Apr 05 2008
Top Tips for Buying Overseas
Posted in International Property, Property Finance, Property Matters
For most, buying a second home overseas is a once in a life time experience.
To make sure that the process runs smoothly, contact PRO-PROP for an international real estate practitioner; and take note of these tips for buying abroad.
- Have a Clear Purpose – be clear in your mind why you are doing it. Whether you are buying for a holiday home for personal use or to let out, a place to retire to, or for short or long term investment will effect factors along the buying process.
- Research The Location – checking that it and the surrounds suit your needs, considering transport links and access to facilities.
- Choose a Reliable Agent – familiar with assisting international clientel. Regulations governing agents vary from country to country (In some they do not exist.) as do the laws of international and foreign land ownership. Consider working through a local agent familiar with the possible obstacles and with access to overseas agents of similar understanding.
- Be Financially Realistic – when deciding your budget. Remember to take fees, taxes, and other costs into consideration; and in the long term fluctuating exchange rates. Ensure that the money that you have for a deposit is available so that you can secure the property.
- Get a Survey – on the property if you are unfamiliar with the countries building regulations. (In some countries this is a norm.) This report would point out and land slip, subsistence, damp, wiring (electrical) defects, possible boundary disputes; and above all will also give you peace of mind and could save you some serious heartache and cost.
- Consider Finance Options – by comparing local and foreign mortgage options and criteria. A mortgage in UK or US will mean lower interest rates but leave you vulnerable to foreign currency exchange rate fluctuations.
- Use an Independent Lawyer – who speaks both the local language and yours; and has a knowledge of the legal systems of both local and your countries laws. In most countries the lawyer is appointed by the seller / developer who, despite their best intentions, will invariably err to the side of the seller – particularly if the buyer is foreign. You should instruct that the lawyer confirms that: you d0 not inherit any debt on the property, that the survey of the property does not reveal any statutory or local laws are being violated, that you obtain correct title to the property with the correct endorsements, that the correct certificates are issued to you for any money you take into the country, and that a local will is drawn up.
- Pay Your Taxes – that come with the new property, and keep the payments up to date. If you are asked to pay a portion of the purchase price in undeclared cash walk away from the purchase and consult your lawyer immediately – you are likely to find yourself contravening both local and international tax laws.
- Property Insurance – need to be taken against the property and for its intended use. Property left vacant for extended periods, short term rentals property, etc. will all require different cover. Confirm with your mortgage lender and lawyer of the cover required.
- Make a Local Will – to ensure that your heirs avoid expensive and time consuming legal problems.
One Reply to “Top Tips for Buying Overseas”
1. Never sign a contract that you do not understand, or written in a language that you are not familiar with.
2. Be aware of you emotions, and allow yourself a ‘cooling off’ period – especially before putting down your deposit.
3. If you are raising mortgage finance, ensure that it is stated in the agreement, and that you may ‘opt out’ if the finance is not forthcoming. This will ensure the refund of your deposit which might otherwise have been non refundable.
4. Check with the costs involved with the representative (estate agent, broker), to be aware of your obligation over and above the price for charges, taxes, fees, levies, etc.
5. Where possible try to have your finance to be confirmed ‘in principal’ before committing to any purchase or paying over a deposit.
6. Consider buying with friends or family. Pooling your resources will more likely reduce your risk and make attainable the purchase of a better property.
7. Failure to meet your property tax obligation in some countries (Spain, France, Portugal, and others) could quickly lead to court action and seizure of your property. Open a account with a local bank and set up standing orders with them for the payment of these accounts. The onus is on you to ensure that the account has enough funds to meet the payments irrespective of whether your tenant (or any other source of income) has paid or not.
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