Letting property abroad can be a fantastic way to make an investment and get a holiday home into the bargain. It can also be a great way to lose lots of money. If you’re looking to get into overseas property, here’s what you need to know to do it well.
Do your Research
Thorough research is a must when buying any property. Those buying abroad can often be tempted to skip it, as it’s much more difficult to do. But it’s vital you get your research done if you want to make a successful investment.
The most important thing to find out is how long the holiday season is. Like holidaymakers, overseas home-buyers can be subject to the hard sell on particular resorts or regions. Talk to other holiday landlords in the area to find out. Remember that agents sometimes have a habit of telling buyers the season is four months long when it’s actually more like four weeks. City homes tend to have longer (even year-round) seasons. Ski resorts do too, if they have a summer season.
Think about Management
When you let property abroad you must have a local manager who can deal with problems for you. Even in the UK, it can be difficult for many landlords to keep up with the demands of managing a property without using a letting agent or management service. It’s pretty much impossible when the property is overseas.
Look for a local management company with English-speaking staff, so that they’ll be able to communicate effectively with your guests. And you, of course!
Know your legal stuff
Finding your way through the maze of legal and financial details in another language and different culture can be challenging. But it’s vital you know your stuff to avoid either being ripped off or falling foul of the authorities.
Get a good local property lawyer who speaks English but understands the local culture and legal system. Look for recommendations from other Brits who have bought in the area. Remember that other countries’ legal systems can be very different from our own – don’t make any assumptions.
When it comes to finance, it’s usually easiest to get a mortgage in the country you’re buying in. Use a specialist broker who can help you through the process from the UK. Some UK lenders will lend on overseas mortgages, but getting them can be harder.
Make sure you understand the tax system in the country you’re buying in. You’ll need to pay tax on your rental profits in the country you’re letting in. The HMRC will then take this into account when you file your UK tax return. The cost of buying varies hugely between countries so make sure you know what you’ll pay before you start. In Italy, for example, fees, landlords insurance and tax can amount to as much as 15% of the purchase price. In the US, it’s as little as 5%.
Most people who buy overseas do so at least partly because they want to enjoy the property themselves. Overseas property isn’t just about making an investment. Make sure you buy in a place you want to visit…enjoy your hard-earned time in the sun!