Buying Property

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Medelin, Colombia

There are some locations that never seem to go out of style for long – the French Riviera, say, or Florida. Then there are victims of the market, like Spain or Italy, old favourites edged out by economic woes. Second homes can be vacation homes or a stepping stone to repatriation, retirement homes or rental prospects. Whatever the purpose, here’s where everyone’s trying to buy this year.

1: Argentina

Argentina has a market characterized by sharp up and down swings. Right now, it’s in a down swing, meaning the opportunity for a real bargain that will appreciate quickly when the market comes back around. Apartments in Buenos Aires are the usual way to get into Argentine property, unless you’re in the mood to buy a ranch.

2: Istanbul, and Turkey

Turkey’s property market weathered the 2008 storm better than many of its neighbours. While about 25% was sliced off the values of housing in Istanbul in those years, prices recovered and then continued to rise at 10% – 15% a year, a rate of appreciation which continues. A standard house in the Turkish capital can still be a real bargain – and rental and resale prospects are good too. Turkey’s economy is growing at 4-5% and half the population is under 30, meaning that as the economy recovers those people will be looking for homes to buy and rent. It’s wise to focus on Istanbul rather than on the vacation properties on the coast, because these are typically supported only by foreigners and the tourist economy, less stable than Turkey’s main economy.

3: Dominican Republic

The Dominican Republic is an internationally popular destination – it pulls in Europeans, but also purchasers and visitors from every corner of the globe. It sees big volumes of tourists every year, and is a top Caribbean choice for beginner investors. More and more foreigners are heading this way this year, and that’s partly because property prices are very affordable compared to the rest of then Caribbean.
One-bed new builds a few minutes from a beach can be had for $100, 000 (£60, 000) or thereabouts and the rental market is strong.

4: Spain

It’s symptomatic of Europe’s economic fortunes that Spain has begun to recover its status as the number one destination for British people. Some observers say it’s the best time in 20 years to buy a Spanish property, and it’s very much a tale of two markets: local Spanish markets are still wobbling and may yet fall still further, but expat-driven markets are finding their feet again as foreign buyers come to their rescue. Traditional areas like the Costa del Sol offer good buys for foreigners looking for a second home.

5: Medellin, Colombia

The market in Colombia’s capital, Medellin, has grown by 10% per year for the past six years and shows no sign of abating. The pound is relatively strong against the Colombian peso (so is the dollar, so Brits should expect some Norteamericano competition) and Medellin isn’t everybody’s idea of a South American capital. Looking more like a Central European capital, it has modern infrastructure and a thriving tourist trade as well as a buzzing real economy and plenty of night life. If you’re interested in South America, Medellin almost requires a look.

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Australia Harbour Bridge

A fifth of British first-time buyers are so eager to get onto the property ladder that they would consider looking abroad for a suitable property, according to a recent survey.

The poll, from comparison website, found that 20% of UK people looking for a house to buy would look abroad for a property. They’re willing to leave the country to find an affordable home – but the figures also suggest that they’re not all that serious about it, at any rate not yet.

For instance, the destinations they listed were overwhelmingly English-speaking – Australia, Canada, New Zealand, and the USA. Besides distance and language all these nations have something else in common: they’re notoriously hard to get residency in, especially the USA, and lengthy and complex visa protocols mean they’re not necessarily going to save you much money.

The United States was the most popular location among respondents, with 31% saying they would consider moving there, while 29% favoured Australia and 20% New Zealand. Men were more likely than women to consider a move overseas, while respondents aged between 18 and 24 were most likely to want to leave the UK.

Overall, the most popular means to get on the property ladder is the government’s Help to Buy scheme, with 30% describing this as their preferred option.

The poll also found data that’s in keeping with observable trends, such as the 15% of respondents who would consider buying with friends, and increasingly popular choice as the structures of families, lives and careers change. 14% would look at buying a micro home, 13.5% have considered a static caravan or mobile home and 12% consider buying homes with parents or siblings.

‘A lack of affordable housing has resulted in a property market that is closed off to an increasing number of would-be homeowners,’ remarks Matt Sanders, spokesperson for Gocompare Mortgages. ‘As such, it’s hardly surprising that many people feel like they may have to take some rather drastic steps to own a home.’

Some methods are more drastic than others: the same survey revealed some surprising facts about how would-be homeowners view the housing market. 23% said they felt they would only be able to afford a home if they bought one with someone else, while 17% thought they would never own their own home. 10% of respondents felt the only way they would end up owning a property would be if they were left one in a will!

Part of the willingness of first time buyers to move abroad could stem from the fact that they’re facing moving anyway, since many will have to move around the UK to find an affordable property, balancing career and other concerns against regional variations in housing costs. With this in mind, their attitudes to moving abroad make a lot more sense. The question is whether they’ll ever come to fruition. Visas to the United States aren’t getting easier to come by, and Australia and New Zealand are dealing with housing shortages of their own, to the extent that Australia has mooted limiting overseas purchases.

If the current generation of would-be homeowners wants to move abroad, they might find themselves looking more toward the traditional British expatriates’ destinations of France and Spain – and even perhaps towards Eastern Europe and the Baltic states, as work becomes more mobile than housing and EU membership gives them automatic residency rights.

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Buying property abroad

International real estate agents are struggling to give the impression that holiday hotspots like Spain, Portugal and Greece have seen resurgent property markets in the last year, and that buyers who get in quick will get a bargain before prices reflate. However, figures from Eurostat, the EU’s data agency, show much of this optimism to be ill-founded. Across 2013, much of Europe actually saw prices fall, especially in the continent’s holiday areas, while there are many developments in Spain that may never be sold at any price, and many more properties are in the hands of ‘bad’ banks designed to isolate toxic assets.

What does that mean for British property buyers?

Let’s use Spain as a case study.

In Spain, Britain supplies by far the majority of overseas buyers, and most British people are to be found in coastal areas – the traditional holiday hotspots hardest hit by the crash. In many of those areas, there are substantial developments built for a market that no longer exists and which are expected never to find buyers at any price. Unfinished, often sub-standard, the argument over these monuments to hubris centres on whose responsibility the expense is of knocking them down.

And after years of plummeting house prices in Spain, it’s understandable that British buyers would want to tread carefully, but while the picture is mixed there is some good news.

Well into 2014 the Spanish market was providing plenty of grounds for scepticism, but experts now predict price rises in 2015 and prices have actually begun to increase this year.

Professor Gonzalo Bernados, an expert in the property field at the University of Barcelona, believes that house prices in the best districts of Spain’s major cities – Madrid, Barcelonia and Valencia – will rise by as much as 10% in 2015.

Professor Bernados observes that the Spanish economy is showing signs of recovery and that when this is combined with low interest rates, it is more advantageous for many people to buy a home than to rent one.

In a note of warning to those considering buy-to-let, Professor Bernados foresees a decline in the rental market as Spain loses population and the economic pressure in favour of buying. This year has seen the highest number of home sales in Spain since 2011 and both sales and prices are forecast to rise next year.

There are positive signs even in Greece: foreign buyers doubled their investment in Greek property in the first half of 2014 compared to the same period the previous year, and  Greek tourism is recovering faster than the rest of the country’s economy, meaning that now might be a good time to buy a property in Greece.

In Portugal, meanwhile, the news is also, finally, positive. RICS/Ci reports that market confidence is returning, with new buyer enquiries and transactions increasing. ‘PHMS results show sales activity continues to pick up,’ RICS stated in a report, ‘while prices appear to be a step closer to stabilisation.’

Europe’s real estate agents have been talking up the continent’s resurgent market for two years now. Last year, they had little enough evidence on their side: this year, their optimism is looking more realistic. If you’re in the market for a European home, now might be a good time to start looking!

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Luxury French Property Abroad

Many people think of moving abroad, but who actually does – and where do they go? Figures reveal the most popular destinations.

Moving abroad is a dream for many and a hope for some. While a lot of us Brits like the idea of buying homes abroad, not all of us will make it as far as seriously attempting either to move abroad or to get a second home. Of those who do shoot for that dream, though, where do they want to go? carried out a survey of its members, and from a sample of 3000 respondents, they found that 51% were looking for a second home; moving permanently abroad trailed slightly as a motivation, at 36%; and investment purposes accounted for only 13% of foreign home purchase.

Most of those purchasing a home abroad in 2014 said they intended to focus on Europe, with France and Spain accounting for 60% of buyers’ attention – France with 23%, Spain with 37%. That picture is confirmed from within Spain, with Spanish property website reporting that overseas buyers increased their share of the Spanish market by 25% in the third quarter of 2013; of these, British people made up 14.9% of the transactions by overseas buyers.

While we might not have had precise figures before, the trends in second home purchase aren’t exactly surprising. France and Spain are traditional second-home destinations and that hasn’t really changed. What is surprising is what people who planned to emigrate permanently said about their destinations.

The traditional destinations for emigrating Brits have been distant, so-called ‘long haul’ destinations like Australia, Canada, New Zealand – English-speaking countries offering either a higher standard of living than the UK, or a better quality of life; New Zealanders might not be richer than Brits (in fact, they’re slightly poorer, with a per capita GDP of £18, 400 against the UK’s £21, 6000) but they get to live on the set of the Lord of the Rings.

All that has changed, though: of the top 5 destinations for overseas property buyers in 2014, not one of the traditional major destinations is even present. Instead the top 5 destinations are all European: France, Spain, Greece, Cyprus and Italy make up the hit list.

One distinguishing feature all those countries have in common is that they’ve been hit hard by the Eurozone crisis. A cynic might be forgiven for thinking that those countries became popular because their degenerating economies allowed Brits to snap up a bargain at the expense of their Euro-neighbours. In fact, though, the main reason respondents gave for choosing these countries was that they wished to keep family and friends close by.

Of those purchasing overseas for investment purposes, financial incentives made up a higher proportion of their motivation, as would be expected. The USA and Greece were very popular among investors because those countries’ high surplus stocks and poorly performing economies make them ideally placed for bargain hunters. Opportunities to move their base of operations to countries with more favourable tax environments under so-called ‘golden visa’ (residency or citizenship for investment) schemes was also thought to play a part in investors’ decisions.

It should be remembered, though, hat investors make up a small proportion of overseas buyers: just 13%. The majority are buying abroad for personal reasons, and their sights are overwhelmingly set on European destinations.

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Renting out a holiday property is an excellent way to help cover some of the operating costs, and if carefully managed, having the property in regular use can even reduce its maintenance costs. However, many people go into it wearing blinkers; thinking that it’s as simple as taking a few photos and sticking it up on the big holiday rentals sites. It isn’t. And many people come unstuck and end up miserable as a result of this miscalculation. Running a successful rental property is hard, here are some steps you can take to help ensure your success:

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A worrying trend appears to be emerging in Ireland “overseas property investors” seem to be walking away from their foreign property investments in their droves.

People who bought during the boom years are now finding the value of their properties has slumped to the point that they are having to simply hand their keys back to the bank and walk away. Some of these individuals have not even been able to enjoy a single day in their foreign homes because they were bought off-plan, meaning they paid their money on the basis of a projected building yet to be built on a certain plot of land. Now these projects are nearing completion and the final staged payments are becoming due, property owners are realising they have already paid two or three times what their investment is now worth, without even adding in this final payment.

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Off plan property overseas — property that is purchased from the plans of a new development, which are sold from before even the first foundation has been dug — has the potential to be one of the most lucrative investments a person can make.

Unfortunately it also carries a certain amount of risk and this has come to the forefront over the past 6 months to a year, because of all the cancelled and postponed developments around the world as sales plummeted because of the credit crunch sparked by the collapse of the American banking system and property markets.

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easy-jet-fly-to-let At the beginning of last year fly-to-let was all the rage, as it had been for the 2 years previous. For those who don’t know, fly-to-let is a play on the words buy-to-let. Buy-to-let is buying a property with the sole intention of letting it out for a profit, and fly-to-let is doing this abroad. Look here for a more detailed explanation of Buy to Let.

In most buy and fly-to-let transactions the aim is that the income from the rentals of the property will cover some or all of the mortgage repayments. Buy-to-let landlords who buy properties in their own country will want all the repayments covered, whilst fly-to-let owners can balance how much of the repayments are covered with how much they want to use the property for their own holidays.

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Fraud investigators are looking at a suspected international property scam that has left investors more than £40 million out-of-pocket.

Ocean View Properties, based in Staffordshire, has gone in to administration claiming overseas developers forced the company to stop trading after failing to repay millions of Euros handed over as deposits on behalf of investors.

A notice to investors on the company website claims: “Adverse press reports have undoubtedly contributed to the company’s demise though we have communicated and continue to communicate with the relevant media personnel to correct the inaccuracies that they appear to have been fed.

“It is worth noting here that there are clearly a number of people who have appeared in these articles who have subsequently confirmed that they were never personally approached or that they have been misquoted.

“With regards to the allegations surrounding Sean Woodall we can confirm that he acted as a ‘land finding’ agent for us for a period of around 4 years. It subsequently transpired that, not only was he creating problems with the developers that we were working with but he also had a ‘history’. Accordingly links between us and he were severed in 2005.”

This statement refers to articles in the Sunday Express that alleged hundreds of investors have been left at least £80,000 each out of pocket after major off-plan property deals in Spain’s Costa del Sol never materialised.

Customers were told their cash was being held in legal escrow accounts, said the newspaper, but when they asked for refunds, the money had disappeared.

Sean Woodhall set up his own company, Worldwide Destinations after falling out with Ocean View, copying the Ocean View business model in Egypt, Brazil and the Dominican Republic.

In May last year, a light aircraft said to be carrying Woodhall was reported to have crashed over Brazil.

His body has never been recovered, but he was declared dead last autumn.

Fraud officers from Staffordshire Police, City of London Police and the Serious Fraud Office are currently investigating Ocean View to see if any evidence exists to support criminal allegations.

Ocean View was set up in 2001 by buy-to-let millionaire Colin Thomas, other businessmen and Sean Woodhall, a convicted fraudster.

Investors were persuaded to buy off-plan apartments in southern Spain.

Several celebrities were involved in the marketing – but there are no suggestions of wrongdoing against any of them. They include Martin Roberts,  presenter of the BBC’s Homes Under the Hammer property programme.

He claims the company owes him and his partner about £200,000.

England international footballers Gareth Barry and Alan Smith also bought properties successfully from Ocean View.