment on to its destination.
Furnishing your property:
If you do need to furnish your property it is advisable to visit as many suppliers in the area first in order to get an idea of prices. If you have purchased a property in a tourist resort, then prices are generally going to be inflated. It would be advisable to visit the main City, where prices are normally a lot cheaper.
Most off plan properties would have an optional furniture package, however it is still advisable to get some quotes independently.
Essential Advice:
When buying a property be it here in the UK or overseas it is important that you realise all markets including the property market have cycles, your investment can go down as well as up. Prices for property can stay stagnant or shoot up to unsustainable levels and in some cases devalue dramatically.
If you are seeing some capital appreciation do not assume that this trend will continue. The key to any successful investment is knowing when to enter or exit the market.