I have a great contributed post for you today on buying property overseas. It’s for informational purposes only, so please consult a financial, real estate, and legal professional before making any money decisions or buying property. Got it?
If you are thinking about buying a property in another country, there is a lot that needs to be considered. This can be a bit of a daunting and overwhelming process, and it’s not something that should be rushed into.
We have all heard about the horror stories regarding people that have bought a house overseas without doing their research, only to end up with a nightmare scenario on their hands. Never assume that property laws are as stringent as they are in your home country.
Of course, this is not said to put you off the idea: simply to ensure that you do the required research. Below, you will find some valuable information to help you get started.
Make sure you get all documents professionally translated
You could find yourself with a disastrous situation on your hands if you sign a contract that you don’t fully understand or one that has not been translated properly. This is why you need to get all documents professionally translated, even if you are provided with two copies – one in the national language and one in English. After all, how can you be sure that the English copy matches up?
Check your eligibility for any schemes
Most countries will have a number of property schemes in place, although most of them will be reserved for nationals and those who live in the country on a permanent basis. Nonetheless, it is worth exploring this further. The HDB scheme in Singapore is a prime example. This is the public housing system, which provides temporary leaseholds for 99 years.
This makes up the vast majority of the housing in Singapore, and buying an HDB resale flat may be something you are able to do. This is an attractive proposition, as an HDB resale price will be attractive. However, you do need to make sure you are eligible for one of the schemes that are in place. You can easily do this using one of the tools online. Of course, this is just one example, and the same goes no matter what country you are thinking about investing in.
Investigate the market thoroughly
This is one of the most common mistakes that people make: they purchase a property abroad without conducting the required amount of research. The property markets of various destinations can experience independent cycles of increasing in value and then correcting at a lower level. Although property prices are rising in one place, it does not mean the same is happening there.
Moreover, you need to make sure you haven’t missed the boat so to speak. Don’t only look at the prices now, but consider the forecast for the future. Are prices likely to keep rising, or have they reached their peak?
Aside from this type of market research, you also need to look at the legal side of things. In some countries, foreigners are limited in terms of what they can purchase, and even prevented altogether in some cases.
Conducting significant research beforehand can ensure you don’t end up disappointed and that you don’t end up falling victim to any scams. You also need to check the stability of the country, as well as the current rate of exchange.
Tax
You also need to check the laws regarding capital gains and inheritance tax laws of the country where you are purchasing a property. For example, if you were to take out a mortgage in Spain, there will be debt on the property, and this could lower your inheritance tax. However, you will be liable for income tax if you rent out the property.
Another example includes inheritance rights in France. If you were to purchase a property here, your children would automatically inherit the rights to it. This means that you may need to compile a separate will if you want your estate to be passed onto your spouse.
Property ownership
Another area that could land you in trouble if you are not careful is with regards to property and title ownership. Find out whether the seller or the developer has full title to the property or land.
You also need to talk to your solicitor to make certain you do not inherit a debt on the house. This could happen if the developer borrowed money to build the development, and each plot has an amount allocated against it for additional security to the bank of the developer.
Be cautious when buying a new build
If you are buying from a developer, make sure you look into their track record. Find out how long they have been trading for. You should also look online to see reviews that have been left by previous buyers. This will give you a good indication regarding what to expect from the quality of the properties and the process entailed.
Don’t be surprised if things move a lot slower than they do in your home country. It is also a good idea to look at comparable properties in the area to see if there are any re-sales available on the same development.
Also, don’t take the developer’s rental returns are gospel – find out what they are based on.
Get an independent valuation
Last but not least, make sure you get an independent valuation carried out on the property, especially if you are buying a resale property. This should point out any issues with the house or apartment, for example, wiring defects, damp, and subsidence. It could also highlight any possible disputes with boundaries.
Hopefully, you now feel more prepared when it comes to buying any type of property overseas. There is no such thing as too much research or too much caution when it comes to making an investment as large as this. Use the advice that has been mentioned above so you can be sure that you do not experience any hurdles or disappointments later down the line.
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