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Buying overseas in plain English

Window shopping while on holiday can lead to dreams of long summer days in your own beach retreat or the ability to leave your skis behind until next season and save carting them home.

The reality of the journey home usually removes the mystique and provides a reality check for many regarding the affordability of a second home. However, for those who take the exciting step to own a holiday home, do they do so with their hearts or with their heads?

For those buying with their head, in the last few weeks, the Spanish government has made buying property in Spain a step clearer for British investors. Land Registry documents can now be sourced in English. This most welcome news comes in the wake of many less-than-positive stories relating to Spain’s real estate industry. And, this could be the confidence builder that investors need in what was once the most popular investment market for British holiday home investors.

Whatever entices you to buy a second home, there are usually two thoughts to consider. Are you buying it to use and enjoy yourself, or are you seeking (even expecting) financial gain from your investment.

In the case of the latter there are a few pointers to consider. You can still let your heart guide your decision in part as long you don’t love your chosen destination because it’s so remote nobody else knows about it or goes there! All the usual property purchase logic applies – consider property prices and fluctuations, if there comes a time you want to sell-up you’ll need it to appeal to a buyer’s market.

If you’re buying overseas, consider the impact on your costs of currency fluctuations and how you’ll manage cross-currency payments. This is likely to play a significant part in managing your P&L and more so than your rental yield although there are companies that will help you reduce the admin here. Also consider costs involved in finding English speaking lawyers, surveyors and the like. It’s not a bad idea to seek a second opinion when buying overseas because you’ll be less savvy to the legislative side of things as well as any local idiosyncrasies.

Don’t let any of the logistical points put you off. Having a base in the sun is undoubtedly rewarding, but doing the ground work well will ensure a smoother long term project. Also, be realistic about how much time you’re going to spend there versus the number of weeks it will be occupied with paying guests. Typically, most holiday home owners spend an average of four weeks per year at their holiday home. If you’re employed that about maxes out your holiday allowance while giving you time to explore new destinations too!

As a bare minimum you’ll want paying guests in during the peak season. In traditional destinations that will be at least the weeks that schools take holiday. In a ski resort it is from Christmas through to Easter (depending when it falls and snow conditions), plus a decent summer season if you promote walking and activity holidays. In a long haul or winter sun location it’s likely to be November through to Easter.

Just remember to book a warm week for yourself too!

Uploaded September 2011

Kate Stinchcombe-Gillies

Kate Stinchcombe-Gillies is head of communications for holiday home portal, holidaylettings.co.uk. A keen explorer, but lover of the finer things in life, Kate loves Italy, just not its roads. Kate is particularly fond of Snowdonia and the north Wales coast as well as the rocky Maltese archipelago and being married to a Kiwi ensures she gets regular fixes for her all time favourite destination, New Zealand.

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