General: Overseas property in 2010 - Paul Owen, AIPP

AIPP welcomes 2010

As the UK has now finally (and only by the smallest of margins) moved out of recession, the prospect of a recovery in the overseas property market is beginning to be mooted among industry professionals and the media alike. With this, overseas property could soon begin a new phase of growth, and combined with the raft of changes to the industry as a result of agents and developers going bust, the need for proper self-regulation is more important to the consumer than ever. We caught up with the CEO of the Association of International Property Professionals Paul Owen, to discuss the future of overseas property.

How radically has overseas property changed in the past 12 months?

Fewer agents, fewer developers and fewer buyers. We estimate that 60-80% of agents and developers are no longer active in this market, an incredible drop-off. All other changes pale in comparison.

Are buyers now safer because the ‘bad’ companies have gone bust, or more at risk as agents and developers could go under with their deposits?

Neither. There are the same risks there always were and the same safeguards to minimise your chances of falling foul of them.

How can buyers protect themselves from the possibility of agents and developers going bust?

An agent going bust is not a big problem, except for the agent that is! It’s extremely rare for buyers to pay anything other than a £2,000 reservation deposit into an agent’s account and we even recommend Members not to do this (ie. we recommend agents not to take money from clients as it carries additional liabilities for them). So, worst case is a buyer losing that deposit if an agent goes bust. You wouldn’t want it to happen but, if you’re buying a second property overseas, you are probably not going to be bankrupt over £2,000. A developer going bust carries more potential problems of course, particularly if a development is not finished. As per answer above, use the safeguards that you’ve always had (but many have not used): hire an independent lawyer – and a good one – to represent your interests and your interests alone, both before you sign and through the process.

Has the nature of AIPP dealings with the public changed in the past year?

We received far more enquiries, dealt with more complaints, hosted more mediations and put more clients in touch with Members (the last one being a little strange – as the number of buyers has drastically reduced, we received more enquiries for agents and developers – it’s simply a sign of our increased recognition by consumers, we conclude).

We are seeing more companies advertising ‘distressed properties’ for sale at the moment – what should buyers be wary of with these properties?

Debt on property, right of alleged vendor to sell and then all the usual things: just because it’s cheap or distressed doesn’t mean it will be right for you at any price. Do you like it? Can you afford it? Will you go there or get rentals? Would you like to live there? What’s it surrounded by? You should never buy just on price – it’s worth remembering that before you get too excited at price reductions!

Where are the advantages in Fractional Ownership? Has the resale market on these been tested as yet?

Advantage? You get the same property for a lot less money and still get to use it (in most cases) as much as you’d use a holiday home you own outright (this is assuming you’re still working and ‘holiday’ means the 4-6 weeks we each get every year). Resale market tested yet? No. It doesn’t mean it won’t be a thriving market, just that it hasn’t reached the stage where it’s been tested yet.

What are your predictions for the overseas property market in 2010? Where do you see there being the most activity?

We’ve always focused our research on data showing previous activity rather than the perilous pursuit of predictions. However, our recent quarterly survey of Members showed 55% of Members expecting the final quarter of 2009 to be an improvement on Q3 – our soon-to-be-conducted follow-up will show how that panned out. Incidentally, in the same survey, 58% of Members said that the 3rd quarter was better for sales than Q2. As for countries, a flight to safety in all senses where money is concerned is likely to see the established destinations of France, Spain, Portugal, USA, Italy and Cyprus increase market share – how big will that market be? None of us knows.

What plans does the AIPP have for 2010?

More of the same really: spreading our membership base to include a greater share of the professionals in our market; getting our message of ‘Buying Overseas Property Safely’ to more consumers – our most recent consumer guide, available in hard copy and online, will reach more than 1 million readers; helping our Members and the market as a whole to be more professional with customer friendly standards through training, best practice guidelines and, as will undoubtedly be necessary at times, through stringent disciplinary investigations and, where appropriate, disciplinary actions. Our work will change this industry, making the international property market a safer place to buy and a better place to work. The question is not if but when.

Paul Owen

Paul is Chief Executive of the Association of International Property Professionals (AIPP). A non-profit organisation, the AIPP was set up in 2006 to make the international property market a safer place to buy and a better place to work. Vetted and referenced before acceptance, all Members have voluntarily agreed to follow the AIPP’s professional Code of Conduct and to face disciplinary action if they fail to do so. The AIPP gives consumers free advice about how to buy overseas property safely and produces an annual guide. Full details including a list of Members can be found at www.aipp.org.uk