The pitfalls of property overseas - dangers associated with buying property abroad
The biggest mistake that buyers of international properties make is thinking that the process is the same as in the UK. When buying property abroad you must endeavour to find out about the associated costs and legal differences. The market for property overseas represents some fantastic lifestyle and investment opportunities but it also contains pitfalls which you must avoid.
Exceeding your budget for international properties
Are you sure that buying property abroad is within your means? Purchasing property overseas may be all the rage but you should not feel pressured into a major investment which you cannot afford to make. Similarly, think carefully about what international properties you can afford and do not overstretch yourself by placing your UK assets at risk.
Remember also to factor in extra costs to your budget. On average 10-12% of the purchase price will be added on top with legal fees, taxes and other costs. Also evaluate the situation with regards to currency exchange issues and seek advice on this and whether it is better to have a UK or international mortgage.
Legal risks to your property overseas
Always, always, always seek out independent legal advice when buying property abroad. The laws in other countries may be very different and a lawyer will check any legal documents and protect your interests when buying international properties. It is worth paying extra for a lawyer who speaks English and is qualified in UK and foreign law.
The potential risk of buying property abroad is exemplified by the Valencia land-grab laws in Spain. In 1994, when large areas of the Valencia province were undeveloped, local authorities were permitted to seize land from owners to improve the infrastructure of the area without recompense.
Buying international properties unseen
Buying property abroad unseen is a mistake which a surprising amount of buyers make. Never commit to buying property overseas unless you have personally inspected it and had professionals check it over as well as any contracts you must sign.
Inheritance tax on property overseas
Inheritance tax can be a big issue when buying property abroad. It is always advisable to take a will in the country where you are buying international properties. The laws concerning inheritance tax vary from country to country but financial advisers will be able to limit the amount of your estate which is liable.
Other pitfalls to avoid when buying property overseas
- Assuming the deposit on international properties is always refundable.
- Failure to secure appropriate guarantees against a developer going bust.
- Buying on a whim without fully considering the implication of buying property abroad
- Not arranging sufficient insurance to cover your property overseas.
Do not be disheartened. These barriers to a new life and property overseas are surmountable. Employing a reputable lawyer is the most effective safeguard against the pitfalls associated with purchasing international properties. If buying property abroad is your dream, exercise caution to ensure it does not turn into a nightmare.
