Investing in overseas property has long been seen as a viable and lucrative option for individuals and companies seeking to broaden their portfolio horizons and increase their yields.
Whilst the U.K. is considered a mature market, there are plenty of global opportunities available in the global property sphere, particularly when you take into account the uncertain domestic investment outlook and concerns over low interest rates, Brexit and global instability caused by ongoing terrorist incidents in major cities worldwide.
As with any investment there are risks involved (it would be foolish to suggest otherwise), but being aware of the following simple guidelines will help you to overcome these:
- Starting with the end goal in mind.
Why are you investing in overseas property? Is it to enjoy an idyllic holiday bolthole? Or are you looking for attractive yields and/or significant capital appreciation over time?
That’s why it’s crucial you have clear goals and expectations as to what you want from your overseas property investment.
- Understanding the tax laws of the country in which you wish to buy property
Any investment you make has tax implications, and every country has different tax rules. For example, depending on where you buy property, you may have to factor in an additional sum for VAT, and if you’re receiving a rental income you’ll have to declare it to HMRC.
- Renting out an overseas property
Are you legally entitled to rent out your property?
Local property laws differ considerably depending on the country (and even state/region) where you’re buying property, so if you need to state what kind of investment you’re making (and its purpose) before purchasing.
- Holding legal title over the land
Paying for an overseas property is no guarantee that you will hold a clear title to it. There have been many cases of sellers offering properties without having the title deeds, and the buyers owning nothing (for example, in Northern Cyprus).
Make sure you ask your solicitor to check this, as the laws vary from country to country
- Fluctuating exchange rates and international transfer/banking charges
Given the confusion over Brexit, and the weakening of the pound, you should keep a close eye on the rates of exchange between the pound and the currency of the country in which you’re investing into property.
Banking regulations and charges are also another factor to consider, as taxes may be applicable for certain transactions.
These are just a few of the many factors to consider when buying property overseas. For more information and assistance on how to invest safely in overseas property, please contact us.