Buying overseas property Overseas property: 5 tips for buyers

Older couple staring into distance from balcony

Always inspect the property and its direct surroundings before agreeing to buy it

Are you considering buying a property abroad, but feel unsure how to go about it or what you need to consider? Check out our five expert tips:

1. Search far and wide for your overseas property

There are plenty of ways to find details on overseas property for sale. 

Property portals

Many well-known property portals have overseas sections, including Rightmove, Zoopla and Primelocation. UK estate agents Knight Frank and Savills also sell overseas property.

Developers

Developers often market new-build properties to UK buyers through the press or their own websites. 

Buying off-plan properties through developers (where the property has yet to be built) was once seen as a way to make a quick profit. However, there is increasing uncertainty about the likely value of the finished property or, in some countries, whether the property will even be completed.

Look into the company's reputation and, if possible, visit a development it has recently completed and talk to the residents before signing on the dotted line. 

Estate agents

You can visit local estate agents while you're abroad, or find them through trade bodies, such as the Association of International Property Professionals (AIPP).

Spend time talking to them about how the market has changed over the past couple of years and try and get some tips from them on the local areas. They may offer insider knowledge on the areas on the up - and those to avoid.

However, you should always take what estate agents say with a pinch of salt as, ultimately, their clients are the people trying to sell properties, no matter what neighbourhood they're in. Talking to local expats could be far more eye-opening.

Property shows

You can learn a lot about buying overseas property from shows such as 'A Place in the Sun Live' and 'The International Property Show'. These shows often give advice on where to find bargain overseas properties.  

2. Consider whether you’re going to live in your overseas property

Letting out overseas property

You can make impressive profits by letting out your property when you're not using it, but there are risks involved, too. 

If the property already gets rented out for some or all of the year, ask the current owner about yields and how many weeks a year it's typically occupied to give you an idea of the return you can expect.

Don't forget to factor in the costs of maintaining and cleaning the property between guests.

Depending on how involved you are and whether you use an agency, renting out an overseas property can be time-consuming. See our guide on overseas property as an investment for a full list of things to consider. 

Timeshares

With timeshares, you buy the right to spend a certain period, usually a week, each year at a particular resort or group of resorts for a number of years.

This is more affordable than buying a property outright, although aggressive and misleading selling practices have given this industry a bad name. 

Buying property abroad

Always seek legal protection, particularly when buying off-plan properties

3. Seek legal protection

It’s essential to employ an independent lawyer, with no connection to the developer or agent, who is fluent in both English and the local language. 

They should understand not only property law in that country, but how it relates to non-residents. They will usually need to be based in the country concerned, as much of the work will be done there.

In European countries, and some others, you have to use a notary - an impartial government representative who oversees property transactions. 

Buying off-plan property abroad

Legal protection is essential if you're buying off-plan property abroad.

A well-negotiated contract should set out a clear payment schedule and clarify what finishes the developer is promising. It should also provide a bank-backed guarantee that if the builders go bust the job will be completed to the same standard at no extra cost to you.

Your lawyer should clarify how any guaranteed rental income or leaseback schemes the developer is offering will operate. These can look good on paper but may not reflect the long-term rental potential of the property.

4. Consider local taxes and charges

You must pay income tax on rent you receive. You may be liable to pay tax both in the country itself and in the UK - although there are national agreements that mean you won't pay the same tax twice. Visit our guide to how rental income is taxed for more information.

You will have to pay capital gains tax when you sell the property if it’s not your main home, although in many countries this is reduced or waived depending on how long you've owned the property. 

Inheritance tax could be payable by your heirs when you die, though this no longer applies in some countries, such as Italy. 

You'll also be liable for the local equivalent of council tax. Our guide tax on overseas property explains more.

Be sure to budget for buying costs, such as mortgage and lawyers' fees, taxes and insurance.

5. Weigh up the pros and cons of investing overseas

Think carefully about the pros and cons of different ways of buying the property.

Always view the property in person before agreeing to buy and shop around for the best deal on mortgages and currency. Factor in the likely costs of maintaining the property, too.

If you're buying property as an investment, don't get sucked in by claims of huge capital growth and rental yields. As with any investment, it's possible to lose money. 

If you're planning to emigrate, research your tax, pension and healthcare requirements as early as possible.

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Last updated:

March 2016

Updated by:

Joe Elvin

Your home may be repossessed if you do not keep up repayments on your mortgage.

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