If you are considering in investing in overseas property, you may be impressed by the claims of better capital growth and higher rental yields than buy-to-let property in the UK. Many investors are attracted to investing as they have the added advantage of having their own holiday home. Of course, this is a great benefit, but you can also be rewarded financially by making the right choices.
There are some points you will need consider, such as different laws, taxes surrounding property ownership in a foreign country, rent charges and much more.
If you are new to property investment, you may be thinking about what location would be a suitable place to begin. If you want your investment to be successful it is important to think about the long-term. Many property experts will constantly highlight certain property hotspots and you may be able to snatch a bargain where property prices have fallen dramatically. However, it is often wiser to invest in more established markets.
This will be a safer long-term investment and if you are planning on having a mortgage it will be easier to find a better deal.
Points to think about
When looking for the perfect property, there are many things that will need thinking about:
- Will the property be used as a holiday home?
- Will the property be rented out?
- What foreign ownership laws will be involved?
- Will the cost of living change?
If the property is going to be rented out as a holiday home, the property should be easily accessible with good local amenities and in a popular area with tourists. Holiday seasons should be considered as many tourist attractions and destinations shut down for the out of season months.
Investigate other similar properties in the area to see what the general rate is and get a feel for the market. Although global property price trends occur, property markets in different locations can go through cycles of rising and then amending lower. Consider seeing how many weeks per year similar properties are occupied for, this will give you guidance into what to expect when you decide to proceed.
With investing in overseas property there comes a lot of paperwork. The tax system aboard is very different to the one in the UK, and it can alter your tax affairs back home. Tax rates will differ between countries and also the way that tax is calculated can be very different, as can any tax free allowances that you are used to.
When buying a holiday home in order to make a profit, there is no need to relocate permanently. This means that your property may well be empty for a significant portion of the calendar year, so you must be practical and prepared to organise some form of security. One of the best ways to achieve this is to employ a local property management firm, who will make regular visits to check on the residence and carry out relevant duties to keep the property in a good condition. Although this will require additional investment, it can help to save you money and safeguard your assets.
A second home
Purchasing a property abroad and just using it purely as a second home can be a great way to spend your money. With sun, sea, sand or even snow right on your doorstep, these are the perks of having your second home abroad. You will always have a place to visit when you feel like escaping reality.
As said above, it is important to hire a property management company to look after the property whilst it is vacant.
Finding the right property
When on holiday to an area people get enchanted by the beautiful houses and pictures in estate agent windows, and many of them are directed toward English-speaking buyers. It does make sense to buy in a country which you have visited before, however if you believe you like the sound of country but have never travelled there, it may be time for a holiday?
Take a look at our website to find your dream property, whether you are looking for a castle or a luxury property in Lagos we have a great variety of properties for you to choose from.