Second homes abroad have trebled in a decade
BRITONS’ passion for a bolt-hole abroad has seen the number of overseas properties owned by UK homeowners treble in the past decade.
The value of foreign homes has also surged, hitting £71 billion in 2005, up from £29 billion in 1997.
The number of foreign homes snapped up by British buyers rose from 102,000 in 1995 to an estimated 300,000 in 2006, a study from Grant Thornton, the accountants, revealed.
The demand for foreign properties is such that 2 per cent of UK home owners now own a second home abroad.
Though Spain and France top the list of desirable destinations, the expansion of the European Union has seen an increasing numer of properties being bought in Eastern European destinations, including Bulgaria, Romania and Hungary.
The study concludes that a continued underpinning of UK house prices for the forseeable future should see the trend towards second home ownership continue albeit at a slightly lower rate.
By 2025, the report says, up to 2 million British homeowners or a tenth of total home-owners in the country could own a property overseas.
Maurice Fitzpatrick, senior tax manager at GrantThornton, added however that the continued trend would be “heavily dependent on the strength of the UK property market and the wealth it generates”.
The study warns potential purchasers of second homes to be wary about the tax implications of purchasing abroad.
Often, it says, buyers are unaware that they are still subject to tax on offshore income and capital gains if they are resident in the UK.
They are often surprised too, it says, by the complexity of local tax systems.
“It is all too easy to be seduced into the attractions of overseas property ownership and to ignore the perils,” Mr Fitzpatrick said.
A combination of low interest rates, a booming UK property market and benign global economic conditions have helped to fuel the rise in foreign home ownership, the study found.
Cheap flights and the expansion of the European Union have also helped to make foreign ownership a reality for many people.
The typical second home-owner, it found, was either a pensioner, using their foreign property as their main home abroad, or an affluent person aged 45 or above whose second home was either an investment or a holiday home.
The study, which drew on the Government’s Survey of English Housing, found that 35 per cent of second home owners had a place in Spain, 24 per cent had a home in France, and 5 per cent in the US.
Source: Times Nov 18 2006