Property Investment Articles

500,000 Buy Abroad

Brits are flocking overseas to buy second homes. Chloe Scott looks at the pros, cons and destinations.

Owning a home abroad has become a major ambition of many Britons. A record half a million people already own a second home overseas and, according to a survey by Nat West, 23 per cent of people have future plans to buy one.

Spain remains the most popular purchasing destination. But the market is vulnerable, says Dominic Farrell, of property investment company Bewarethesharks.com.

‘It seems to have done the same thing as the UK market and there needs to be a correction of prices,’ said Mr Farrell. Experts in Spain agree – inflation hit 17.2 per cent in June and the country’s central bank warned that property prices were over-valued by 20 per cent.

Britons after holiday homes may find southern Cyprus a better low-risk option, according to Mr Farrell. ‘Ninety-five percent of Cypriot law is British law and the banking system is the same as here, which makes life easier,’ he said.

Southern Cyprus makes economic sense too, according to Peter Holden, international investment manager for property company Assetz. ‘Cyprus is due to get the Euro in 2007 so mortgage rates are expected to go down and property prices to go up rapidly,’ he said.

Apartments near ski facilities in Bulgaria are good propositions for winter sports lovers. Mr Holden suggested the resorts of Bansko and Borovets as places worth exploring. ‘If Bulgaria joins the EU, the yields will be high.’ But, he added, buying could be risky. ‘There is currently no re-sale market. Who do you sell to when you move on?’

The future of the former Eastern Bloc country as a resort is also uncertain. ‘Bulgaria’s highest rainfall is in the summer months and, if people are going to ski, they generally go to the Alps.’

Nevertheless, so-called jet-to-let buyers, who make up the buy-to-let market abroad, are already snapping up Bulgarian resort properties. Mr Farrell said British buyers investing in property abroad should take time to explore all the implications before committing to a purchase.

‘Consider ownership,’ he added. ‘In countries such as Turkey, Dubai and North Cyprus you might own a property but not he soil underneath it, which is risky. Also, look at a countries’ legal system and economic stability.’

Buyers should also look into the property-taxation system. In some countries, such as France, it is very complex. And remember that British residents must declare world-wide income to the Inland Revenue.

‘Buy where you would feel safe to live and don’t be greedy,’ said Mr Farrell. ‘The Dominican Republic is not as safe to buy as somewhere like Barbados.’

The Metro. Tuesday September 20th 2005