The housing market is becoming more and more internationalised with people increasingly buying across borders, be it for investment, holiday homes or for migration purposes.
Various countries, in order to stimulate their housing markets, are also offering visa residency and in some cases citizenship to overseas purchasers who meet the necessary criteria and who buy at various price points. The schemes, which are discussed elsewhere on this site, generally include spouses and dependents. This is generating a lot of interest in markets such as Portugal, Spain and Cyprus. The golden visa market is rapidly changing the paradigm on the ground in these places, creating a more cosmopolitan aspect to them and presaging a wider international profile.
Then again, there are various global hubs, such as the UK or Miami where people purchase mainly due to quality of life issues and specifically for investment in places with robust economies, a high standard of life with much on offer by way of cultural activities, excellent shopping and the like. Frequently people buy property in the US or UK as their children are being educated there.
Many markets are worth looking at from a pure investment standpoint including the fast growing second tier cities of the UK which are coming to global prominence, are experiencing burgeoning demand and capital growth and are reasonably priced in comparison to the majority of property one would find in London, including higher rental yields in some cases.
A property abroad
There is no doubt that the overseas market has seen some uncertainty in the past. Due to the financial crisis that occurred across the globe many areas saw a severe dip in lending which had a ripple effect across the market, affecting house prices, sales and rental demand. However, this presages opportunity as many markets are in recovery.
Across Europe and the USA there has been a significant boost to the housing market thanks to increased interest from international investors, principally but by no means exclusively from Asia and from the UK.
With prices beginning to rise now is the perfect time for individuals to take advantage of a rising market and the fact that various locations are really at the beginning of significant infrastructural improvement and widening international interest. Prices in countries such as Spain are currently around 50% cheaper than their 2008 peak which means that buyers can now get much more for their money. Similarly, prices in Portugal and in Cyprus represent bargains which can bought for much less than they would have fetched almost a decade ago.
There are many advantages to purchasing overseas property, one of which is that you have a holiday getaway, somewhere beautiful to which one can retreat and relax in sybaritic and sunny circumstances. Mediterranean countries are particularly popular with UK, German, Benelux, Scandinavian and Russian residents due to their tourist attractions, enviable quality of life and desirable weather conditions. The number of airlines available and the abundance of cheap flights also ensure that travelling costs are kept low.
There are several other added benefits that you may wish to consider when buying abroad. Due to the market once again performing so well in various places, a well chosen second home can provide a generous income. With a strengthening economy, a high rental demand tends to follow and so the option to let the property out for several months of the year could provide additional income when your property is not in use. However, this is by no means a given. If one is buying for investment purposes it’s important to weigh one’s chances in both the long term rental market as against the holiday rental market and here a variety of factors come to bear including the prevailing rental costs, length of season, amount of competition from hotels and other renters etc. Obviously, margins are determined by how well rental income jibes with any mortgage commitments and, if one has bought for cash, what sort of time frame one is looking at by way of a return, how much capital growth there will be etc.
If you intend on purchasing a home abroad using a mortgage, the rental income could cover the cost of repayments and potentially produce a profit, making it into a solid investment for your future. Moreover in a well-performing market, again if one chooses well, there are possibilities for long term capital growth.
What You Need To Know
Purchasing any property, whether in the UK or abroad, is a big commitment. There are many things to consider and the buying process can take up to several months dependent on locations, property types and budgets. Each country handles property purchases in slightly different ways and it’s wise to be well prepared in advance so you can ensure you have a quick and efficient property purchase. Here at Birchwood Stanhope, our advisors will provide you with all the information you need to consider, as well as recommending specialists in different fields, to help you achieve your dream of buying property abroad.
Before you begin searching for your overseas property you should consider the following:
Regardless of the size of your budget there are two important financial aspects to consider before purchasing a property abroad: tax laws and hidden costs. Different countries have different tax requirements and without understanding their laws or what you will be expected to pay, you cannot accurately plan your budget. Additionally the history of the property could mean that there are hidden fees, such as community fees, which will become your responsibility as the new owner.
It is also important to note that in some countries the contract is legally binding from the start of the purchase process, not at the end as it is in the UK, so it is important to have your surveys done and finance in place before you begin the process. To avoid falling into any pitfalls and going over your budget we recommend our clients consult with financial and mortgage advisors before completing on any property in order to ensure that the purchase goes as smoothly as possible. Our team will manage your expectations and help you at each step of the way to ensure a smooth property purchase.
You may also want to think about the sort of amenities to which you need to be close by. Certain areas may meet your needs in a different way so think about what it is that you want and where your property needs to be located. Those who are looking at a holiday home may want to be nearer to a beach, city centre or a more tourist driven area, especially if letting the property out is an option. Those who are relocating permanently may want a slightly more rural area away from the hustle and bustle during peak seasons.
You may also want to think about what sort of amenities you need to be close to. Not only can these factors affect your own personal circumstances but they may also affect the price you end up paying for your property. These amenities can be beaches, pools, shops, bars and restaurants. You should also consider transport links as these can increase the demand and the overall value of a property. If it’s preferable for you to be near to an airport then this also needs to form part of your location planning.
We at Birchwood Stanhope have had a very considerable amount of experience dealing with these markets both by virtue of our working in real estate for many years, but also as we have lived and worked in these locales. As such we are well acquainted with the realities on the ground. We are happy to give you the advantage of that knowledge in order to assist you in making a safe, secure, enjoyable and profitable purchase.