Buying Overseas

A holiday home in the sun is the ambition of many of us. Perhaps it has to do with the weather. But whatever the reason, buying a property overseas has become a big market. The idea for many is to have a second home for holidays, and perhaps one day to retire to, and in the meantime rent it out to cover their costs. With the substantial increase in affordable transport links such as the budget airlines, and the opening up of some of the eastern European countries, the traditional venues such as France and Spain have received serious competition.

When you buy a property in the UK there is a lot to think about, but when you buy overseas even greater care needs to be taken and expert independent advice should be taken.

Funding. Unless you are buying it from your savings, you will need to work out the best way to raise the capital. This may be through a mortgage using your own UK property (which may often be the cheapest) as security, or getting a mortgage on the property you are buying abroad. You could consider raising a mortgage in the local currency where you are buying but you need to be very aware of the risks as exchange rates can vary and make seemingly attractive rates turn sour. Our advisers can guide you through the options you have and help you secure the most suitable scheme.

Legal side. Always make sure you get Independent Legal Advice before proceeding and there are firms of solicitors who have specialists in this field. At Ashwood Law we have contacts with a wide variety of Solicitor practices all over the Midlands and can help you get the right advice.

Inheritance Tax (IHT) Rules. Remember, just because you buy a property overseas doesn’t mean the taxman can’t see it, and for most people Inheritance Tax (IHT) is assessed on worldwide assets, not just those in this country. You should also make a separate will in the country where you are buying for that particular asset.

Taxation. If you rent your property out, you will have to declare it to the taxman in the UK. Also you need to find out about the local tax rules of the country in which you are buying. Although many countries have an agreement with the UK (so that you don’t get taxed twice on the rental), you should get independent advice on this area.

Changes in exchange rates may affect the sterling equivalent of your debt.
Tax Planning is not regulated by the Financial Services Authority.
Some types of mortgages may carry charges such as set up fees, booking fees, or an early redemption charge. These will be made clear at the outset. We can be paid by commission, a fee or a combination of both. A typical fee would be no more than £750.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
The Financial Services Authority does not regulate some aspects of buy to let mortgages and commercial mortgages.

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