An estimated 1.5 million Brits own a property abroad, and joining their ranks may be easier than you think. This isn’t a decision to be taken lightly, so do as much research as possible.
Calculate your budget and consider your reasons for buying: apart from more sunshine, are you looking for a holiday home to visit whenever you want, or somewhere to retire to now or in the future? Do you plan to rent it out, and are you looking for a long-term investment? Once these questions are answered, you can start narrowing down your options.
1. Pinpoint the location
The property portal from Channel 4’s A Place in the Sun found Spain to be most sought-after destination for UK buyers, followed by France, Portugal and Florida, while Cyprus, Greece and Italy are popular too. Cyprus and Greece are the most affordable and prices vary considerably in each country – for example in Spain, southern Costa Blanca is cheaper than the Costa del Sol.
Think about whether you want to be close to the beach, in a lively tourist resort, or prefer the tranquility of the countryside or a small village.
Also, look into proximity to an airport – a factor that’s particularly important if you’re going to be travelling back to Britain frequently or if your holidaymakers need access. And get to know the area you’re interested in if you’re not already familiar with it.
2. Finance the purchase
Unless you have enough cash to buy outright, you’ll need to raise the money to do so. If you’re keeping your home over here and have a decent amount of equity, you should be able to fund your purchase through remortgaging, otherwise you’ll have to apply for a new mortgage.
Currently, mortgages on overseas properties aren’t widely available from UK lenders, so you’ll probably have to arrange one from a lender in the country where you’re buying. Deposits are higher than in the UK – typically 20-30% and payments are usually in the local currency.
Contact a broker specialising in overseas mortgages to discuss your options, including the duration of the loan and whether a fixed or variable rate would be best for you.
3. Get good legal advice
Always hire an independent English-speaking lawyer to represent you, protect your interests and advise you throughout what can be a complicated process. Expect to pay around 1-1.5% of the purchase price and don’t accept recommendations from sellers, agents or developers as you’ve no way to know whether they’re completely impartial.
Ask other recent buyers for names, or get a list of local lawyers from the Foreign, Commonwealth and Development Office via the Government’s website, gov.uk, and make sure they have professional indemnity insurance.
If the lawyer’s based in the UK, check they’re registered with the Law Society and are qualified to practice in both countries. An independent translator is a necessity too if your language skills are limited.
4. Find out about visas
Brexit has imposed a limit on the amount of time we can spend in most European countries. Now, UK residents can only stay in the 29 Schengen states (including Spain, France, Italy, Portugal, Greece and Cyprus) for up to 90 days in any 180-day period.
This might not be too onerous for holiday-homeowners, but visas are required for those planning to retire there. Rules and types of visa differ by location, but generally you’ll have to prove that you have sufficient income to support yourself.
Some countries offer golden visas to non-EU expats spending a minimum specified sum on property, but these are gradually being stopped or made more restrictive. Florida holiday-homeowners can stay there for up to 180 days a year, but obtaining permanent residence is very hard.
5. Buying a new build
Although lacking the character of older properties, new builds come with certain advantages. They’re pristine, energy-efficient and secure, and you’ll have a choice of units. The downside is that if they’re not yet finished, you’ll have to buy off-plan and can’t view your home before committing.
Rather than going through an estate agent, you may be dealing directly with the developer who owns the land. Make sure they have permission to build, find out how the project is being financed and check that the title deeds for the property exist.
Ask to see finished projects, talk to owners and see if there have been any issues since they’ve lived there.
You may be required to pay in stages so check these payments are secured by bank guarantees so you’ll be reimbursed if something goes wrong.
6. Watch out for additional costs
You’ll incur many expenses over and above the cost of the property itself. These include legal and translation fees, the cost of a surveyor to assess and provide a report on an older home, stamp duty or transfer tax, registry and possible mortgage arrangement fees.
You may also be liable to pay a proportion of the estate agent’s commission and the equivalent of VAT on a new-build.
Depending on where you buy, extra taxes might be due – for example property taxes and income tax on earnings from a rental property. There might be implications for your pension and inheritance planning, so factor in the cost of an accountant. Then there are insurance, running, maintenance and removal costs and extra flights to pay for if you’re coming and going from the UK.
7. Hiring local tradespeople
When buying a home that isn’t brand new, at some point you’re bound to hire a tradesperson – whether for a small project or complete renovation. Ask locally for word-of-mouth recommendations and look for positive reviews on local expat websites. Find out what qualifications contractors should have, ask to see evidence of this and get at least three written quotes for the work.
For bigger jobs, discuss timescales and payments – ideally in stages – and ensure that planning permission is in place if required. Reduce the stress of the build by brushing up your language skills beforehand and arranging for any fittings or materials to arrive in good time.
Aim to be on-site as much as possible so that you know everything’s getting done and to deal with any issues before they escalate.
8. Renting out your home
When purchasing primarily as a holiday rental, investigate occupancy levels, how much income you can expect to achieve, whether a licence is needed and make sure there are no restrictions on short-term lets.
Check out the competition: a villa in pristine condition will have the edge over one that’s dated, but lack of a pool in an area where most holiday homes have one will make it harder to let.
Consider creating a website for the property where customers can give feedback, and whether you want to manage bookings yourself or prefer to leave this to an agency that also arranges cleaning and handover – for a fee of up to 15%. Costs can be offset against rental income, but income tax is payable on profits.
9. Property purchasing checklist
To avoid your dream home turning into a nightmare, the UK Government recommends researching and following local laws on buying and renting out property abroad, and carrying out precautionary checks. Always get written confirmation of what has been agreed and insist on a paper rather than an electronic receipt for all payments.
Ensure that the seller or developer owns the title deeds to the property and can transfer them to you, and that they haven’t been offered as security for any loans.
Ask too whether there are any outstanding utility bills, local tax demands or other expenses that you as the new owner may be liable for, and check that water, gas, electricity and sewage are connected and ready to use.
Our expert says…
‘A currency specialist can help with all the international payments relating to buying a property overseas. Specialists offer better exchange rates than high street banks – and on a large amount for a property deposit or investment, even a fraction of a percentage point can make a big difference.
'UK high street banks charge higher fees and when you add up all the payments you need to buy a property, including legal fees and local taxes, this could make a dent in your budget.’
Simon Conn, overseas property and finance specialist.
What £200,000 will get you in Europe*
Axarquia, Malaga, Spain
Two-bedroom new-build apartment from €213,200 (approx. £182,000) A pet-friendly home in the Baveria Golf Club development. It has an open plan kitchen-living-dining room and a terrace and residents have access to lush gardens and facilities such as a gym and pool.
Lucas Fox, lucasfox.co.uk
Charente, Poitou-Charentes, France
Four-bedroom villa, €220,000 (approx. £188,000) Constructed in a style known as ‘Maison Bourgeoise’, this elegant period property is in a thriving village with shops and a station nearby. It has high ceilings, shutters and fireplaces, but could do with a little updating.
Kyero, kyero.com
Kournas, Chania, Crete, Greece
Two-bedroom villa, €225,000 (approx. £192,000) This sunny villa is available fully-furnished and couldn’t be better positioned for a new owner. It overlooks Kournas Lake and is a short walk from the village’s tavernas and half an hour from Chania airport.
Rightmove, rightmove.co.uk
Polignano a Mare, Puglia, Italy
Three-bedroom villa, €225,000 (approx. £192,000) Five kilometres from the beach, this semi-detached villa has a large roof terrace with sea views, a covered veranda and a garden with planted olive, lemon and fig trees.
Casa Travella, casatravella.com
*Exchange rates correct at time of press and rounded to the nearest £1,000
