Buying property abroad

If you’re thinking of buying a property abroad, there are things to consider. As well as potential language problems, the buying process is usually very different than in Northern Ireland. Make sure you get expert advice before buying.

Looking for a home abroad

Many of the difficulties encountered when buying a property abroad, either as a retirement or holiday home, is due to not understanding the different procedures in a foreign country. You shouldn't commit to a purchase without taking advice and investigating the full implications properly. There are pitfalls to avoid to ensure you don’t end up with extra costs you hadn’t bargained for.

Contracts

Never sign a contract that you do not understand. If two versions are provided (English and local language), ask your solicitor to confirm the English version is a true translation.

Always read the contract. Ensure you fully understand the terms and conditions you are about to agree to. Specific points to be clear about include:

what deposit is required?
is it refundable and under what circumstances?
for new properties, what stage payments are required and when?
what is included in the price and what is the cost of the extras?
check the due completion date

Arranging finance

If you need mortgage finance, get an 'Agreement in Principle' for your mortgage before agreeing to buy the property, or before signing any contracts and paying a deposit.

If you’re arranging finance on the property, ensure that this is stated in any contract and, where possible, seek an 'opt-out clause' if the loan is not agreed (which will ensure any deposit paid is refunded).

Remember, your mortgage will probably be in the local currency and you must consider the impact of fluctuations in exchange rates. However, if the intention is to rent the property out, this may be in the local currency.

Specialist advice

Always ensure that you seek specialist advice before considering a purchase. You should contact:

independent solicitors
valuers
architects
surveyors

Valuation

Before proceeding with the purchase (especially with a re-sale property, regardless of age), ensure an independent valuation of the property is carried out, which should point out any problems with the property – for example, subsidence, damp, wiring defects – and could also highlight any possible boundary disputes.

New build

If buying from a developer:

what's their track record and how long have they been trading?
are references available from previous buyers?
check comparable properties in the area and any re-sales offered on the same development
if the developer mentions 'rental returns', what are these based on?
check they're feasible and have been achieved in the past

Before making any commitment, try to give yourself a 'cooling off' period if you see a 'must-have' property and are tempted to put down a deposit there and then. You must be sure that you're making the right choice.

Title/property ownership

Does the developer or seller have full title to the land or property? Ensure you do not inherit a debt on the property before you buy, which your solicitor should also be able to check. For example, if the developer has borrowed money to build the development and this amount has been allocated against each plot as additional security to the developer's bank.

Location, location, location

You should thoroughly research local facilities and transport. People tend to buy properties located near to an airport, especially if it's served by a budget airline. But remember there are no guarantees that cheap flights will continue indefinitely in one location. Proximity to basic facilities like restaurants, shops and a beach are also important.

Talk to people who already live or own property in the area you like to get a better understanding of what it's like to live there. And consider the property off-season - many resorts (beach and ski) are seasonal and practically shut down when the tourists return home.

Local money

Open a bank account in your chosen country and, where relevant, ensure you get a Certificate of Importation for the money you bring in from your home country. Set up standing orders in this bank account to meet local bills and taxes. Failure to pay your taxes in some countries such as France, Portugal and Spain, could lead to action by the authorities.

Extras

Bear in mind that bills don't end at the asking price. Lawyer's fees, local and national taxes, insurance must all be met in your host country and can often add at least a further 10 per cent to your costs. Ensure you are, therefore, aware of the costs charged by the legal and government authorities for buying a property in your chosen country.

Further advice

Buying abroad represents a huge financial commitment and, because there are significant risks involved, you really cannot do too much research before deciding to part with your money.