|
make sure you cross the T's and dot the I's by Alex Radford
With interest rates in the UK at their lowest for as long as one can
remember and property prices having risen by up to 25% in the last year
alone, the second home concept is becoming increasingly popular with Brits.
Many are unlocking some of the equity in their homes or using their hard-earned
cash and buying their dream home in the sun. Spain, France, Italy, and
Portugal are all popular destinations for retirement, a second home or
even a new country to live in!
Although the weather may be better, house buying is no quicker and the
procedures are usually more expensive. Add to that a foreign language,
different legal and tax systems and it is a wonder that any of us seriously
consider buying overseas. It is one thing ordering your aperitif at the
local bar, it is quite another ploughing through a foreign document.
Unlike in our dreams; buying abroad needs careful preparation and homework
if the pitfalls are to be avoided. When does this preparation start? As
soon as you have decided to buy. Where can you obtain the information?
The Internet, local libraries, personal contacts, newspapers and magazines,
to name just a few. If you have access to a computer, the Internet is
probably the best port of call with lawyers, estate agents, property rental
companies, builders, decorators and architects, all advertising their
services. Contact them and obtain as much information as possible.
Having decided to buy, the first major decision is where. What was lovely
on holiday in July may not be the same when you are mending the leaking
roof in February. Then having found the area find the house. Will it be
a new purpose built apartment or a ruined barn with wonderful views? There
are professional firms that will help you find the home of your dreams
and you may want to let them do the donkey work. Ask them to send you
particulars of properties and check on the local area, nearby leisure
facilities, roads and anything else that attracts you to the area.
If it is the barn you have chosen who will do the conversion? Again,
agents can assist, but local knowledge can be a great help. Before you
can convert you must buy, and although the basic cost may be low, the
procedures are often complicated and pricey. Remember that the further
south in Europe you go the more the maņana principle applies and that
is not just to lawyers!
As enthusiastic as you may be, once you have found a property to meet
your needs, within your price range and almost certainly cheaper than
a similar property in the UK, do not act hastily! Often buyers get carried
away and believe everything the agent or vendors say. Remember that the
estate agent will be acting in the seller's best interests and not yours!
Before you sign any documents or pay any money, as in some countries
payment of a deposit commits you to the purchase, ask for full details
of all the costs involved in the purchase. It is not uncommon for legal
and land registry charges and transfer taxes to add up to 15% of the cost
of the property, so you will need to factor this into the purchase price.
If you have not done so already, seek independent legal advice and do
not agree to jointly instruct a lawyer with the seller to save on costs.
This is especially important when buying on the Continent as when it comes
to declaring the value of the property on the purchase deed it will be
in the interests of the seller to under declare the value of the property
so as to reduce his tax liability. How could a lawyer in that situation
act in both your interests?
There are usually many local lawyers who speak good English or have English
workers in their offices. The advantage of an English speaking lawyer
is that it will reduce translators' costs. The Internet is usually a good
place to find a suitable lawyer. Then try and arrange a meeting with the
lawyer or at the very least discuss your proposals, the property and mechanics
of the purchase with the lawyer before you commit to the property. If
you are buying the property for its views, additional enquiries should
be made by your lawyer as planning legislation can in some countries be
quite haphazard!
If you are busy and unlikely to be around for the purchase process it
may be necessary to grant a Power of Attorney to the lawyer. This is a
deed that can be prepared authorising the lawyer to sign legal documents
and act on your behalf.
Once you have bought - what then? Unless you plan to live in your new
home full time you will have to find someone to look after it or rent
it for you in your absence. If you intend to fund the purchase with rental
income it is essential that you find a rental company you can trust and
someone the neighbour can call when there's the sound of running water
at 2 am on a winter's morning. Further local tax advice should be obtained
on the income derived from the property.
Then what happens if you decide to sell up and move elsewhere? Well,
properties abroad, generally speaking, can take longer to sell than in
the UK and as the property was a second home there may be capital gains
tax considerations to bear in mind and local tax advice should again be
obtained. The reverse of this is that when searching for that property
find out how long it has been on the market for and strike a hard bargain!
IF YOU ARE CONSIDERING BUYING A PROPERTY ABROAD HERE'S A CHECKLIST
OF SOME ITEMS THAT YOU SHOULD CONSIDER:
- Research the local property market, area and country
- Consider funding for purchase and obtain mortgage quotes from local
banks
- Consider the purpose of the purchase, retirement, holidays or rental
- Obtain independent legal advice before you commit to the purchase.
If buying to rent initially discuss tax implications with lawyer
- Locate property, agree price and all related costs
- Make local wills
Over the last few years, and with improved transport and easyJet flights
many of us are turning the second home concept into reality. Despite our
reputation we are becoming more proficient in other languages and English
is becoming more widespread (though not that you would notice in country
villages!). The pound is strong against the Euro and our money goes further.
For the price of a country cottage we can buy a small manor in rural France
or Spain.
More of us are turning our dreams of owning abroad into reality and
this is likely to increase as we become more involved - as we surely will
- with the European Community. Although the idea may be raised after a
good dinner on holiday, the dream will only become reality with patience,
tact and professional advice.
One final recommendation: Once you have purchased the property of your
dreams, local wills should always be prepared as in the event of death
of one of the owners, title in some countries does not automatically pass
to the survivor as in the UK.
If you don't want or can't afford to buy a second or holiday home consider
timeshare. Despite its reputation, the concept is brilliant and the product
is usually good. It is the way it is often sold that causes the problems.
But remember, always do your homework!
Abbey National France offers a specialist mortgage service dedicated
to English speaking buyers with bilingual staff who can help them throughout
the process.
To make things easy, Abbey National provides its customers with a helpful
guide telling them everything they need to know about buying a property
in France. To obtain this free guide call 0800 169 84 70 or E-mail ukbuyers@abbey-national.fr
www.abbey-national.fr
to find out more.
Alex Radford is a Solicitor at Stones, who specialises in the
travel and leisure industry and can assist with purchases of property
in Spain. Tel. +44 1392 666 777 www.stones-solicitors.co.uk
| 
