With the current UK economic slowdown, the British pound is taking a nose dive as we speak (currently GBP/EUR 1.19 and GBP/USD 1.49 – a record low against the Euro). The current state of the weak British pound is putting a large number of foreign holiday property owners in a very tight financial spot as their mortgage payments keep increasing due to the exchange rate while increasing flight costs prevents them from visiting their property as often as they did a few months ago.
This especially affects British investors who own properties in countries like Spain and France. But even those investing into farther shores are feeling the sting of the current exchange rate. A year ago, a Florida home worth US$ 200,000 was to be had for around £95,200 according to the exchange rate. These days the same would cost around £127,400 for same. This is a massive hike just because the pound is falling and costs people a lot more than money.
Many are forced to do their renovations themselves to save money and avoid costly repairs by local tradesmen. Further to this investors looking to keep their neck above water need to act and make their properties rentable in order to raise some much needed funds.
Another problem poses for Realtors in places like Spain and France. They are dealing with an increased amount of British investors who are ready to buy, then fly back to the UK to sort out finances with their local banks. Then they go back to find their dream property has just risen a further 15 percent due to the falling pound.
One way for overseas property owners to make some headway right now is by using arbitration. This means if you get paid in US dollars for your rent, you can trade this back into pounds with a near 30 percent profit on each transaction.
It is estimated that from August 2007 to August 2008 some 170,000 homes have been bought by British citizens in the US. These property owners can now cash in by converting their rental earnings into pounds.
Photo credits: Caribb