UK Overseas Property Trends

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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

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· Overseas homeownership up 300% in 10 years
· 1.3m nationals may live outside UK by 2025

Drive through almost any pretty French or Spanish town and there is bound to be a derelict villa asking for some love and attention. Just a lick of paint and the help of a few local tradesmen will transform a wreck into a holiday home for friends and family.

Today, a second home in the sun is now the boast of more than 300,000 people, according to a study of foreign home ownership – more than three times the figure recorded in 1995.

While Spain and France lead the list of destinations, Bulgaria, Romania, Hungary and the Czech Republic are rapidly gaining favour with Britain’s affluent homebuyers. Montenegro, which features in the latest Bond movie Casino Royale, is also on the shopping list of British bargain hunters. Budget flights, booming property markets and the rise and rise of the super rich pensioner have fuelled the boom, which is continuing to gather pace, according to the report.

By 2025, it says, there could be around 1.3m British nationals living in other countries.

A comfortable home with a better guarantee of sun is one of the chief reasons for taking the plunge, with 38% of buyers saying they will holiday in their new home or eventually use it as a place to retire.

Not everyone is aiming to move abroad. The study shows that four in every 10 buyers of foreign property believe it will be an investment either to supplement their pension or for their children.

However, the authors of the report warn that many potential buyers fail to investigate how much they will need to pay to buy and maintain their property and how much they will pay in fees and taxes.

They said the attraction of a warm climate, cheap cost of living and easy access to a second home overseas can blind buyers to many hidden perils.

Mike Warburton, of accountants Grant Thornton, authors of the report with City firm Lombard Street Research, said: “Purchasing a property abroad has important tax implications. Contrary to popular belief, you are still subject to tax on your offshore income and capital gains if you are a UK resident and live here. And, if the UK tax system is not complicated enough, the purchaser of a property abroad has to cope with a local tax system that may be culturally dissimilar to our own.”

The report says that today 2% of the UK population owns a property overseas. The typical owners are either pensioners with their main residence abroad, or affluent fortysomethings, usually aged over 45, who take their holidays abroad or use it as an investment.

Retired people like France and Spain less than the familiarity of an Anglo-Saxon environment and prefer Australia, the US and Canada.

A separate government report in the summer revealed that the number of families in England who own a second home in Britain or overseas had soared past half a million for the first time. The data revealed that in 2003-04, 298,000 English families owned a second home in England, 26,000 had a second home in Scotland or Wales, and a further 178,000 owned a property overseas.

Spain has long been a favourite of British holiday and retirement home buyers, and just over a third (35%) of all overseas second homes are located there, says the department. Another 24% are in France. Only one in 100 second homes abroad are in Italy.

Most buyers say the quick and cheap access offered by budget airlines is the initial temptation. Tanya and Steve Taylor of south London bought a small home near Barcelona for £50,000 three years ago. Since then a small renovation project has included putting £500 worth of solar panels on the roof. To cut C02 emissions on summer holiday visits with their three sons they also bought a second hand camper van on eBay to drive rather than fly, though flying is still part of the deal.

“We have to pump the water by hand and use lots of candles,” said Mrs Taylor.

At the other end of the spectrum, Mark Harrison, a Harley Street doctor, bought a ski chalet in Switzerland for £1m last year that allows him to ski straight on to the piste.

“It’s fantastic and is so much cheaper than other places in the four valleys, especially Verbier which is just next door, and similar places in France and Italy,” he said.

Mr Harrison, who has five daughters aged one to 11, will not be renting out his second home. “It’s an all-year-round resort which means we can go mountain biking in the summer.”

Over there

Most popular countries for second homes

1. Spain
2. France
3. United States
4. Bulgaria
5. Turkey
6. Cyprus
7. Greece
8. Italy

Source: Observer Nov 18 2006

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HM Revenue & Customs is cracking down on families that own overseas property over concerns that they could be avoiding inheritance tax responsibilities. With around 250,000 British residents owning property overseas, the clampdown could catch many families who believe they no longer have to pay IHT to the taxman. ‘If you have inherited foreign property and not declared it, the Revenue is saying we are coming after you.

Even if you have failed to pay the tax accidentally you should be worried,’ ICAEW tax faculty technical manager Anita Monteith told The Sunday Times. IHT, which is levied at 40% on assets above £285,000, is extremely difficult to avoid even if a former UK resident attempts to acquire a new domicile. Source: AccountancyAge

Buying property abroad could work out cheaper than five years’ worth of foreign holidays, according to new research.

Every year, Britons travel to other countries for a break and fork out for often expensive accommodation.

However, research from property website SmartNewHomes.com has revealed that letting out a property for six months of the year could see your holidays paid for due to the rental income.

SmartNewHomes said that with some Brits spending around £1,000 on accommodation during peak holiday season, by choosing to buy an apartment in the same area instead, they could pay for that property, any overheads and other costs, within just five years.

David Bexon, managing director of SmartNewHomes, said: “Purchasing a new property abroad can be a great investment. It can offer you a guaranteed holiday destination that you can jet off to at a moment’s notice with the security that you will be staying in a property that you are familiar with, as well as offering high returns.”

He added: “By investing in a property abroad consumers could save thousands of pounds on their annual summer vacation and by taking professional advice and researching the area carefully a dream holiday home could also become a dream investment.”

Source: Real Estate TV

A bridgend firm of independent financial advisers has expanded into Cardiff. As part of its next phase of expansion, Future Asset Management has opened a branch in Cardiff Bay. Established 18 months ago, the firm focuses on high net worth and corporate clients, and through newly established Future Asset Management Ltd, concentrates on investment property opportunities abroad, focusing on Spain and Bulgaria’s Black Sea coast, as well as the winter sports centre of Bansko.

Director Mr Wingar said, ‘Our fee-based formula has proved popular with clients because we are able to offset costs to some extent against the products we offer, which is also tax-effective.

‘The additional expertise we have now recruited in the mortgage and financial planning fields will help us to provide an even better service.

‘On the property investment side, yields from the holiday-let market – currently between 4 to 5% in the UK – in Bulgaria and parts of Spain are above 10%, even without capital growth.

‘This might persuade even more people to dip a toe in, once they are comfortable with the idea of owning a property abroad.’ Mr Underdown, also a director, added, ‘Equity release on one property in order to invest in another is not a debt, but a savings plan, It is estimated that 750,000 people in the UK will become second home owners in the next 10 years.’

Source: Western Mail

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MUMBAI: The burgeoning domestic real estate market has started to attract yet another section of the global real estate industry real estate service providers (RSPs).

The UK-based MoneyWise group, which provides advice on financial planning, mortgage broking and investment property sourcing, has entered India. It will invest £100,000 (approx Rs 80 lakh) here to expand its presence by setting up new offices.

“We will invest £100,000 in the next one year in India to create infrastructure,” MoneyWise Property Consultants India head, real estate business, Vikram Goyal, told ET. MoneyWise will offer property sourcing and finance services in such a way that a person based anywhere in the world can buy and rent property.

The company, which had set up a call centre in Mumbai, plans to hike headcount across the country. “We have opened a 24-hour real estate consultancy call centre in Mumbai to cater to NRIs and HNIs in the UK, US and Dubai,” Mr Goyal said.

The realty share in India’s GDP has gone up to 7% from 5.2% in ’02-03, but it still compares poorly to 15% share of realty in developed economies. Hence, the potential for growth is enormous, which is luring foreign companies.

MoneyWise has tied up with 20 realty developers like Bangalore’s Prestige and Sterling group, Pune’s Kumar and Gera Developers, Delhi’s Vipul and Unitech and Mumbai’s Keystone group to offer properties to 1,000 odd clients.

Soon after the company began its operation in April ’06, it managed to strike deals to the tune of Rs 2 crore, Mr Goyal said. MoneyWise also plans to launch a subsidiary company shortly and create funds for dedicated investment in Indian markets, he said.

The residential property market price index has gone up considerably and transparency in the real estate sector has improved too. As a result, global property developers are looking at India as a parking place for their investments. India offers a big opportunity, given that real estate yields are zooming.

Source: Economictimes

Banco Halifax Hispania, the Spanish arm of the Halifax, has revealed new research that suggests nearly a third of Britons (29 per cent) would be interested in buying property abroad.

The US and Australia were the most popular destinations amongst those who had thought about looking overseas, with each picked out by nine per cent of those asked. The most popular European destination was Spain (six per cent).

The increase in demand for foreign property, particularly in Spain, is reflected in the Official Social Trends Report (OSTR), which notes that Spanish property accounts for 27 per cent of all Britons’ second homes abroad.

The OSTR also found that spending on overseas property has increased by 45 per cent in the UK in the last four years.

Head of European operations at Halifax, Ian Smith, said: “Over recent years we have seen a huge increase in the number of UK residents wanting to buy a property in Spain.”

“Our mortgage products are designed with British residents in mind,” Mr Smith continued. “We certainly understand the type of mortgage products that British customers require, based on our vast experience in the UK and our knowledge of British attitudes and culture.”

Banco Halifax Hispania works alongside a UK-based operations team, making the process easier for British customers who wish to invest in property abroad without the hassle of directly contending with a multitude of foreign companies and institutions.

This, along with the fact that customers can deal with their mortgage lender in English rather than Spanish, is said by many consumers to be a major selling point.

Source: Fair Investment

A third of Brits are looking to escape the cold British weather for sunnier climates by either buying property abroad or emigrating. It seems that America and Australia are the preferred destination of those considering leaving the UK, according to a survey by Banco Halifax Hispania, which is the Spanish arm of mortgage lender Halifax.

Nearly 10% of the survey respondents said they’d like to head across the Atlantic or Down Under. In Europe, Spanish property came out on top, with 6% of people saying they’d love to move there.

“Over recent years we have seen a huge increase in the number of UK residents wanting to buy a property in Spain. Banco Halifax Hispania aims to take the worry out of the Spanish housebuying process by supporting customers at every stage in the purchase,” said Ian Smith, head of European operations at Halifax.

Spain was closely followed by the Caribbean, New Zealand and Canada in the league table of preferred destinations for Brits. Banco Halifax Hispania said that its mortgage products cater well for Brits thinking about moving abroad. Mr Smith said: “Our mortgage products are designed with British residents in mind. We certainly understand the type of mortgage products that British customers require, based on our vast experience in the UK and our knowledge of British attitudes and culture. “There are certainly slight procedural differences and different jargon, such as evaluators rather than surveyors.

However, as long as care is taken over the choice of bank and some initial checks carried out, such as the bank’s ability to deal with British residents in English, all these differences are capable of being explained. “Therefore, the whole process becomes no more complex than buying a property within the UK.”

The bank provided some helpful tips for anyone who’s thinking about buying property overseas:

  • Make sure you get all necessary documents, such as visas and work permits
  • Check medical arrangements
  • Make sure you’ve registered your residency status with the Inland Revenue in the UK, as well as the correct authorities wherever you’re moving to
  • Get advice from a tax specialist
  • Set up bank accounts in the country you’re moving to
  • Arrange furniture shipments well in advance
  • Remember your electrical goods might not work abroad!

Source: Find.co.uk

The United States has shot to number two in the league of countries where Brits are investing in overseas property, according to new research.While Spain is the number one location for overseas property purchases, a biannual survey for A Place in the Sun Live reveals that the US has overtaken France to move into second place.

Australia takes fourth place ahead of Italy and New Zealand in the survey, which shows that the reasons for Brits making an overseas property purchase are varied.

More than a quarter of Brits are so-called ‘family sun seekers’. They would buy an overseas property because they are looking for a safe reliable haven for holidays with their children.

Buying a place in the sun to enjoy a well-deserved retirement ‘reward reapers’ is the reason a fifth of people want to make an overseas property purchase.

‘Lifestyle luvvies’ who want to expand their social horizons with an overseas property drive 16 per cent of purchases, while eight per cent of would-be-buyers are ‘life changers’, leaving the UK for a new life abroad.

Surprisingly, the number of people buying abroad for investment purposes is minimal by comparison.

Only three per cent of Brits see themselves as ‘property tycoon wannabes’, and two per cent of people want to ‘jet-to-let’ buy abroad because they cannot afford to get on the property ladder in the UK.

Figures from the Office for National Statistics show that Britons are already investing more than £23 billion in overseas property, and most are looking to buy big.

The research for A Place in the Sun Live reveals that nearly a quarter are looking for palatial super-sized villas with four bedrooms or more.

Source: AboutProperty.co.uk

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WINTERSPORTS fans snapping up property in ski resorts are driving British interest in Bulgaria and Canada with a new breed of adventurous investor leading the way.
The latest Global Property Hot Spots league compiled by currency specialist HIFX has shown enquiries for cash aimed at purchasing homes in the pair of increasingly popular destinations for British skiers rose substantially in February.
Interest in Canada rose by 66% during the month, while enquiries for Bulgaria increased by 17%.
But both continued to hold a far smaller proportion of all enquires 9.4% for Bulgaria and 2% for Canada than old favourites Spain and France, which attracted 25.25% and 17.8% of all interest respectively.
Interest in Australia, which had risen rapidly in January, fell back substantially dropping by 63% to 10.6% of all enquiries while demand for the United Arab Emirates, home to Dubai, fell 79% to 1.5% of all enquiries.
Bulgaria’s reputation as the latest property hotspot has been supported by the arrival of upmarket estate agents Savills and Hamptons in the market. Both have begun to heavily advertise new schemes in Bansko, considered the country’s number one ski resort.
The luxury apartments are expensive by Bulgarian standards but the agents have vowed to offer a five-star service with problems often encountered in property purchases in the country ironed out.
Experts have warned however that the Eastern European property bubble could be at risk of overheating, with large numbers of developments being built and investors chasing high returns who could be easily scared off by any market wobble
HIFX said its study showed Britons considering buying property abroad fell into three categories.
The traditionalists make up the largest group – opting for holiday homes in France, Spain and other destinations close to the UK. Cheap flights, the ease of renting out properties, a well-established expat community and the simplicity of escaping to the sun are the driving force behind their purchases.
Adventurers were more daring in their choices, heading further afield and tending to be at the vanguard of investment in either less familiar destinations such as Bulgaria and Morocco, or farther afield, in Canada, Australia and New Zealand.
The most flexible group were hotspot investors, whose financially driven decisions led to countries in Eastern Europe, such as Bulgaria and Estonia, and the latest rising markets, such as Dubai.
Each set of buyers faced their own risks, with traditionalists hit by higher prices, adventurers taking on unproven markets and hotspot chasers at the mercy of changing fads or sudden market fluctuation.
Mark Bodega, marketing director at HIFX, said: ‘People buy abroad for many different reasons. For some people it’s an emotional decision based on a life-long dream, for others it’s an exciting step into the unknown and for some it’s simply a financial investment.’
HIFX’s February league showed Portugal made up 4% of enquiries, the US accounted for 3.8% and Italy totalled 1.6%.
More exotic destinations regularly featured on lifestyle property television shows also made the list, including 3.1% of enquiries for the Cape Verde Islands, 1.2% for Turkey and 1.1% for Morocco.

Source: thisismoney.co.uk