Our property expert guides you through the pros and cons of buying a second home abroad…
Sun, sea, sand and a glass of wine or two… If only the holiday feeling could go on forever. I think we can all admit to dreaming of owning a property in our favourite holiday destination, there for us to escape to whenever we feel like it. But is it really the right thing for you?
I’m sure you all like to check out property values whenever you go away (or is that just me?) and, when you see some of the ‘bargain’ prices in certain parts of the world, it can be tempting to view buying overseas as a cheap and easy investment which will give you free holidays for life. But, owning a second home abroad is never going to be an easy task and it shouldn’t be – there’re lots of financial and legal risks.
You need to first look at the costs involved in buying, owning and (eventually) selling a property abroad. Something else to consider is whether you really want to go on holiday to the same place every year? If you’re the type of person who enjoys exploring new places you may soon get bored and prefer to visit other places.
However, if you do enjoy returning to familiar territory, to hit the beach or even the ski slopes, and you’re in a position to take frequent or long holidays, a home abroad could be a life-changing investment, and it may even appreciate in value over time. Plus, you won’t have to worry about your holiday accommodation not being up to scratch, and you’ll be able to take breaks whenever you want to, without going through the bookings process.
BUY TO LET?
Of course, you can offset some of your costs by letting out your property, but this means you’ll still have to reserve your own weeks, especially if you want to visit at the most popular times of year. And don’t forget rental money will be subject to taxes, possibly in the UK as well as the country you buy in – so make sure you know what these are prior to buying, as well as potential costs for an independent lawyer which could be several thousands of pounds.
With all costs, be aware that they will vary depending on exchange rate fluctuations. Even a small drop in the value of the pound against the euro or dollar could send your dream property soaring out of budget. Similarly, if you take out a mortgage in the local currency, you’ll need to be prepared for your monthly payments increasing if sterling falls in value.
Finally, other costs to bear in mind include any licensing to let the property, sometimes VAT and, of course, maintenance. You’ll need to have somebody you can trust nearby, who can go to the property when you aren’t there to fix any issues, and who will bill you honestly for any work done. There’s certainly a lot to think about, but if a second home abroad is your dream come true, then it’s all worth it!
Kate Faulkner is one of the UK’s leading property experts. Read her regular column every month in Period Ideas! Get in touch with her via propertychecklists.co.uk or follow her @katefaulkner
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