That dream home in the sun Print E-mail
Written by Penny Kitchen, 2004   
Penny Kitchen recommends common sense and caution before you take the plunge
Buying property in a different country where you may not even speak the language is seldom problem-free, however buyers who really come unstuck are usually the victims of their own ignorance and naivety rather than bad luck. Horror stories and lucky escapes abound, yet if you keep your wits about you, research your chosen area first and seek legal advice before you sign anything you can minimise the risks.

The most enjoyable research you will do is exploring your chosen area on holiday. Next, do a little reading. Whether you are looking towards France, Spain or further afield to Greece, Cyprus or even Florida, there are magazines containing advice and readers' personal experiences to enlighten you, reference books and information on websites.

Property exhibitions are regularly advertised and give you an opportunity to talk to agents and solicitors involved in the overseas market. Many exhibitors actually live in the area and can therefore advise on lifestyle, cost of living and rental returns if you are thinking of letting out your property. Companies providing foreign currency and overseas removals services will also be on hand to advise you.

There was a time when rural properties in France and Spain were so cheap you could risk £10,000 on a village house without a thought about legalities or surveys, but as prices have risen so has the need for greater care on the purchaser's part. What do you know about French inheritance law (a minefield!)? About the statutes governing a Spanish urbanisation or rights of appropriation? About tax you will pay on rental income in the Algarve?

Then there are the new EU members such as Bulgaria and Croatia. Adrian Medd, MD of European Villa Solutions and Chairman of FOPDAC*, warns: "It took decades for procedures and services in the established markets of France, Spain, Italy, Greece and the US to reach the level of safety and simplicity everyone expects today, but remember that most of these emerging markets have barely taken the first step along this path. You have to beware of things like disputed or unregistered ownerships, tortuous regulations and restrictions, bad debts and incomplete laws."

Language problems

Do you have a good enough grasp of the language to find out what plans exist for future development? A motorway extension or a wind farm could be bad news, which is why you need legal advice. There are plenty of reputable firms in the UK who specialise in conveyancing abroad.

Tax advice from specialists is essential whether you are planning on retiring to your property or using it as an investment. It is also important that you include all the expenses of buying (stamp duty, legal fees, estate agents' fees etc.) in your budget - they can amount to as much as 15 per cent of the purchase price. To be safe, even though an English-type survey isn't the norm in countries like France, it is worth paying a professional to check over the property before you sign.

Buying a place in the sun is seldom the road to a quick profit, so if you are thinking of buying to let, make sure there is a good rental market. Is the resort an up-and-coming one with a good infrastructure? Is the area already saturated with rental properties?

Then there is the general state of tourism. For example, there are over two million second homes in France, about half are owned by non-French people and many of these depend on tourism to pay the overheads or mortgage. But tourism to France is down 20 per cent in 2004 - the second year in a row that the country has had a decline in visitors. The new Adriatic and East European countries, on the other hand, are all experiencing tourist and property booms.

Prospective buyers need to be realistic when it comes to calculating their probable returns - if you're not careful, it could be less than you need to cover mortgage and annual outgoings, never mind make you a profit.

*FOPDAC is the Federation of Overseas Property Developers, Agents and Consultants whose members adhere to a code of conduct offering protection to purchasers and vendors overseas - tel: 0870 3501223 or visit www.fopdac.com
 
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