An increase in buyers failing to carry out checks before signing up to a property abroad has prompted expert Simon Conn to offer advice to those considering this kind of investment.
The overseas property expert said the market for buying abroad is becoming more complicated and competitive and he is urging potential buyers to undertake thorough research before committing to the sale.
He has compiled a list of Top Tips for buying abroad which he hopes people will consider before signing on the dotted line.
Find out where the property has been built
Conn suggests asking this question up front. He said if it has been built on an area that should have been set aside for green belt or agricultural land, then the chances are there is a risk.
He suggests making sure you take advice from an independent, English speaking lawyer – preferably not from the same area as the property.
There are some cases where there can be problems with properties that have been constructed with the wrong permits, granted as a result of corruption, or with no permits at all.
Conn said: “An independent lawyer should be able to save you the heartache of seeing your newly purchased dream home demolished.”
Research the location and planning history
Conn suggests researching the background of the property’s location, as you may be surprised to learn about the chances of earthquakes or volcanic activity, or it may be in a poor neighbourhood, loud nightlife, or have commercial units nearby with associated activity.
Also, consider planning permission and which licences the property needs. Not having the correct licences could have an impact on what utilities you can obtain.
Get an independent valuation
Poor construction is a common problem. Always obtain an independent valuation, ideally from a professional surveyor expert in that country, even if it is a new property, as this will highlight any problems, Conn said.
Be vigilant with new properties
Conn explained: “New properties can sometimes be built in poor soil and with insufficient foundations, substandard building materials, or in dubious locations such as flood plains.”
Ensure contracts are professionally translated
One of the most important warnings when purchasing abroad is when it comes to contracts, said Conn. “It is common to only receive one contract in the local language, in which case, you must have a professional translation completed,” he explained.
“If you are given two copies of a contract which include the original and a supposed translation, get the translation checked by a professional.”
Buying to rent?
If you are buying a property to rent out Conn said you must consider the cost of maintaining the property.
“Decide if it is worth employing a managing agent to look after it for you but do not forget to factor in their costs as it will reduce your profit,” he said.
“How often do you intend to visit the property yourself to ensure it is kept up-to-date? If it is a long term let, think about the wear and tear on furniture and other fixed goods.”
What’s more, if the property is a long way from your main home, you may need to get there to sort out any major problems.
In this case, who is going to vet your tenants? Conn said: “If they damage your property, you must have suitable cover and a deposit in place. Make sure you know what licences are needed in the area as you may not even be allowed to rent out your property there. If you can, additional licences may be required.
Decide who will own the property.
Will it be in single or joint names, company and/or trust ownership? Conn suggests making a Will locally to cover aspects such as inheritance tax and he advises you check local tax issues relating to capital gains etc.
Check builders’ credentials
If purchasing a new property, look into the builder’s past experience and how these properties have fared over time, Conn said. Take referrals and feedback from previous purchasers.
Get finances in place
It is also important, advises Conn, to always get your finance approved in principle before signing a contract. If you are applying for a mortgage, ensure any contract signed is “subject to finance”.
“This will help you recover an initial deposit if you are turned down during the mortgage process due to financial analysis, valuation and legal issues,” he explained.
Think about the future
Finally, Conn said think about how easy it would be to sell the property you are purchasing according to how buoyant the local property market is at that time.
He added: “Do not be put off buying overseas – it should be no different to buying at home. Just take the relevant precautions to ensure that you are minimising the risks.”
