Top 
Step by Step
Guide
After following
our basic guide you should be on the right path to purchasing your
new holiday home. Now for the complex stuff.
1. Dealing
with Agents
Once you have
found that ideal property you will have to negotiate a price with
an estate agent. Here are some important points when dealing with
foreign estate agents:
- You should
understand that the same property is often offered for sale with
more than one agent and quite often offered for sale at differing
prices. Obviously, the bigger chains of agencies have higher overheads
to contend with.
- The vendor
or seller will have an agreement with the agent to pay a commission
upon completion of a sale to a client he has introduced.
- The commission
to be paid is always reflected in the final price negotiated and
can vary from around the 5-15% mark.
- When choosing
an agent make sure they are an approved GIPE or API member with
a current license, offers the best service and information, and
attends you with a senior member of staff. Choose an agency with
an up to date property database.
- A good agent,
with their wealth of local knowledge, will help you understand the
pro's and con's of different areas. They can save you a lot of time
finding your new home and as an experienced negotiator will help
you reach an agreement with the owner.
2. Making an
offer
This stage will
consist of your and your lawyer finalised certain points with the
owner. The following points should be negotiated:
- The Price
- The declared
price on the title deeds
- Payment method
and currency
- Fixtures and
fittings · Furniture
- Who pays which
taxes
- Take nothing
for granted, include it in the offer, presume nothing.
- This way you
only have to negotiate once and there should be no hold ups or surprises.
- This is where
the skill of the agent comes into play as the vendor and buyer reach
a harmonious agreement.
- Having funds
available at this time will also convince the vendor you are serious
not just browsing.
3. Finalising
the deal
Once you have
paid the reservation deposit (around £2-4k) you then have a period
of up to 30 days to exchange the private purchase contract with the
vendor. You can arrange for your lawyer to handle both this stage
and the completion on your behalf if you are unable to attend.
Before your lawyer
exchanges contracts he will have completed the detailed searches and
investigations at the land registry in respect of the property. On
the day of completion you will sign the title deeds and receive your
keys for your new property.
Other important
points:
- NIE number:
You will need an NIE number (fiscal identity number). Even if you
are not a property owner, you can then open a bank account.
- Banks: This
decision should be taken very carefully. Your own bank may have
strong links with foreign banks so consult them before you depart.
- Becoming
a resident: Applying for residency differs from country to country
but does have its appeals.
- A will:
It is advised you make a will in your new country of residence.
Certain countries have particular rulings over foreign wills. Discuss
with your lawyer about the differences between what you can will
in your own country as opposed to here.
- Inheritance
Tax: Ask your lawyer or tax consultant about inheritance tax
and how to minimise it. Get advice before you decide in whose name
or names the property is to be registered in, especially if you
are in your golden years.
- Common Sense:
Make sure you clear everything with your lawyer and don't sign
anything without their approval.
Top
Case
Study: Costa del Sol
The sun, sea and
sangria of the Costa del Sol has proven a popular resort for people
from the UK to relocate to. Despite the increasing houses prices in
the Spanish resort there seems to be no downturn as house sales continue
to rocket.
The following
statistics highlight this current trend:
- A market study
revealed that the number of residential tourism homes in Spain has
doubled in recent years to more than 3 million, 1.1 million of them
owned by foreigners.
- 70% of Spain's
residential tourism homes are located in Andalucia and Valencia,
and principally on the Costa del Sol and specifically in the Marbella
area, an additional 65,000 homes are on sale along Spain's coastlines.
- According to
the Banco de Espana foreign investment in property in the first
six months of 2,000 totalled 373,000 million pesetas, 35% more than
for the same period in 1999.
- In 1999, foreign
property investment totalled 501,000 million pesetas, which was
37% up on the 1998 figures.
- Of that sum
a total of 149,000 million was invested in Costa del Sol a substantial
rise from the 119 million total the year before.
Future developments
look even more promising for the area. The improvement of the motorway
and foreign investment has been a major boost to the resort. Financial
factors: The following are all financial points that make Costa del
Sol so appealing:
- Favourable
exchange rates
- Low Euro interest
rates · Mortgages from 5.25% being available for residents and non-residents.
- Good rental
property and location. For investors who are just not looking for
a home in the sun, the Costa del Sol has been one of the leading
world property investments in the last five years.
Top
FAQ
Q. Are
there any additional charges or fees that I need to look out for
when buying a property abroad?
A. As
with any house buying process, there are always additional costs
involved such as taxes and lawyers' fees and it's important to realise
how much these can vary from country to country. The Federation
of Overseas Property Developers Agents and Consultants (FOPDAC)
estimates that on average, a buyer can expect to pay about 10-12%
on top of the original purchase price in fees and charges when buying
abroad.
Q.
How do I find out about the legal aspects of buying a property abroad?
A. FOPDAC
produces a series of fact sheets giving legal advice on buying property
in various countries including Spain, France, and Portugal. It also
has details of reputable local property agents and solicitors in
the area where you are looking to buy.
Q.
Will I have to pay tax in the UK on the property I have bought abroad?
A. If
you decide to rent out your second home, all income generated from
this must be declared to the Inland Revenue and this will involve
filling out a self assessment form. Expenses such as, mortgage interest,
however, can be offset against this and, if you are planning living
in the property for part of the time, you will need to arrange with
the Inland Revenue exactly how much of this can be offset against
your rental income.
Q. What
taxes will I be subject to in the country where I have bought the
property?
A. It
is likely you will have to pay tax if you rent or sell the property.
However, the UK operates double taxation agreements with a number
of countries and the Inland Revenue should be able to give you details
of these to prevent you having to pay tax both in the UK and where
you have bought the property. Some expenses, such as travel, may
also be deductible. To find out what you are entitled to, it's worth
consulting an organisation such as The Tax Team for independence
advice.
Q. How
do I insure my new home and its contents?
A. Although
insurance can be taken out in any country where you buy the property,
many people find difficulties with language and the varying terms
and conditions attached to the policy. Tax can often be charged
on insurance policies taken out abroad and this can be confusing.
Saga's new holiday home cover is written in English with clear terms
and conditions, and automatically pays any overseas insurance tax
to the relevant government department.
Q. Will
my children's inheritance be affected by buying property abroad?
A. Although
it's not one of the first things you think about when buying a home
overseas, it's important to make the necessary arrangements to avoid
any inheritance problems in the future. It is always advisable to
take out a will in a country where you hold assets; however, regulations
governing inheritance will vary from country to country so it is
important to take proper legal advice from a local expert before
making the necessary arrangements
updated: 11/11/02
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Buying Abroad