Maybe you’re planning on buying a holiday home now, to retire to in the years to come, or maybe you’re just upping sticks for a life somewhere new. Whatever your reason, if you’re looking to invest in a property overseas in the New Year, there’s lots to think about – not only have you got to decide your location, pick a place you like, and consider removals, you’ve also got to move your money abroad, consider how you’ll make regular overseas payments for mortgages, pensions, property upkeep, or other commitments at home, and try and make the most of your funds in the process.We’re highlighting some of our top tips you should consider before committing to a property purchase, so you’re more prepared.
Before you make an offer on your dream home, make sure you set aside some time to research the property market and see what the global trends are. While house prices might be climbing in London, properties in other countries might be falling. House prices tend to work in cycles – so ideally you want to buy property when it’s in the low end of a cycle, and sell when prices are high as it reaches the top.
Yes, that three-floor, seven-bedroom, six-bathroom villa with a pool might be incredibly good value for money and an appealing buy, but don’t forget the cost won’t stop once you’ve paid the amount on the price tag. Not only will you have to upkeep the property (which can be expensive if you hire help), you’ll have to pay extra in running costs for things like fuel and heating.
Be realistic about what size property you need and how much effort you’re willing to make maintaining it. If you’re buying a holiday home it’s doubtful you’ll want to spend money on hiring cleaners and maintenance people to maintain a property you don’t use that often, and if you’re expatriating, how much of your new life and cash do you want to spend maintaining or restoring a place?
So, you’ve decided to move abroad or buy an overseas property, but make sure you put the effort in to make a specific trip when you’re looking to buy. You need to look around your chosen properties to get a feel for them, check out any issues with them, and ensure you’ll be happy in the neighbourhood. A dedicated trip to your chosen country means that you’ll be in a focused mind-set to buy effectively, whereas doing it on holiday can leave you distracted and lead you to make less informed, and sometimes rash, decisions.
It’s equally important to decide from the offset whether you’d rather a renovation or restorative project, or a recently renovated or newly built property you can move straight into. Location is another key thing to consider – if you’re expatriating, make sure it’s in the catchment area of schools you like or close to all the things you need and in a nice friendly neighbourhood to help you settle in. If you’re buying a holiday home, try and consider whether you’ll need a car with the location of your property or if you can buy one close enough to all the local amenities so you can do without.
If you’re buying a new build straight off the shelf, check out the developer’s record and how long they’ve been in business. Also, if you’re looking through a brochure or on a website and can see pictures of a property, just keep in mind that all the fancy fixtures and fittings you can see might not be included in the price.
If you’re buying a home abroad, it’s worth weighing up the pros and cons of shipping your belongings overseas. It can often be cheaper to buy new items overseas and forego the shipping, so unless you have a number of larger sentimental items, it might be an idea to have a shopping trip to decorate when you arrive.
This is a pretty basic one, but quite important. Look into general living costs—from weekly food shops, to going out—and other things like property maintenance. You may have to do some maths to decide if a country or region is affordable for you so you don’t stretch your household budget too much. It’s also worth considered wages and any taxes you could be liable to pay. When you look at properties to buy as a holiday home, keep in mind you need money to visit, and you don’t want to be counting the pennies every time you do. If you’re moving permanently, make sure you’re buying a house that’s affordable, and won’t leave you any spare cash to enjoy life in your exciting new country.
We know it can be exciting to purchase a property and finally own that home abroad you’ve always dreamed of, but make sure you do the purchase process right. Get professional purchase assistance, hire industry professionals where you need, have key documents translated into English, and ensure you know exactly what you’re signing up for. It’s also worth noting in some countries if you buy a property that has a debt linked to it, you inherit that debt. Make sure all the proper checks are done, even if it costs you a little extra now, because finding out any less positive aspects of the property could save you a load, later.
Get the property valued by an independent industry expert and ensure any issues you’ve found such as damp, dodgy wiring or land concerns, are highlighted.
Another hugely important factor when buying a property is how you transfer your funds to pay for it. When you’re looking at a house price in another currency denomination, the exchange rate can play a huge part in how much it actually costs you.
Let’s break it down into a quick example. If a property in Cyprus costs €300,000, and the pound to euro (GBP/EUR) exchange rate is at interbank levels of 1.14 – you’re going to need somewhere in the region of £265,000 to purchase the property. But say over the space of a few months (when your house purchase is going though) Brexit takes a turn for the worse and negotiations stall, UK economic data doesn’t print as positively and markets sell-off the pound, you may find the GBP/EUR exchange rate drops to somewhere around 1.08. If this were to happen, you’d need around £280,000 to buy the same property.
Snap currency movements can happen and rallies and falls are commonplace as market volatility remains high. Political change has fuelled a lot of exchange rate movements in the past year or so, and there’s plenty of other factors that can affect the market too.
If you want some financial stability for your move, why not consider locking in an exchange rate? If you find a good rate on offer, you can secure it in place with a forward contract for up to two years. So, if the pound does well on Brexit progress, or economic data bolsters sterling to great levels, taking advantage of the shift can be a great idea. It removes the risk of currency fluctuations, and means you don’t have to rush to make a money transfer.
If you’ve bought a home away from home overseas and need to make regular maintenance payments, try to use a provider that eliminates hidden fees, so you don’t get caught out. Some institutions can add on fees for the transfer as well as not giving you a great exchange rate, which makes your transfer less cost-effective, especially when you make them regularly. This is also useful to bear in mind if you’re moving overseas and want to receive a pension.
Some brokers offer fee-free currency transfers and no hidden fees, so the amount you’re quoted is exactly what you’ll receive.
This is a huge one if you’re looking to move overseas and it can be a long and expensive process. Find out which visas you need to reside in the country long-term and check if there are any tax implications from owning a property abroad.
While you might not get fluent enough to know the ins and outs of the legal house purchase documents, even learning some of the language in another country can go a long way. If you try and communicate to locals in the native tongue it shows willing and you’re more likely to have a friendly reception. What’s more, one of the best benefits to owning a property somewhere else in the world is the fresh start and the ability to immerse yourself in a completely different lifestyle and culture, and part of that includes speaking another language.
If you’re keeping a property in the UK, you may want to consider renting it out when you move abroad. A lot of expats choose to do this and you’ll need to decide how you want to go about it; but however you organise it, it can be a great way to ensure your house remains lived in and everything keeps working, while earning a little extra money on the side to cover the mortgage. You might want to consider finding a letting agent to fill your property and manage it in your absence (for around 10-15% of your rental bounty). If you’re going to rent your house out, be aware that you’ll need to look into the Non-Resident Landlord Scheme and let HMRC know what your intentions are. You may also want to consider expat landlord insurance, and talk to your mortgage provider about your move overseas so that you don’t break the conditions of your house loan.
If you’re going to be moving abroad or spending a lot of time in another country, health insurance is probably a good idea. It’s worth taking out a comprehensive policy to protect you while you’re living in another country, as some nations only offer health care to residents or private healthcare, which can be incredibly costly.
Investing in a property abroad isn’t a cheap venture, so make sure you check the inheritance laws in the country you buy, and discuss the matter with an international solicitor so that you know how you can leave your property to your children or other loved ones should anything happen.
This is also worth researching; while some countries such as Canada allow you to pay one lot of Capital Gains Tax, others can tax you both in the UK and in your new country if you get a profit from selling your home.
Brexit is an important factor to keep an eye on as there may be more news on immigration for British expats as well as developments impacting the exchange rate. By signing up with FC Exchange, you’ll be able to benefit from having your own industry expert on your side. They’ll keep you up to date with market developments, as well as getting in touch should your chosen currency pair make a positive shift, so you can maximise your funds. Brexit trade talks are likely to create ripples in the market as the UK approaches the March 2019 deadline, so speaking to a currency expert now could make a big difference to your pocket.