Want to Buy a Foreign Holiday Home? Read This First!

*This is a collaborative post on what to do when you want to buy a foreign holiday home

There’s no denying that property is an excellent investment choice and one that has made many people extremely wealthy through a continuous process of buying and selling. Another reason why people buy properties is so they have somewhere to live or go on holiday.

You’re likely reading this article today because you’re thinking of buying a holiday home in sunnier climes. The thing is, buying a house abroad is often different to what you’d do for properties in the UK.

With that in mind, this comprehensive guide will discuss what you’re likely to expect and the best practices to use when beginning your foreign property purchasing journey. Here is what you need to know:

Think About Where You’d Like to Buy

You’ve undeniably got the idea of buying a holiday home abroad in your mind. But, have you thought about where that might be? If the answer is no, you need to start thinking about potential locations.

As you know, there are lovely and not-so-nice locations for buying homes in any country. The first step to identifying potential areas is to shortlist idyllic locations. These might be coastal areas or ones in quaint countryside settings.

You can do some research online to help you determine where are the best places to consider. However, you’ll find that it makes the most sense to check out possible locations in person.

If it’s not possible to visit potential locations in person, you could ask a trusted friend or relative to do so on your behalf. You could have them take plenty of photographs and videos of the area, along with likely locations where you could buy your future holiday home.

The last thing you should ever do is purchase a holiday home “blindly” and not realise what you’re getting yourself into until it’s too late. That’s why spending some time researching potential locations and visiting them is the best way forward.

Understand the Property Buying Process

You will likely have a thorough understanding of what is necessary to buy a home in the UK. However, that process may not be the same or even remotely similar in other countries. With that in mind, you should learn about the property buying process and understand it.

One thing you could do is conduct some Internet research. For example, you could read and digest the rules and guidelines as prescribed through official government channels. Once you’ve done that, reach out to ex-pat communities in the country that interests you. You could also check out the advice of an overseas property and finance expert like Simon Conn to see if they have anything that might be of use to you, depending on where in the world you are planning to buy your new property.

Many British ex-pats will have purchased their homes and have a thorough understanding of what you need to do. They can also advise on areas where you might get caught up with bureaucracy and how to overcome such challenges throughout the entire process.

The trouble with buying property abroad is you have to rely on people to tell you the truth – and that includes government officials. Talking with the ex-pat community and listening to several people’s stories will help you find out what is the truth and what advice to avoid.

You’ll also need to learn about the fees and taxes you’re likely to pay at various stages of the homebuying process. In some countries, the costs and taxes you pay might depend on the area and how it gets run, rather than just the property’s value.

Calculate What You Can Realistically Afford

What you should never do is agree to buy a holiday home and discover to your horror that you can’t afford to buy it! That’s why it’s crucially important to review how much capital you’ve got at your disposal or how much you can afford to borrow and repay.

As you can appreciate, some foreign holiday homes could be extremely cheap to buy due to the lower cost of living than in the UK. However, other properties could cost a lot simply due to the location and the market forces driving price action (i.e., supply and demand).

Also, the price of what you want to buy will vary. For instance, there are vast price differences between apartments and houses.

How much you can afford to spend will ultimately depend on your financial circumstances. For example, are you currently paying a mortgage on your home in the UK? Do you have many other financial commitments?

Plus, what would happen if you had a drop in income through losing your job or because of any other reason? Could you still afford to pay the purchase and maintenance costs associated with your holiday home?

Buying a property is no mean feat, and purchasing one in a different country to where you reside takes a lot more consideration. It must not be a decision that you rush into because you may find yourself in a difficult position if you change your mind after buying a home.

Remember that the purchase price and associated buying fees aren’t the only costs you’ll need to bear. You’ll have to pay ongoing property taxes, utility bills, insurance, and you may also need to pay someone to act as a caretaker when you’re not there.

Think About Why You Want a Holiday Home

Most people purchase holiday homes abroad because they want somewhere to stay when they visit a foreign country. It undoubtedly offers a more relaxing and tailored holiday experience than staying at a hotel or other temporary accommodation.

But why is it that you specifically want to buy a holiday home? That is the question you need to think about and answer, given that such a purchase is an involved one that will potentially cost you a lot of money.

If it’s a purchase that you will be making jointly with your spouse, life partner, or a relative or friend, you should ensure that it’s a decision both of you agree with. You may both decide, after careful deliberation, that it might make more sense to simply rent a holiday villa.

Consider What You’ll Do With Your Holiday Home

You will likely only spend some of your time at your holiday home each year. When you’re not there, your holiday home will remain dormant for the rest of the time. What will you do with your home away from home when you’re not there?

Thankfully, there are several options you can consider. For example, you could rent it out to your friends and other family members, so that they can spend some time in comfortable surroundings while you’re abroad.

You may also choose to rent it out for the entirety of the time you aren’t there via a service like Airbnb. Such ideas will ensure the property continuously gets inhabited by people and won’t become a target for vandals if they think your holiday home is an abandoned property.

Another good reason to rent out your holiday home when you’re not there is you’ll have a secondary income source. You can use some of that money to cover the cost of your mortgage on the property, along with other expenses like maintenance and utility bills.

If you do decide to rent your holiday home out to other people, bear in mind that it qualifies for paying tax on income earned abroad. So, even though you don’t live in the country of your holiday home, HMRC will tax you on any rental income you make from it.

The only way a person can “get around” paying tax on income from a home abroad is by saying that they’re a UK resident, but their permanent domicile is in the other country. However, that doesn’t apply to you for obvious reasons.

Hiring Professionals

When you’ve done your due diligence and are happy to buy a property abroad to use as your holiday home, you’ll need to amass a team of experts to help you conclude the purchase.

For example, you will need a solicitor that specialises in property law, along with interpreters and translators, to translate all official documents. Doing so will ensure that you know exactly what you are buying and what contracts and documents will need your signature.

When it comes to choosing your team, make sure you don’t work with people recommended by a property vendor. That’s because those individuals will more often than not have their client’s interests at heart, and their work will get biased accordingly.

You can search online for potential experts to work with, but it makes sense to ask ex-pat communities for recommendations and, of course, the names of people to avoid. They will unlikely have any links to your property’s vendors and won’t pose any problems with bias.

Choose the Right Time to Buy

Last but not least, you need to ensure that you purchase your holiday home at the best time to suit your needs. As you can imagine, there will be times where it could be a buyer’s market or a seller’s market.

You need to ensure market movements are in your favour, as it means you will end up paying less to buy your holiday home. You should also take into account the exchange rates. Again, choosing a time with favourable rates means you’ll pay less.