Is buying property abroad right for me?

Many of us have had the experience of going abroad somewhere, and feeling like we’ve come home. Some places, for whatever reason, seem like they’ve been a part of you forever, and you can’t remember what life was like before you found it. And once you have, you want to keep coming back time and time again.

Once you’re sure that you’d like to keep coming back, it may be time to consider whether it’s a good investment to buy a property out there. But how do you know if it’s right for you?

Location, location, location

The first step is, of course, making sure that you love the location. If you’re at the point of wanting to buy property, we assume that you do, but make sure that you’re not making the decision on a whim. Consider whether the property will be right for you in the long term – things like, will you want to travel at different times of year in the future, potential changes in family circumstances, would you want to retire here, can all affect your decision. If you’ve only experienced your prospective new second home during one particular season, it’s worth looking into whether it’s suitable at other times of the year as well. While you may not normally holiday over Christmas, for example, owning property makes it much more likely, so different possibilities should not be overlooked.

Once you’re sure it’s the right location for you, make sure that you also do your due diligence of where exactly you’d want to purchase property. In any region or city, there will be areas that are more or less suited to your lifestyle, just like at home. And while you likely know a fair bit about where you do or do not want to live in your home city, it can be harder to figure out abroad. Enlisting a local real estate agent who understands your wishes – or one familiar with both the UK market and the market you’re buying in, if possible – will make this part much easier.

Consider your budget

While budgeting is important when buying any house, buying property abroad may come with additional costs that you hadn’t considered. Research shows that though 45% of UK buyers setting a budget of at least £9,000 for fees and additional costs, 24% still exceed that budget. If you’re working with a local agent, they will have an idea of what you need to consider, but it’s advisable to also do your own research. You don’t want to be caught out – for example, if your agent genuinely didn’t realise that you weren’t aware of certain fees or rules.

One big unexpected cost can be foreign exchange fees or unfavourable rates. Caxton can help ensure that your transaction is made on time, locking in a favourable exchange rate, and as simply as possible. Contact our International Payments team on 0333 123 1815 for more information.

When you’re not there

Buying a second home abroad poses a unique question – what do I do with the house when I’m not there? Unlike a second home closer to home, you may spend less time in an international property throughout the year, which may require some additional planning.

Firstly, consider your insurance policy. In the UK, many standard insurance policies will only cover an unoccupied property for 30 or 60 days. And while it’s not impossible, finding a policy that will cover an empty property may require a little more shopping around. It is likely that your real estate agent will know more about the local laws and expectations where you’re buying, so make sure to ask them.

If you don’t want to leave your property empty, short term rentals may also be an option. The benefit of renting out your property through AirBnB or similar is that you can make a little bit of money on it, and having people in the property may make it a less attractive prospect for criminals. The downsides, of course, include having less flexibility if your property has already been rented during your unexpected long weekend, and the risks you take letting strangers into your home. It is also worth noting that some cities, particularly in southern Europe, have started cracking down on short-term rentals as they have had an impact on the local housing market.

Ready to go?

Buying property is a big life event, and it’s always worth finding out as much as you can ahead of time. For more information on buying property abroad, read what Errol Izzet, our Head of Private Clients, had to say on the topics of the benefits of owning property abroad as well as top tips for buying your first property abroad.