2022 is set to be a record year for buying property overseas: 8 things you should know about purchasing a holiday home
It’s many people’s dream to own a home in the sun, and it seems the misery of the pandemic has spurred us on to start hunting for foreign properties.
Research by the overseas property portal Kyero (Kyero.com) suggests 2022 will be a record-breaking year for overseas property buying – Kyero saw a 45% increase in visitors searching for homes abroad in 2021 compared to 2020, and so far in 2022, enquiries from overseas buyers have been up 40% compared to last year.
The Alliance of International Property Owners (AIPO aipo.org.uk) says around 35,000 Brits buy a second home abroad every year, for holiday, investment or retirement purposes – or sometimes all three. “Buyers continue to have long-held dreams to buy and own property overseas, and neither Brexit nor Covid is deterring them from following that dream,” says Peter Robinson, a director of both AIPO and the Association of International Property Professionals (aipp.org.uk).
Robinson says the current popular destinations for Brits to buy in are France, Spain, Portugal, Italy and Florida, closely followed by Greece, Cyprus and Turkey. However, he warns there’s an emerging lack of quality second home properties for sale in key destinations, particularly Spain.
Louise Dell, co-founder of Kyero, says: “An increasing number of people are looking to make their dreams of moving to Europe a reality after two difficult years of lockdowns and Covid restrictions.
“Perhaps people are realising time is precious and opting to seize the day, rather than delaying dreams until tomorrow. With travel restrictions lifted, people are now able to plan trips overseas and view properties more easily, which has been challenging over the last two years.”
Part of the reason for the increase in popularity of foreign home ownership may be because the pandemic has led to many more people working from home. “We’ve seen a big increase in people moving to Spain, Portugal, Italy and France, as remote working made such moves far more doable,” says Dell.
But the major reason for buying property abroad is, of course, better weather – Kyero research found this was why three-quarters of potential buyers wanted to make an overseas move. A further 16% said they were looking for a cheaper cost of living.
Dell says property prices tend to be slightly cheaper in Europe, and the market is less competitive. The average price of Spanish properties for sale on Kyero.com is €292,200 (£249,877), and in Portugal it’s €245,000 (£209,513).
But while the prices and the climate may be attractive, buying houses is different overseas, and you need to do your homework…
What the experts think you should know about buying property overseas
1. Research is vital
If you’re planning to live in a foreign property, Dell advises you thoroughly research the country, culture and, of course, the local conveyancing process. “Make sure you truly understand what life’s like there and if it will suit you,” she says. “Having the right knowledge, expertise and advice on the journey is vital.”
2. Decide whether you’ll rent out your property
Robinson says many owners want to capitalise on the premium rental rates available during the summer months, which are sometimes enough in July and August to pay for a year’s utility, service, maintenance or community fees and local tax bills. But he stresses buyers need to think about potential rental income before they choose a property, explaining: “A rural property out-of-the-way may be idyllic for you to live in, but may offer lower rental potential. If your property is mortgaged or needs regular upkeep, you need to be comfortable that you can either meet the running costs yourself, or find others to do this for you – effectively on a commercial basis.”
3. You need a good local estate agent
Dell says the buying process varies from country to country, but wherever you’re looking, finding a local estate agent can be invaluable when it comes to viewing properties. However, Robinson points out that agents who sell both new and older properties are likely to earn double the amount of sales commission on a new property, compared to an older one. “Look out for sales bias from the agent when being shown property,” he warns.
4. Find a reputable local lawyer
Dell says she’d normally recommend working with a lawyer in the country you’re buying in, stressing that a reputable lawyer is “priceless”, particularly when it comes to potential legal stumbling blocks, like the public notary system in Spain, which checks documentation is government-standard. “Unscrupulous agents or developers might try to convince you to save money on legal fees, but this leaves you vulnerable to signing contracts to your disadvantage,” she warns.
If you don’t know where to start looking for a lawyer, Dell points out there are many with offices based in multiple countries. “If you’re making the purchase from the UK, for example, you’ll be able to easily speak with a lawyer in your own country, and a representative in the country you’re buying in,” she explains. You can also ask the British Embassy for a vetted list of English-speaking lawyers in your chosen country, and the AIPP have arranged for independent legal advice to be freely available to both buyers and owners of foreign properties.
5. Gen up on the buying process in your country of choice
The buying process in other countries can be very different from that in the UK, warns Dell, and it’s important for potential buyers to become familiar with it. She says that, for example, in Spain, once a seller’s accepted an offer, it’s wise for them to sign a reservation contract (documenta reserva) which requires the seller to take the property off the market in return for a deposit (usually between €3,000-6,000) and means they must sell it to you at the agreed price. You’ll lose the deposit if you pull out of the sale, unless there are legal problems with the property. Dell says that, whatever the country you choose to buy in, the majority of the process can be completed remotely.
6. Budget for unexpected fees
Don’t underestimate the costs of agent, legal, land registry and notary fees and taxes associated with international property purchases, warns Dell. “These can differ significantly to the UK market,” she points out.
And Robinson adds: “You need to get a swift handle on your expected outgoings as soon as possible. And budget for a contingency!”
7. Think about hiring a property management service
Depending on whether you’re planning to live full-time in the overseas property, or just using it for holidays, you may want to consider hiring someone to help you with its maintenance or management, suggests Dell. She says a number of property management services exist, and newer and purpose-built apartments and resorts will have recommendations or in-house services.
8. Try to visit the country you’re buying in
Dell says that during the pandemic, a record number of buyers purchased property overseas without visiting the country it was in. “This is still not the norm, and we’d recommend visiting the location and property several times to ensure you’re happy you’re making the right choice,” she says.
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