With the British property market suffering while overseas prices soar, many of us are contemplating our first overseas property investment. But how do you keep your money safe, and where do you start! With our guide, of course, to your first five steps.
The latest Global Property Guide Investment Analysis points out that most of the world’s major economies are enjoying property price rises, many in excess of 5% above general inflation in that country. Some are slowing down and some accelerating, but few areas are seeing as much of a slowdown as the UK, where inflation adjusted prices fell 0.08% last year. And that is before Brexit and the promised new housebuilding programme, both of which may well ease the UK housing crisis by cutting property prices. Added to that, successive governments have hit domestic buy-to-let investors with extra stamp duty and other costs. Hardly surprising that many of us are looking abroad for our property investments.
There is only so much research you can do remotely, it really does take an in-person experience to get a solid understanding of a place and if the investment is the right fit.
Many small and first-time investors will be nervous, however, of spending money they have scrimped and saved to accumulate. Buying property abroad comes with an entirely new set of circumstances that do not apply when buying a flat around the corner from you in the UK. It does, however, offer the chance for use as a holiday home for yourself, or perhaps offer some rights to live abroad as we approach Brexit. With UK interest rates unlikely to increase much in 2018, perhaps now is the time to reconsider putting your money in a home abroad – bricks and mortar are still a sound investment virtually wherever you buy.
For investors nervous of their first foray into the overseas property investment market, due diligence and proper research are obvious essentials. If you follow our five point plan, however, you will be well place to take advantage of rising prices abroad.
Step One: Be clear on your intent
Why are you making this investment? Knowing with clarity why you want to purchase a property abroad will help guide your decision making. If it’s a holiday home in the sun you are primarily after, with a bit of rental return, this will narrow down the possible locations. If it’s long-term capital growth you want, then you may be looking at slightly different properties to those offering a good monthly rental income. When you have clarity of purpose keep this front of mind when deciding what and where to purchase.
Which property offers the best investment fit for you?
Step Two: Narrow your search
Now that you know why you’re buying, you probably have some idea what you want to buy too. The next tip is to narrow your search. You may have narrowed it down to a few countries already but within each country there are likely multiple locations, so really defining what it is you’re looking for will help focus your search. You will need to seek out independent market research and expert advice to compare locations empirically, rather than relying on the sales brochure or the estate agent. Be honest about the requirements of the investment; it may be more convenient to you, but is it really important to be near an international airport if you’re renting to the local market? Do you want to be somewhere where English is predominantly spoken? Do you require consistent and reliable internet? Some places on your list may naturally drop off when you discover they don’t actually have some of your “must-have” requirements.
They may look good, but are they a good investment?
Step Three: Know your rights
Some countries simply do not allow foreign residents to buy property, while others will put up informal barriers. Thailand and the Philippines are examples of places that restrict foreign ownership. Other places, such as Australia, restrict what you can buy as a non-resident. The internet is a great starting point for researching your rights to property ownership in another country. Once you get serious about a certain place, contact a lawyer or real estate agent in the location and get some professional guidance on the process of buying property as a non-resident.
If you are ready to invest abroad within the next few months, call our friendly Resource Team on 020 7898 0549 or email [email protected] to be put in contact with trusted lawyers, estate agents and currency specialists.
Step Four: Plan a viewing trip
Now that you know why you are purchasing property, what you want to purchase, where you’d like to purchase and your eligibility, it’s time to conduct some primary research and visit your shortlist of places. There is only so much research you can do remotely, it really does take an in-person experience to get a solid understanding of a place and if the investment is the right fit. If you’re researching a few different places, try planning them in the same trip so you have some direct reference to make a decision. If this is purely a financial investment then numbers will hold a lot of weight, but if this is for a holiday home too, or somewhere you will spend significant time, you’ll want to immerse yourself fully in the local area to make sure it’s a good fit. Check out our Viewing Trip guide to help plan the trip.
Step Five: Get help
Remember, there is plenty of support for those wishing to buy property abroad, both here in the UK and in your destination country. You may want to speak to a lawyer or financial advisor on UK soil to determine your considerations about the purchase. Connecting with a currency advisor such as the team at Smart Currency Exchange will help you figure out the best way to get your money into the new country. In the destination country you’ll want to connect with a real estate agent that specialises in buying (or buying from abroad, even better), as well as a lender and lawyer for financial and legal advice. Enrolling a competent team to support you in your overseas purchase will help everything go smoother and result in an investment you can be confident about.
If investing in property abroad is on your bucket list in 2018, make sure to follow these five steps to ensure you find an investment that meets your needs and requirements, and provides you the lifestyle and returns you seek.