Cheaper property prices on the Continent and in America are one of the major attractions of buying a home overseas. When you hear of unmodernised French farmhouses on sale for £15,000, substantial bungalows in Florida on a complex complete with golf course and swimming pool for £55,000 and studio flats in Tenerife for just £16,000 it seems that you cannot lose if you buy.
But before you swap your 3-bed roomed semi in suburbia for a sprawling villa overlooking the sea or go out to raise a second mortgage, remember the costs you must take into account.
Buying a property in Britain can be relatively cheap. Purchasing costs overseas can easily add a further 10% or 20%Â to the purchase price. There will usually be legal fees, land registry charges, purchase taxes and money transfer fees.
Local taxes and rates – these will come out of your income. So even if you can afford to buy the property out of savings or with a mortgage, you will also have to find extra income to cover them.
Removal costs – even if you are only buying a home for holidays you may find it cheaper to move extra furniture from Britain than buy overseas.
Maintenance – every property needs maintenance. Even if you are purchasing a flat there will be a service charge.
Insurance.
Accountancy fees – many countries require foreign nationals to submit a tax return even if they only own a holiday home.
Local representative – this is a must if you leave your home unoccupied for any length of time. You don’t want our local services cut off because you were not there when the bill and final reminder arrived. A local agent is also advisable if you are letting your property out.
Getting there – flights or ferry tickets can be expensive, particularly in peak season.
Inflation and exchange rates – just because you can afford to live abroad or run a property overseas today, does not mean you will in the future. If your income is in sterling and exchange rates fluctuate even by a small amount, could you really cope with a 5% or even a 20% reduction in your income? Britain now has a very low inflation rate so the threat of rising prices is often ignored. But elsewhere inflation rates can be a serious threat. If prices are rising rapidly you can quickly discover that although you can afford to pay for the property you cannot afford to run it or that your enjoyment suffers because prices in shops and restaurants have raised so much.