Buying property in the Mediterranean or further afield is more affordable then ever. Observe a few precautions and a second home abroad can function both as a holiday getaway and an investment
As the British love affair with house buying extends beyond UK shores, buying a piece of sun-kissed heaven is no longer the preserve of the super rich.
Whether it is a second home for family use or an investment property, the top property hot spots are Spain, France, Italy, Portugal, Cyprus, Greece, Bulgaria and Florida. Property buyers and investors have also shown increased interest in Turkey, Brazil and Morocco. While further afield, less traditional countries are becoming popular such as other parts of eastern Europe, Dubai, South Africa, Australia and New Zealand.
Spain is still the most popular choice for buyers because of its good all-year-round climate and easy access, with a number of cheap flights. It also provides a large choice of properties, with the possibility of good rental returns. However, with over-building in some key destinations, rental return has been dropping off, particularly in popular areas such as the Costa Del Sol, providing investment opportunities.
Recent high profile fraud cases such as the $1bn (£533m) property scam in Marbella could mean thousands of Britons face having their holiday homes demolished. An estimated 4,500 illegal buildings face court decisions on whether they will be demolished or legalised. With scams such as these, people should observe the fundamental rules of buying property overseas and take independent legal advice.
France is the second most popular destination for buyers, as it offers a diverse range of properties and types of regions such as the South and ski areas.
There has been an increase in the amount of people wishing to purchase investment property in France, specifically in popular holiday destinations such as the French Alps. Ski chalets are highly sought after as the rental potential is good all year round, given that resorts such as Chamonix are used in the summer as well as winter months.
Leaseback properties have been available in France for some time, and are proving popular, with a steady increase in demand over the last 12 to 24 months. This scheme entitles investors to a TVA (VAT) rebate providing the property is leased back to the developer, which is normally for a period of nine or more years.
This is ideal for someone who only intends to spend a couple of weeks a year in their property as there would be a guaranteed rental return for the rest of the year.
Italy offers good investment opportunities, particularly renovation projects. More investment opportunities can be found in other areas within Italy that have only recently opened up such as Puglia and Sardinia. Leaseback schemes are also available in Sicily and Sardinia. The downside to investing in Italian property is that some authorities are bureaucratic and inflexible.
Portugal still remains a popular choice, and although prices are still rising, it provides good investment potential. Although property can be expensive, bargains can be had just a few miles inland.
keys to florida
For those happy to explore property further afield, the US, particularly Florida, is the most popular long-haul destination. Florida offers a great climate, large choice of properties and good rental return in certain areas. It is recommended people stick to the Atlantic and Gulf Coasts for better growth and returns. Clearwater beach is the next area to boom, while Miami Beach and Fort Lauderdale are also good investment areas. Finance is available up to 80% in euros, sterling and dollars. Self-certification mortgages are also available.
The good weather and the fact most people speak English in Southern Cyprus means it is also a popular destination for investors. More lenders are now offering loans in Cyprus, increasing the purchasing power for buyers. There have been problems in the past where people have not obtained proper legal advice to later find they did not have clear title over the property. It is not uncommon for a property to have been passed down from one generation to another and for it not to have been registered with the land registry in the process.
Recent markets such as eastern Europe, Dubai, South Africa, Australia and New Zealand all offer investment potential.
East to middle east
Eastern Europe is the most recent property hotspot for investment, particularly in Bulgaria, which joins the EU in 2007. Although much of the property priced in the region of £15,000 has been snapped up, there are still bargains to be had. With direct flights and a relatively short flight time of just under three hours, it has wide appeal - a sandy coastline for beach lovers and mountain towns for skiers.
For increased investment opportunities, quality properties including new golf courses are now being built and may offer greater investment potential.
For the past few years, Dubai has been heralded as one of the most lucrative of investment opportunities. However, despite recently passing the Freehold Law to allow foreign nationals to own a freehold property in Dubai, it only applies to certain areas and the 'sub-law' confirming where has yet to be decreed.
Over 150,000 properties are currently being built, but none have been finished long enough to give any track record of rental return and there are concerns of over-build. Therefore it is difficult to say whether the market is sustainable for the long-term.
In summary, probably the best countries to consider for inPropertystment are Spain, France, Italy, Portugal, Cyprus, Greece, Bulgaria and Florida. The future of investment in Dubai remains unknown. Other areas which may experience problems providing a return on investment are Northern Cyprus, Croatia, Slovenia and Somalia.
In Northern Cyprus there is still the problem of ownership of title, and on-going disputes with Southern Cyprus. Croatia and Slovenia are having difficulties with proof of ownership and registration of title. Legal advice must be taken before completing on any property. The government is working to solve these problems but progress is slow. Somalia is still a war zone and so there is severe title/ownership issues.
So where are the next wave of investment property hot spots? The top two are Brazil and Morocco. Other possible emerging markets, which could prove lucrative for property investment could be Egypt, Thailand, China and Goa/India.
In Brazil, the North Eastern area seems to offer the best investment possibilities including cheap and good value properties as well as legal/title ownership based on Portuguese law. Morocco also has good value properties, large numbers of developments being built or considered and is based on French property law.
Although Egypt is becoming popular, investors should beware of political and terrorist activities. In Thailand there are maximum 30-year leases and restrictions still apply to foreign ownership.
For China, Shanghai and Bejing, title and legal ownership must be checked and investors should be aware that political background could change very quickly, especially views towards any foreigners.
Goa and India are also new markets, so title and legal ownership must be checked. These countries also have no long-term track record.
TIPS FOR BUYING ABRoad
Never sign a contract that you do not understand, particularly in a foreign language.
Always seek specialist advice from independent solicitors, architects and surveyors before considering a purchase overseas.
Before proceeding with the purchase ensure an independent valuation of the property is carried out.
Ensure you do not inherit a debt on the property before you purchase, which a solicitor should be able to check.
Always give yourself a 'cooling off' period if you see a 'must-have property' and are tempted to put down a deposit there and then.
If you are arranging finance on the property, ensure this is stated in any contract and that you have an 'opt-out clause' if the loan is not agreed to ensure any deposit paid is refunded.
Try to arrange your mortgage finance in principle, before agreeing to purchase the property, or before signing any contracts and paying over a deposit.
Arrange your mortgage in the currency you earn, unless rental income will be received on the property.
Consider combining cash with friends or family. It could bring a villa with pool within reach, rather than simply an apartment.
Check with the estate agent or vendor so you are aware of the costs charged by the legal and government authorities for purchasing a property.
Open a bank account in your chosen country and ensure you get a Certificate of Importation for the money you bring in from your home country.
Set up standing orders in a local bank account to meet bills and taxes. Failure to pay taxes in some countries, such as France, Portugal and Spain, could lead to court action and possible seizure of your property.
Remember that bills do not end at the asking price. Lawyer's fees, taxes and insurance must all be met in your host country and can often be more expensive.
Data by LinkedIn
£42m assets under influence
Up a fifth on 2015/16
One day to go …
Focus now on dealflow