Guides and Tips

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With ever increasing property prices in the UK and Ireland, it is little wonder that investors are looking further a field and becoming more adventurous and imaginative with their overseas property portfolios.

The emerging markets of Central and Eastern Europe are current hot spots, attracting a lot of interest with low entry costs and the potential for high capital growth.

However, the advantages and the security of more mature markets should not be overlooked. France is a great example. According to the annual French Property Market Report, published by the French property experts, VEF, France is still an exciting market with house prices set to rise by an average of 11 per cent this year.

VEF’s long term prediction for the market is healthy with prices set to perform over the 8-9 per cent p.a. rate over the next decade, which shows there is still plenty of room in the Gallic market for growth. This is reassuring news for investors looking for sustainability and no unwanted surprises to their portfolio.

However, perhaps the best part for many is France itself. You can buy your dream apartment or villa as a buy to let and you can also use it for your own holidays. Tips from VEF include looking into regions such as Burgundy, Languedoc, Loire and Pyrenees Atlantiques. With low cost flights to France becoming cheaper from most areas of the UK and Ireland access has never been easier.

France still offers an incredible diversity of property, be it old or new at a price range to suit most budgets. VEF has a charming luxury development called ‘Le Hameau des Pins’ set in the breathtaking Corbieres hills near the Mediterranean coast with prices starting from just £130,000. With private swimming pools and views of the nearby Cathar castle and vineyards, this offers excellent letting potential.

A concept which is becoming ever more familiar is the ‘leaseback purchase’. This is a particularly attractive idea that has existed in France for more than 20 years. You buy a freehold new build property on a holiday complex (for example by the sea, on a golf course on in a ski resort) and you sign an agreement with an onsite rental management company for a minimum of 9 years for them to rent out your property.

Not only does the French state give you a VAT concession worth nearly 20 per cent but you usually receive a guaranteed rental income and you can use the property yourself. According to VEF, the number of investors from Yorkshire who are opting for this type of holiday investment property has increased by 47 per cent between 2004 and 2005.

VEF’s Jardins de Renaissance is a fascinating leaseback development in the historic town of Azay le Rideau in the Loire Valley. Fully furnished one bedroom apartments start from £70,200. Firstly, you receive a VAT rebate worth £13,759, then when built the annual guaranteed rental income of 5 per cent equates to £293 per month. Should you opt for a 25 year French mortgage with a 3.8 per cent fixed interest rate, your repayments would be £290.

Who knows the VAT rebate you receive could be put towards another property for your portfolio?

For investors with their eyes set on building their portfolio in Eastern Europe, buy-to-let apartments in Poland or Czech Republic make excellent sense.

UK-based investment property specialists Validus give a pragmatic and honest approach in helping investors choose the right property for their portfolio. They assist you to identify what type of investor you are and how much risk you feel comfortable with.

Should you be looking more towards capital growth, they offer superb value off-plan apartments in Warsaw. One bedroom flats are available from just £19,000. By opting for a local Polish mortgage with a loan to value (LTV) of 80 per cent, you need a cash deposit of just £3,800.

Warsaw is set to become the sixth largest business centre in Europe and is experiencing a severe shortage in new accommodation. Property prices rose between 15 and 22 per cent last year, with similar figures expected for 2006. Although Polish wages are rising, they are still low and as a result rental yields are moderate at approximately 4 per cent p.a.

For a stronger rental income, Validus is offering brand new buy-to-let apartments in Prague. As the property market is more experienced prices tend to be higher but Czech mortgages can be obtained with a LTV of 85 per cent. This means that a one bedroom apartment costing £47,000 can be purchased with just £7,050. A 25-year Czech mortgage at 4 per cent would cost £212 per month. The rental income is expected to be at least £270, so your nest egg in one of Europe’s most beautiful capital cities will actually pay for itself.

Louis Mann of Validus, has some sound words of advice for any future buyer of overseas property.

“There are key rules to follow to make your property investment as successful as possible.

“Take financing seriously – Look at local mortgages and leverage where possible to make the property pay for itself.

“Do your homework and seek expert advice from reputable companies.

“Make an exit strategy. If and when you sell, what are the tax implications? Are there benefits to holding on to your property for longer to avoid local capital gains tax?

“Don’t forget exposure to currency fluctuations. Forward purchase where necessary.”

Source: 999Today.com

NEW YORK (CNNMoney.com) – Ever dream about buying a little place in the rolling hills of Ireland? Perhaps you’re drawn to living in Tuscany or wandering the snaggleways of London.

Buying property abroad isn’t out of reach. Five Tips is here to tell you what you need to know before buying a home in a foreign country.

1. Get the big picture

Buying property in a foreign country is no small task. But more andmore Americans are finding benefits to moving abroad. Today there are four million citizens living outside the country.

Who can argue with buying four acres of prime land in Costa Rica for $43,000? And of course there’s always the Internet to help keep you connected to your family back home.

But be warned, sometimes the grass isn’t always greener across the globe. You’ll need to find out the rules about foreign ownership for the country you’re interested in. Some countries restrict foreign ownership altogether, like Switzerland, for example. You can find that information on the International Consortium of Real Estate Associations Web site at www.icrea.org.

You’ll also want to check with the U.S. State Department about the stability and safety of the countries you may be interested in moving to. That Web site is www.travel.state.gov.

There are also some countries that prospective buyers should be cautious about. “Vietnam is an exciting new place in Asia, but it has limited property rights and it’s still in its development stage,” says David Michonski, a certified International Property Specialist at Coldwell Banker Hunt Kennedy.

You should also be very cautious about Russia. It has a declining population according to Michonski, and you’ll see the economy suffer because of that.

2. Call in some help

If you’re thinking about buying overseas, you may want to enlist the help of a real estate broker to help you figure out unfamiliar laws and customs.

For example, if you want to buy property as a foreigner in Malaysia, you’re welcome to do that. But if you decide to sell your property, you’ll have to keep your money in a Malaysian bank account.

To find a real estate broker, check out the International Consortium of Real Estate Associations Web site at www.icrea.org. Of course, you’ll still have to pay commissions of 4 to 6 percent.

3. Count on paying cash

To figure out what you can afford overseas, assume you can pay cash only. Financing mechanisms like mortgages aren’t as sophisticated as they are in the U.S., says Michonski.

“You won’t find dozens of mortgage lenders offering you a loan,” he says. In many countries, such as Mexico, Greece, Spain and Eastern Europe, transferring property is historically paid for in cash.

If you can’t afford to buy property without a mortgage, you’ll want to check out English-speaking countries and former colonies like Singapore, Hong Kong or South Africa. But even then, you should be prepared to put down at least a 40 percent, according to Michonski. That’s to allay fears that you’ll get on the next plane and skip the country.

4. Check your title

When you buy property in America, you get a warranty title that states you are the owner of the property. But if you buy overseas, sometimes the distinction isn’t as clear.

It depends on the country you’re going to. Boundaries all over the world have shifted so it’s quite possible that once you buy a property, someone who is seven generations removed from the original owner could come back and make a claim on the land. This is especially true in Eastern Europe where World War Two shifted many boundaries.

Of course, don’t start to panic just yet. The burden of proof is still on the person making the claim. But you can try to assess this risk by seeking the help of a notary. They specialize in verifying legal documents. These notaries, (or Notarios) help you read the title history to see if there are any gaps in the property’s history or numerous property claims.

5. Grease the wheels

While here in the States, bribing is a big no-no, in many parts of the world, it’s just a normal business transaction. And it may be the only way to buy the property you want.

If you’re using a real estate agent, they’ll tell you how many wheels you have to grease. If you’re not using a broker, you can go to the Notary’s office and ask how many gifts you should distribute in order to make sure your property transaction happens quickly.

Your general gift can be $50 to $500 depending on the country, according to Michonski. In the Middle East or Asia, you may give out a dozen gifts. But in most English-speaking countries, offering a bribe isn’t as common.

Source: CNNMoney

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1. Rent before you buy: Many people already living overseas will advise you to rent first and buy second because what you really want, and what you think you want, nearly always turns out to be different. Many Brits go in search of their dream hideaway villa, but those who start off in the “real” Spain soon find they miss many things (from marmalade to a news-paper or a good chat in their own language) and tend to sell up and move to a town or resort. Equally, the friendly resort you visited on holiday in May might not be quite so much fun in high summer.

2. Check out your agent and developer: To counter a number of cowboy outfits, developers have got together to form the Federation of Overseas Property Developers, Agents and Consultants, so visit their website: www.fopdac.com

3. Book more than one inspection trip: Many property abroad sales people have been trained in the very effective sales techniques of timeshare. While there is nothing wrong with this method of selling, it does mean that they are effective at closing the sale before you’ve had a chance to compare other developments or properties. Book at least two inspection trips, if not three to avoid being tempted to buy on impulse.

4. Measure travelling time to the nearest airport: If you intend to either let your property or fly out from the UK to holiday in it, you should look for a location that is no more than an hour’s drive from the local airport, or you will find your weekend retreat becomes a once-a-year trip.

5. Money follows money: Don’t buy the most expensive villa in a ‘cheap holiday destination’ because when it comes to playgrounds, the rich stick together. If you want to know how wealthy a resort is, look at the size of the boats in the marina or count the number of expensive cars outside local restaurants on a Friday night.

6. Visit the location out of season: Viewing your property location in November, December, January, February or March is the best way to see what it is really like. If there are no people about, you can be sure you will not have a winter rental market.

7. Ask about renovation grants: Many rural areas will offer grants of up to 50pc to restore and renovate old properties. Ask at your local council office.

8. Arrange finance before you sign: Don’t take it for granted that you can raise finance on the property. You may find you can only borrow 70pc of the value and also need to find another 10pc of the value to pay for buying costs. That means that you may find it easier to raise money at home by re- mortgaging your own property and buying the property abroad for cash. Either way, you need a written mortgage offer before you sign. It is a very good idea to arrange your finance in principle before you fly abroad.

9. Set up a local bank account: You will need to pay for the notary and other property purchase costs in the local currency via cash, cheque or credit card. For this you’ll need to set up a local ‘non-resident’ bank account. Typically, this means that you have normal current account facilities but won’t receive any interest on the money deposited. You may need to wait before you are issued with credit cards.

Source: The Journal – Newcastle-upon-Tyne 2006-03-04

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Property investors are not a breed apart when it comes to learning something new, and should make new year’s resolutions just like the rest of us.

That is the message from experts at the forthcoming Homebuyer Show, who have devised four key pledges to help property investors make 2006 a prosperous year.

Investors should be prepared to further their education, review their property portfolios and try something new, all while making sure they enjoy life more, so the experts say.

The first thing they can do is improve their education by learning about all aspects of investment that affect them.

This includes learning about taxation to minimise the property tax they pay, researching market conditions to spot new investment areas, and keeping on top of government legislation such as real-estate investment trusts (Reits) and the impact they will have.

Next up is ensuring their property portfolio is healthy, disposing of underperforming investments which reduce the profitability of more successful investments. Investors should slim down to only those with the potential to perform well, releasing capital to invest elsewhere.

Third on the list of new year’s resolutions for property investors is trying something new, like an overseas property investment in places like Bulgaria, the Czech Republic and Hungary. Further afield, Thailand, New Zealand and China are also seeing an influx of investment into their property markets due to their potential for strong capital growth and good rental yields.

Finally, to reduce stress, property investors could hand over the management of their rental properties to letting agents. They will look after all the day-to-day issues such as tenant inquires, carrying out minor maintenance and collecting rent, and deal with all the paperwork freeing up the investors’ time.

“The new year is a great time for people to review their investments and decide what they want to get out of them over the next 12 months,” said Nick Clark, managing director of the Homebuyer Show.

“Property both in the UK and overseas can offer opportunities to investors at all levels, whether it be overseas holiday homes, buy-to-let portfolios or commercial investment, investors can help to turn 2006 into a successful year.”

Source: AboutProperty.co.uk

People should think very carefully before placing their incomes in retirement at the mercy of the buy-to-let property market, warns the Actuarial Profession.

The warning comes as product providers gear up to for changes to the rules for Self-Invested Personal Pension Plans (SIPPs). From 6 April 2006 SIPPs may, for the first time, invest directly in residential property. This may at first sight appear to offer an attractive income and capital tax shelter for buy-to-let properties inside a pensions wrapper.

But the Actuarial Profession cautioned that there are a number of reasons why residential property may not be suitable for many peoples’ pension investments prior to retirement, or for a fund which is being drawn down in order to provide an income:

The initial outlay is likely to be substantial in relation to the existing savings. Existing property cannot be injected directly into a pension fund, and investors should consider the cost of rearranging existing pension investments, and the balance of their revised portfolio.

Savers are permitted to borrow part of the cost of the property, leading to an element of gearing which increases the overall level of risk, especially if interest rates were to rise

Most people need to draw their pensions as soon as they retire, and may have little discretion about when this happens. If the property market is not performing well at that time, a forced sale may be required at a relatively low price

Overseas property investments may be subject to local legislation that inhibits dealing with them, and in some circumstances they may prove extremely difficult to sell.

Residential property can be a volatile investment. Rental income (which cannot be guaranteed) represents a large part of the return, and letting voids and/or marketing costs can quickly erode estimates of rental returns. Properties come in relatively large units and cannot be subdivided; and the property cycle (the period over which values rise and fall) is very long; all one’s eggs are in one basket.

Uncertainty over rental income is especially risky if the property is retained after retirement as part of a “draw down” arrangement, and the investor relies upon the income to fund his or her pension.

Only more financially-secure investors, such as those who already own a buy to let property and who wish to ensure that future rises in value are free from CGT, or those who have large existing pension funds and who perceive property to offer high returns for acceptable risk, should consider buy-to-let property.

Alan Goodman, Chairman of the Financial Consumer Support Committee of the Profession, commented: “There are just 150 days to go before the rules change and people may invest their pension funds in buy to let properties. We are sure some providers will be looking to cash in on this market with enterprising new investment vehicles.

“But people must not be seduced into buying them – even though house prices have rocketed and stock markets have slumped in the recent past. The value of houses, too, may fall as well as rise and the lack of liquidity that could arise from being a forced seller in a falling market could have very serious implications on an individual’s ultimate income in retirement.

“We have identified important reasons why people should think twice about putting all their pension eggs in one property basket. There may be a place for property within a diversified portfolio, but this is best achieved using a property fund rather than investing directly in bricks and mortar.

“In our view the vast majority of people should invest in pooled funds, rather than much riskier individual properties. We therefore urge everyone to consider very carefully whether residential property is a suitable investment for their pension funds and if so, ensure they get good independent financial advice before they go ahead.”

Source: Easier

HUNDREDS of investors have lost millions of pounds after being duped by a string of property companies that promised to make them rich. In the first of a special two-part investigation, Financial Mail unravels the web and examines the companies that conned the public.

Kieran Connolly has done well out of misusing other people’s money. He drives a Jaguar and the house he rents is a grand affair. The Department of Trade & Industry has linked Connolly, 48, to several companies involved in bogus property deals. His wife Elizabeth, 31, has been linked to three companies.

The bungalow next to Connolly’s in the Leicestershire hamlet of John O’Gaunt, near Melton Mowbray, is home to Philip and Tina Waterfall, who have connections with five of the eight companies investigated by the DTI.

In three years, hundreds of investors handed over thousands of pounds in membership fees and deposits, expecting to receive a portfolio of buy-to-let properties. Most ended up with nothing.

Financial Mail this week focuses on the four companies most closely connected to Connolly.

Quicksell

QUICKSELL Estates was founded in 2002 in Peterborough, Cambridgeshire, with Connolly and his wife as its two directors. For £46.94 a month, investors were offered options to buy investment properties. Reservation fees were charged on each deal.

Quicksell advertised for investors and recruited those who attended courses run by Turningpoint Seminars and Portfolios of Distinction. Philip Waterfall, 41, was a founding director of Portfolios. His wife Tina, 38, was company secretary.

Glen Lawrence paid £4,000 to attend a Turningpoint course in 2002. Glen, 53, from Castle Bromwich, West Midlands, is married to Yvonne, who has multiple sclerosis. ‘I wanted a job at home to spend time with her,’ he says.

Glen and Yvonne, 48, paid seven £1,000 deposits on different properties. Glen says: ‘Not one of the deals was completed and we found the developers had not heard of us.’ The Lawrences have not had a penny of their £7,000 back.

In spring 2003, Quicksell was put into liquidation and Connolly was declared bankrupt.

Mansion Investments

CONNOLLY was soon promoting opportunities through Mansion Investments with Ian Jamieson, pictured below, a financial adviser in Newcastle-under-Lyme, Staffordshire.

David and Louise Wilson were among the investors. David, who runs a car repair business, and Louise, 27, a financial controller, wanted to create a letting portfolio. David, 39, from Stoke-on-Trent, Staffordshire, says: ‘Connolly promised to get me £1m worth of property.’ To help the Wilsons raise a £31,725 membership fee, Jamieson arranged a remortgage of their home, releasing £50,000 of equity.

The couple paid £3,160 in deposits to reserve properties in Manchester and Swindon and two in Northern Ireland. But the deals fell through or were delayed. They completed on a flat in Hampshire for £229,000, only to discover that the developer was selling them for £15,000 less.

Mansion Investments was formed in 2002 with engineer Barry Frost, 68, as sole director. In August 2003, Richard Smith took over. Both Smith and Frost were registered as directors from an address in Streatham, south London. This property was sold three months ago and Financial Mail has been unable to trace them.

Sterling Mansion (UK)

CONNOLLY and Jamieson, meanwhile, were expanding through the similar-sounding Mansion Investments-UK), founded in July 2003 with Jamieson as sole director. Customers of Mansion Investments were not told of the switch.

Mansion Investments (UK) and Mansion Investments had virtually identical stationery, shared premises, staff and customers, and marketed the same properties. Yet when investor David Wilson asked for his money back, Jamieson claimed the two firms were not linked.

Mansion Investments (UK) changed its name to Sterling Mansion (UK). It claimed falsely to be regulated by the Financial Services Authority and to be a member of independent financial adviser trade association IFAP.

Jamieson paid himself £200,000 in just 18 months at Sterling Mansion. As a bankrupt, Connolly could not take a big salary, but unconventional payments and ‘loans’ benefited Connolly and his associates.

Sterling Mansion went into liquidation in March. At a meeting, the liquidator stunned creditors by detailing payments such as school fees for Connolly’s children and £40,000 to cover credit card bills. Regular payments were made to Seal Properties, run by Tina Waterfall. These ‘loans’ totalled £651,000. The company completed on only 14 property sales.

SMI (Overseas)

LATE last year, Connolly moved to Sterling Mansion International, trading from Stamford, Lincolnshire. The founding directors were Tina and Philip Waterfall and within weeks the company’s name had changed, first to SMI Limited and then to SMI (Overseas) Ltd. Investors who inquired about Sterling Mansion were sold into SMI. Though his name was not on the paperwork, Connolly was in charge.

A former employee said: ‘Kieran and Liz Connolly did the hiring and approved letters sent out. Tina Waterfall was Kieran’s PA.’

The Waterfalls quit in November, and two months later Tony Nunn emerged as a director. Nunn was connected to Sterling Mansion, arranging international mortgages. He argues that SMI, backed by a mystery company in Belize, should continue trading. But questions have been raised about the company’s deals in Turkey and Spain. The DTI wants the business closed.

Connolly: ‘I’ve not got much to say’

FINANCIAL Mail caught up with Kieran Connolly as he arrived home in his Jaguar saloon. He denies wrongdoing. ‘I’ve not got much to say,’ he told us. ‘I don’t want to go into details until I lay documents before the court that will clear my name.’

Financial Mail hand-delivered a list of questions to Tina and Philip Waterfall and to Tony Nunn at SMI’s offices. They did not respond. Ian Jamieson claimed to be ‘liaising with the DTI’, but refused to discuss his role or answer questions.

The High Court wound up Sterling Mansion and Mansion Investments this month. Three related companies were also wound up. Portfolios of Distinction, Turningpoint Seminars and SMI (Overseas) are contesting winding-up orders. Hearings are due next month.

Source: thisismoney