Property Investment Tips: The Legalities

7 Mar 2017
You’ve spotted an incredible foreign property online that aligns with your current financial goals, and you’d like to make a purchase. It’s a large asset that will increase your nest egg, make a wonderful holiday destination for you and your family and perhaps one day, be a place of leisurely retirement.

Before transferring any money and embarking on this exciting process, you need to pay attention to the legalities.


Buying property abroad is not like purchasing real estate in the UK. Everything from the local taxes to economic factors – like inflation – is slightly different. Take a moment to read these property investment tips before the holiday mood gets the better of you, and the strong British pound seduces your common sense. This advice will give you realistic expectations and make the buying process as painless as possible:


Crunch the Numbers


Never take the purchasing price you see on a billboard, or get from the seller, at face value. When buying foreign property, you must consider the impact of fluctuations in the local currency, because they affect interest rate increases on repayments. If your real estate agent is reputable, they should encourage you to compare a range of mortgage options if need be. Remember, the first option you find isn’t necessarily the best.


Bank, legal and location fees can also add up. Income tax, power of attorney and connection fees, as well as tax maintenance charges, all cost money. This is why you need a healthy budget to factor in additional costs with sufficient leeway to cover emergency oversights.


Payment Methods


A good list of property investment tips should advise buyers to investigate which payment methods suit their financial goals. If you’re not buying it outright, you can either borrow money against your British home or take out a mortgage against your foreign property, in the local currency.


Property investment tips

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The former is easier and isn’t exposed to currency fluctuations, while the latter entails taking out a mortgage in Euros, which generally comes with a lower interest rate. However, take note that you’ll only be able to borrow 70-75% of the purchase price, and if you’re buying off plan, you’re expected to pay for your property through a series of stage payments as phases of the construction are completed.


Find an Independent Lawyer


When it comes to property investment tips, we can’t overemphasise the importance of hiring an independent lawyer. Protect your interests and find an English-speaking lawyer with experience in foreign property sales, or work with a British professional who is qualified to practice both in the UK and the foreign market you’re buying in.


We’d also encourage you to check their credentials and confirm they are registered with the appropriate professional bodies. For extra peace of mind, you can also hire an impartial translator to translate necessary documents and accompany you to meetings. If the professionals you’re hiring have no ulterior motives or vested interest in your property, then they are most likely going to give you sound, objective advice.


Research Local Laws


Are you up to date with all the local laws and customs? Did you know that inheritance laws change from country to country? For example, in France, if one partner dies, the law dictates that a jointly owned property does not automatically pass to the spouse. Children also have entitlement. This is important and valuable information you need to know, especially if you have a family and would like to pass on your investment at a later stage. Don’t assume anything and be sure you know the ins and outs of the law.


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Do the Final Checks


The best property investment tips recommend going through a final checklist. Before signing on the dotted line check if; the seller has transferable title deeds, you have written confirmation of agreed negotiations, the title deeds have not been offered as collateral for any loans, and there are no outstanding utility bills you have to pay after purchasing your property. Lastly, you should also enquire with a reputable tax advisor in the UK about double tax treaties, tax relief and capital gains.


Buying foreign property isn’t as simple as following a checklist and connecting the dots. Knowing the legalities is one aspect that helps make the process easier. If you’re already shopping around for the perfect piece of foreign real estate then why not broaden your horizons and look at our trending Calpe apartments for sale.

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