Hidden Costs of Overseas Properties
SEPTEMBER 67, 2007. Recent research has shown that those purchasing overseas property are often not aware of all costs associated with buying and selling residential property abroad.
As the number of Brits owning a home overseas exceeds 2million, investors can not afford to be ignorant of the buying process and costs involved.
After taking the decision to invest in an overseas property, it is crucial to assess and establish your investment goals, personal needs and the level of risk you are willing to take. While a less established market can be higher risk it will generally offer higher potential returns. However, the cost of property transactions vary from country to country so while you may save on the price of the property; you may lose out in fees and charges. Arming yourself with all the research you need will invaluable when buying your overseas property!
Property transaction costs for countries of:
. French legal origin - 14.2% of property value
. German legal origin - 11.5% of property value
. English legal origin - 6.5% of property value
. Scandinavian legal origin - 5.2% or property value
"While most OECD countries have transaction costs below 10% of the property value; costs for Belgium, Italy, France, Luxembourg and Greece can exceed 15%", says Justin Figgins, Head of RightmoveOverseas.co.uk. "The lowest transaction costs can be found in Slovakia, Iceland and Denmark, at around 3% or less; with costs typically 5-7% in Norway, New Zealand, Switzerland, Austria, Japan, Sweden, Poland, Ireland and Canada."
"Buyers of overseas property often become caught up in the excitement of what the home will mean to them. Essential information that will determine final expenditure and possible restrictions on their ownership can be neglected, leading to complications, stress and disappointment."
"In addition to awareness of transaction costs; independent legal advice should be sought and property laws should be thoroughly researched. For example, while Spain is a well established market, many are unaware that any outstanding debts attached to the property become the responsibility of the new owner."
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