· 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.”
Most popular countries for second homes
3. United States
Source: Observer Nov 18 2006