LONDON -- (THE TELEGRAPH) --July 23, 2013--
Buying property overseas can be a minefield. Jordan Tilley of UKForex, advises on how to avoid pitfalls and bad investments.
Every year, hundreds of Brits return from the crystal-blue Mediterranean with a single ambition – to buy overseas. It’s certainly hard to resist the temptation, particularly when continental estate agents locate their offices in sightseeing hot-spots.
The price of foreign property can seem especially attractive when exchange rates favour the currency of the prospective buyer. Returning to a dreary British summer is another motivator, as travellers seek to spend more time in their favourite sun-drenched destinations. For others, buying overseas is seen as an investment, as undervalued property carries the potential to appreciate substantially over time.
Whatever your motivation for buying abroad, the following tips can help ensure that you have a more positive experience in doing so.
Tip #1: Thoroughly investigate the market
Although global trends in property prices do occur, the property markets of different countries can go through independent cycles of rising and then correcting lower.
Though property values are rising in London, that doesn’t mean they’re also rising in Italy or Spain. For those buying to invest, it’s important to pay attention to these trends, the ideal being to buy near the bottom and sell near the top of a cycle.
Furthermore, some countries prevent or limit property buying by foreigners, so it’s critical to ensure your chosen country gives you the legal right to buy, and under what conditions. Do this before handing over any money in order to avoid scams or disappointment.
In other words, doing your homework is essential. This includes checking the currency exchange rate and stability in the country you wish to make a purchase, something you can do for free online.
Tip #2: Use an estate agent
Buying directly from an owner can sometimes make for a great deal. Nevertheless, if you’re unfamiliar with the foreign property market or struggle with the local language, buying through an estate agent or from a reputable property developer can provide useful guidance and help you avoid a number of pitfalls.
Professional agents typically have an obligation to see that you are properly informed about the details of the purchase. They should also make an effort to complete the deal and assure your satisfaction.
Tip #3: Hire a legal representative
It is advisable to obtain the services of an independent lawyer when entering into a property deal. Though you are unlikely to face real difficulties, a lawyer’s advice can be invaluable if any legal wrangles do occur.
Tip #4: Have your documents translated
Before signing any documents relating to a potential purchase, make sure you have them professionally translated. Even if your languages are in reasonable shape, it’s essential you understand everything you’re signing your name against, in words you clearly understand.
Tip #5: Save money on mortgage payments
Once you have read, understood and agreed to the terms of the purchase, you’ll need to make arrangements to pay for it.
When transferring funds denominated in your domestic currency, you’re likely to want a better foreign exchange service than the one offered by your high street bank. This applies whether you’re paying in full, making a deposit or setting up mortgage payments.
Local banks typically provide foreign exchange services that involve wider margins on exchange rates, higher fees and limited transaction sizes, making them a bad deal for you. Usually, it’s better to change your money and possibly set up regular payments through a currency transfer service.
Send money overseas at better rates than the banks.