A guide to buying a holiday home abroad
So, you’ve decided to invest in a holiday home overseas. Perhaps to take advantage of low prices and high returns, or for somewhere you can escape the English winter and then make pay for itself
But how do you actually go about turning that dream into reality?
My experience is in buying in the UK so I spoke to Christopher Nye, Editor at overseas buying experts Property Guides to find out more.
Here is his to-do list for buying a holiday home abroad
Whenever soon-to-be property buyers start thinking about the steps they need to take to buy a home abroad, they’ll often visualise it as a linear process: first you do ‘a’, and then ‘b’, and then ‘c’.
This does work, but it’s extremely slow if you wait for each step to finish before you move onto the next.
Instead, we advise our readers to take two key stages – the viewing trip and completion – as deadlines for multiple strands of the process. That way, you can easily have found, bought and completed on your home in as little as six months.
What to do before going on a viewing trip
In the UK, you can visit homes as and when you want, at the speed you want. Abroad, however, you’ll need to see them gathered into one, two or three trips. These can either be arranged
individually – you make all the appointments with different agents yourself, and choose your accommodation – or by a single agent. In the case of the latter, it’ll be much more cost-effective, with most agents charging around £99, and your accommodation and transport will be sorted, but you will be limited only to seeing properties with that singular agent.
Before you get to that point, however, there are some key areas to have completed:
Your property shortlist
First up is, naturally, your shortlist of holiday homes overseas that you want to see. Firstly, draw up your list of ‘musts’ and ‘nice-to-haves’. Don’t, however, dive immediately into what your house has to have, but what your guests require from it. For example, many people will start off listing a swimming pool, garden, and views as musts – and then find that the large garden is a pain to maintain, and their guests rarely use it fully anyway.
Think about the style of holiday and list from that. Is it in a rural area, in which case you’ll need parking? Are your guests in a price bracket where they’d accept a communal pool – which means less maintenance? Do they want to relax in peace and quiet, meaning you might want a terrace with a beautiful view – or will they be eating out every night, in which case a property with a small balcony and in walking distance to the restaurants could be more of a priority?
Use this to evaluate properties you see online, and start to make your shortlist. Speak to estate agents’ calling teams and ask about anything coming onto the market soon.
Protecting your money
If you’re buying a holiday home abroad, then chances are you will need to buy a property in a different currency to your own. And that comes with a risk. The price you agree to on, for example, a home in France, will be fixed in euros. But the exchange rate constantly fluctuates, especially with so much Brexit-related uncertainty, and its price in sterling is constantly changing. A €200,000 property, for instance, has changed value by almost £20,000 over the last twelve months alone.
Most people leave this bit until last, which is where it becomes risky, as you depend on luck. That’s why, at Property Guides, we always refer our readers on to Smart Currency Exchange, rather than their banks. A specialist currency exchange can lock you in the same, fixed exchange rate for up to twelve months at no extra cost. It means that, even if the markets suddenly drop, how much you pay doesn’t change. In other words, you can go on your viewing trip with a clear, realistic idea of what your budget will get you.
And, when it comes to paying the ‘reservation deposit’ most continental European countries require, you can pay immediately, without the risk of going back to the UK to sort it out and finding someone else has offered and accepted. In popular tourist areas, houses go extremely fast!
Get your tax code
It often surprises buyers that they can usually apply for the local equivalent of the National Insurance Number, such as Spain’s NIE, even before buying their house. The earlier you do it, the better: you’ll find so many different registration aspects, from tax to bank accounts, easier once you have one. In Spain’s case, for example, you can apply at a consulate in the UK.
What to do before completion
The next half of this process can be a little slower, as it’s less in your hands and more in those of the authorities. It’s important not to get too frustrated – just accept the speed as part of the relaxed culture in somewhere like Italy or Spain and try to work within it.
Most countries require the buyer to sign a reservation agreement, in which case you need to pay a small deposit and the home is taken off the market. We always advise making this agreement subject to preliminary legal checks and mortgage approval.
Settle on your final provider for a mortgage, if you are funding the purchase of your holiday home overseas with a loan. You could use a UK lender for an overseas mortgage, which could be more reassuring than a locally based one. Alternatively, a locally based one will know their own market better and, currently, may be able to offer lower rates – but they might find it more difficult to build up a history of your credit rating.
Prepare your money during the period of the reservation period to sign and pay the deposit contract, committing you and the seller to the transaction. This is one of our favourite aspects of the property purchase overseas – there is no possibility of gazumping!
Keys in hand!
Possibly in just a matter of a few months, you’ll find yourself in position to sign the sale contract. In most of Europe, this will take place in the office of the notary, who is a neutral representative of the state responsible for drawing up the reservation, deposit and sales contracts, among others. The notary will then register the purchase and the home will officially be yours – and your new adventure as a holiday home owner is ready to begin!
My Guest Author:
Property Guides is a useful resource to help people purchase their dream home abroad safely and successfully. Christopher Nye has been Senior Content Editor at Property Guides since 2016, but his experience in the overseas property, currency, travel and business sectors goes far beyond that. Chris has written guidebooks on Mallorca, the Greek islands, on adventure holidays and running restaurants. As property hunter and features writer for A Place in the Sun, Chris helped hundreds of people to fulfil their dream of owning a home abroad. Chris knows the global property market inside out, and is dedicated to both inspiring and helping people to buy international property safely
I hope this guide to buying a holiday home abroad has inspired you to chase your dream. Just take it step by step, be patient and that idea of yours, of taking sangria by sunset every evening will soon be your reality.