As the number of Britons owing property abroad continues to escalate, consumer group Which? has issued a guide to help prospective buyers avoid the potential pitfalls when buying overseas.
Second homes overseas are becoming increasingly popular among UK residents, with brits owning more than 250,000 homes abroad in 2003/04.
Jeremy Davies, author of 'Buying Property Abroad', said: "The TV shows that have helped fuel our obsession with overseas property make buying abroad look easy. But in reality finding, purchasing and owning overseas can be a time-consuming business, and turning a foreign property into a successful investment can be even more of a struggle.
Get all this right and you could have a wonderful new asset which gives you and your family enormous enjoyment over the years, and greater wealth in the long run. Get it wrong and you could be risking a good chunk of your future security on a pipe dream."
The top 10 pitfalls to avoid are:
- Overstretching your finances. It's easy to feel left out if you don't have a fabulous second home somewhere. But don't jump on the bandwagon unless you're sure why you're doing it, and that you can afford it - especially if you're securing it against your UK home.
- Buying sight unseen. If you buy an overseas property without ever having seen it - and surprising numbers of people do -you've only got yourself to blame if it ends up being a disaster.
- Buying without a lawyer. Lawyers may seem to make the process complicated, but the work they do is vital to protect your best interests - for example telling you whether the seller has the legal right to sell. Pay extra for one who speaks good English and is qualified in UK and foreign law.
- Failing to check credentials. Is the seller really the property owner? Is your estate agent really a qualified agent, and are they bonded to hold a deposit on your behalf? What guarantees are there if the developer goes bust?
- Putting the deposit down too early. Don't assume that your deposit is returnable, even if it is described as a 'reservation' deposit. In most countries paying a deposit commits you to the purchase, so don't hand over any money unless you are sure you want to buy.
- Choosing on the basis of price. It may be tempting to buy a property for the price of a second hand car, but perhaps the reason it's so cheap is that nobody else wants it.
- Ignoring the ongoing costs. Even if you hardly use it, keeping an overseas property ticking over costs money. Insurance, maintenance, property management fees, service charges and taxes all add up, so work all this out in advance.
- Relying on budget airlines. Cheap flights have opened up huge tracts of Europe to property hunters, but don't assume they will always be there. Ask yourself what would happen to your tourist rentals if routes to the little local airport disappeared.
- Doing things on the cheap. If you want to avoid creating a white elephant, don't cut corners when renovating. If you can't afford the architects, surveyors and craftspeople to bring out your property's potential, look for a different one.
- Forgetting your heirs. If you want control over how your
overseas property is dealt with on your death - and thus
avoid the restrictive inheritance rules in place in many
foreign countries - you need to make a will. You may even
need to make two - one here, and one there.