If you seek to spread your investment returns and are comfortable with venturing beyond the UK boundaries, then there are some great opportunities to make returns on property overseas. For example, Istanbul, Turkey has recently been included on a list of top 25 Cities by McKinsey, as a mover & shaker of the future.
There are some things worthy of consideration as you set out to snap up your overseas property:
1) Language- when conducting a transaction in a foreign language, a lot of the subtleties are squashed. So if you are looking to invest in a buy-to-let for professionals, with formal legal contracts, then this should be clearly stated, otherwise you could end up with a casual letting arrangement to multiple students.
2) “Soft” issues, like the in-country culture and communication should not be overlooked. When investing in property in Poland, for example, it is surprising how different service standards are between Polish and UK banks. Some suffer from bureaucratic processes, others are more modern and internet-based.
Some of the “harder”, issues to look out for relate to building or buying process differences, such as:
3) Raising finance overseas. Getting a mortgage in the UK can be challenging owing to tight underwriting criteria. In countries like Poland, banks tend to be even more risk-averse. Investors are likely to be asked to provide more credit information e.g. credit reference reports, which would normally be done automatically by UK banks, as well as details about the property, which would usually be provided by the surveyor (not a culturally normal thing to do in some countries).
4) Notarised buying process, a significant difference between the UK purchasing process and many in Europe, is the need to go before a Notary (a specially licensed lawyer) to sign the preliminary and final agreement, or provide Power of Attorney to someone to go on your behalf. In the UK contract exchange and completion can occur without the buyer having to be present, or the need for Power of Attorney.
5) Buying costs. Costs related to the purchasing process can also differ significantly from buying in the UK. Whilst stamp duty tends to be higher in the UK, the overall conveyancing costs are cheaper, generally speaking. So in the UK, property buying costs may represent up to 7% of the value of the property bought, (including 3% stamp duty) this could be between 5-11% abroad.
6) What’s in a finish? Build finish standards differ. Property in Poland or Bulgaria, apartments are usually finished to “black standard”, which means the building is plastered, but may not be supplied with flooring, kitchen or bathroom. So check you are getting “white finish”, more like a “move-in finish”.
7) Property ladder. Getting on the property ladder overseas can be a lot easier than in the UK, with prices starting at £50,000 for studio apartments in cities, such as Istanbul, Turkey. This has no doubt helped fuel the BARBie trend that has been talked about (Buy Abroad Rent in Britain), as a viable alternative to buying in the UK for first-time buyers, who are increasingly being squeezed out of the market.
Understanding the idiosyncrasies of buying overseas property, or at least working with someone who does, can help ease the process, so that there are no unnecessary surprises.
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Property Venture® is an award-winning, UK-based agency for overseas property who helps people buy investment property and holiday homes in Europe, more easily and safely than they can on their own, because we offer grounded common-sense advice.
The focus is mainly greater Europe: Poland property, UK investments, Spain property, Turkey property, Cyprus property
On the Advisory Board and a Member of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. Take a look at what our clients say
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