Where should you consider when buying abroad? :: The Independent

Where should you consider when buying abroad? :: The Independent

Will 2006 be the year you finally take the plunge and buy a property abroad? If the answer’s yes then you certainly won’t be alone. An estimated 80,000 Britons are expected to splash out on a second home over the coming months.And while most will be used for holidays and short breaks, an increasing number will be bought as long-term investments and rented out to generate income.

According to Chris Hall of Norwich-based Villas Abroad, demand from potential buyers is still strong – even though the stagnant UK market means they often can’t fund the purchase out of equity in their homes.

“There are an increasing number of cheap flights available now which has really helped the market, while a number of people are also looking at property to supplement their pension,” he says. “There is also more interest in buying abroad after Christmas because that’s the time families sit down and discuss their plans.”

So where should you look to buy? Is it best to concentrate on tried and tested destinations such as France, or be more adventurous and opt for somewhere like Slovakia or even Serbia and Montenegro?

According to Peter Esders, a partner at law firm John Howell & Co, there’s no easy answer. Different people, he maintains, will have different ideas, budgets, priorities and tolerance to risk.

“Some will be looking for accommodation, while others will want either capital growth or income,” he says. “What may be a good investment for one person could be a complete disaster for someone else.”

In recent years the stalwart continental destinations have suffered slightly from the new breed of Eastern European countries coming to the fore. “Spain and France are still popular – but probably not as much as they used to be because of these new countries,” adds Esders. “More and more people are thinking about buying in places such as Croatia and Bulgaria.”

We have consulted a range of experts in international law, property sales and foreign exchange to make a list of countries worth considering.


Access: Plenty of relatively cheap flights from the UK. Flight times are roughly two-and-a-half hours from London.

Property market: There’s a real boom in Krakow at the moment, according to Neil Lewis, founder of website propertysecrets.net. “We have seen house prices go up 27 per cent over the last six months for new-build properties,” he says. “It’s obviously going to slow down eventually, but at the moment it’s still going up.” Other places worth a look include Warsaw.

Pros: It’s one of the new, emerging areas and this provides opportunities for property speculators. Since joining the EU as part of the enlargement in May 2004, it has come on plenty of radar screens.

Cons: Despite plenty of investment in recent years, large areas of the country are still in need of rejuvenation. Unless you have Polish nationality, you will either need to apply to the Polish Home Office for permission or set up a company in the country with which to buy your property.


Access: Pretty well served by airlines and road links.

Property market: Istria has enjoyed house-price increases of around 15 per cent over the past 12 months, according to Paul Keppeler, managing director of Croatiasun. “This area has the best medium-term investment potential,” he says.

Pros: Spectacularly beautiful countryside and decent house-price inflation has helped mark Croatia out as a potential hot spot. There are opportunities to enjoy both capital growth and reasonable levels of rental income as prices are still affordable. A one/two-bedroom apartment in Istria, for example, can be picked up for around £50,000, while four-bedroom detached villas with swimming pools are priced around £240,000.

Cons: As with many Eastern European countries there is a fair amount of bureaucracy to wade through but the services of a decent lawyer should smooth your path. You can wait up to a year for the Ministry of Foreign Affairs to grant permission, but a way around it is setting up a company and using that to buy the property instead.


Access: Good. Well served by airlines, although flight times are between three and four hours.

Property market: Prices have increased dramatically in some areas so you need to be choosy, advises Peter Esders at John Howell & Co. “I think both Sofia and the skiing areas are going to be good investments for a while. However, lots of people have been buying on the coast so the level of value increases there are unlikely to be sustainable.”

Pros: The country is undergoing a dramatic programme of development which means good potential for investors.

Cons: It’s been heavily promoted in recent years so be on your guard for unscrupulous agents trying to get in on the act. There are still bargains to be had but it may be a bit harder to find them than it was a couple of years ago.


Access: Superb. There are plenty of cheap flights available and it’s only about two hours from London.

Property market: The Spanish property market has been growing fast in recent years, with some areas enjoying hikes of up to 30 per cent. Houses in Valenica, for example, have doubled in value since the beginning of 2003. Neil Lewis at Propertysecrets.net believes the best bet is to look for houses that are in need of restoration.

Pros: It’s an established market for UK buyers, within easy reach of home and offers the added benefit of sunny weather for much of the year.

Cons: Parts of the country are now very expensive, particularly for new developments, so buyers need to be very picky.


Access: Easy and quick. As well as the Channel Tunnel and ferry crossings, there are regular flights to airports across the country.

Property market: Obviously varies from region to region, but prices have increased due to the demand from overseas buyers, with Paris among the most expensive places. However, areas that are well served by airports and road links will always offer potential.

Pros: If you get bored of it there are always people interested in buying in France so selling on your property shouldn’t be too much of a problem, as long as it’s in an attractive area. Estate agents and local officials will also probably be well versed in dealing with British buyers.

Cons: Unfortunately the sheer number of properties available, particularly in the most popular areas, dampens the investment potential. The weather can vary enormously depending on where you are in the country.

Key points to remember when looking for property in a foreign country

“You need to go through the same thought process as you would buying a property in the UK,” advises Peter Esders at John Howell & Co. “It’s important to seek legal advice as early as possible and understand the way of buying properties in other countries could be very different from the UK.”

Why do you want to buy? Is it because you want to spend time in a particular country or are you looking for a long-term investment? You need to be clear why you want to take the plunge otherwise you could end up embarking on a very costly mistake.

* Research: Many people decide to buy after falling in love with an area while on a relaxing holiday. This can be a fatal decision. Visit a few times – at different points in the year – to see what it’s like. If you want it as an investment, try to find the next hot spots by spotting clues such as transport links being improved.

* Get professional advice: Don’t be tempted to skimp on this area. Seeking help is essential to avoid making costly mistakes. Most importantly, recruit an independent solicitor who knows the property laws of your chosen country.

* Organise your finances: Where possible, arrange your mortgage and other loans in the UK before you even start to house-hunt abroad. If it’s a restoration project make sure you know how you’re going to fund it and have built in cash for unforeseen expenses.

* Plan in advance: A bit of forward thinking can save you cash, such as shopping around for the best currency deal – a fact that 80 per cent of buyers overlook, according to a survey by Moneycorp, the foreign exchange provider. Currency valuations are constantly changing but talking to the experts can increase your chances of getting a good deal.

* Look around: After deciding the maximum amount you are willing to spend, search the internet before you go house-hunting abroad to see what’s available. If possible it’s a good idea to try to set up plenty of viewings before arriving in the country, while striking up a good rapport with estate agents can be extremely valuable.

* Never sign anything you don’t understand: Owners, estate agents and developers may try to persuade you to give your signature for “routine purposes” but always refuse until you have run it past your independent solicitor.

* Have a back-up plan: Work out what you would do if your dreams collapsed. Moving abroad – or even just buying a holiday home – often doesn’t live up to expectations. In research for its book Retiring in Spain, Age Concern found that half the people who retired to the country ended up going home because they missed their families.

‘The people are incredibly friendly’

Andrew Beaumont is in the process of buying two properties in Serbia and Montenegro – after falling in love with the way of life in the region on a weekend break to Belgrade early last year.

The retired businessman, who met his partner Dijana Elez in the city, so enjoyed his first taste of the region that he made a number of further trips before deciding to make the move permanent.

Mr Beaumont, 57, sold a property in the UK to fund his dreams. “What I like about Serbia is that the people are incredibly friendly and always willing to help you,” he says. “Also, if I needed to go back to the UK it would only take a couple of hours.”

As well as a four-bedroom detached house in an older suburb of Belgrade which is costing just under £100,000, he is also buying a £77,000 three-bedroom retreat in the mountain resort of Zlatibor.

The process of buying the properties has been relatively painless, he says, while the assistance of foreign currency provider Moneycorp has helped ensure his cash has been transferred at an attractive exchange rate.

It’s also been relatively cheap. Apart from a 5 per cent tax payable on the property you buy, and lawyers’ fees, no other major expenses have been incurred.

However, Mr Beaumont believes that potential buyers need to accept that Serbia and Montenegro are still in a state of confusion and uncertainty. “Five years ago Serbia was being bombed, so you’ll be driving down the road and still see buildings with holes in them,” he says. “There are still real issues about what’s happened over the last 15 to 20 years and there’s little money here, but the people are wonderful.”

Source: Independent