for property has become a far simpler process.
There are many factors to consider when looking at
global opportunities in the housing market, and these
are detailed below.
The price of the property: The price of the property
needs to be considered with the exchange rate in m ind.
You could opt to take out an overseas mortgage through
a specialist broker. They can give you information.
Specialist brokers may have links with estate agents or
lawyers in your chosen country. Since the credit crunch,
it has become more difficult to obtain finance in some
countries. Lending criteria and the maximum amount
you can borrow as a proportion of the property’s value
(loan- to-value) have been tightened up in many places,
and you will need to supply detailed documentation to
prove you can afford it.
Costs involved: You will also need to budget for
buying costs, such as mortgage and lawyers’ fees, taxes
and insurance. Estimate this as a percentage of the
purchase price – around 10% in France and Portugal,
12% in Spain, 15% in Italy and 5% in the US. Be careful
when using money transfer services as not all firms put
client money into a ring-fenced account to protect it in
case they go bust.
What to pay when: Once you’ve found a property
you like and agreed a price, you’ll need to pay a nonrefundable deposit of at least 10% of the purchase price
in some countries, the deposit will vary dependant
on the country you purchase in. In some countries,
including Italy and Portugal, you may need to hand
over up to a third of the total price upfront. Don’t hand
over any money before you’ve negotiated an initial
contract, and then only to a lawyer or bonded estate
agent.
The legal aspects: Seek advice from an independent
solicitor, well-versed in the property laws of the chosen
country and from an independent financial advisor,
before deciding on an overseas property investment.
www.reimag.co.za
Agents and developers may often offer the services of
their own legal representative, however, be careful of
accepting such an offer as it may not be objective due
to conflict of interest. Property ownership laws differ in
each country and you need to know whether the laws in
the country you want to invest in restrict or discourage
foreign ownership.
Taxes: In addition, as a property owner overseas, you
can enjoy tax benefits in the country where you’ve
invested. Many countries impose very low, even
negligible, property taxes or no property taxes at all.
This can be a big plus for a foreign property owner,
just make sure you know and are familiar with what
will be expected of you in terms of taxes, before you
purchase a property.
Type of investment: What type of investemt
are you looking for? A year-round basis or holiday
accommodation in a tourist hotspot? The type of
investment you are looking for in terms of use will
have a large impact on where you decide to invest.
Price and rises: Two factors that should weigh
heavily on the decision are the current price and
the scope of the price rise, as this inf luences the
resale value, and in turn any profit you stand to
make. So have a look at the current price and how
property prices in that country have risen over the
last seven years, this will give you and idea of what
sort of the price growth trend, taking into account
any anomalies, for example if the property market
experienced a crisis, in which case the data may be
skewed and not present an acurate reflection of the
growth you can expect.
Once you have all the information at your fingertips
you will have a better idea of where the investment
opportunities can be found and you can narrow
your list down, and with the Internet, searching for
information is easier than ever, just make sure the
websites you use are reputable.
Offshore Handbook 2013
7