Buying a home in the sun is a goal for many people living in the UK, but the reality is often more complicated than simply moving to a sunny climate. An estimated 1.5 million Brits own a property abroad, and joining their ranks may be easier than you think. However, this isn’t a decision to be taken lightly, so do as much research as possible. You have to calculate your budget and consider your reasons for buying: apart from more sunshine, are you looking for a holiday home to visit whenever you want, or somewhere to retire to now or in the future? Do you plan to rent it out, and are you looking for a long-term investment? Once these questions are answered, you can start narrowing down your options.
The property portal from Channel 4’s A Place in the Sun found Spain to be most sought-after destination for UK buyers, followed by France, Italy and Portugal, with Cyprus and Greece also proving popular. Prices vary considerably in each country – for example in Spain, southern Costa Blanca is cheaper than the Costa del Sol. Think about whether you want to be close to the beach, in a lively tourist resort, or prefer the tranquility of the countryside or a small village. Also, look into proximity to an airport – a factor that’s particularly important if you’re going to be travelling back to Britain frequently or if your holidaymakers need access. Get to know the area you’re interested in if you’re not already familiar with it.
Stone-built House in Laconia, Greece, from €250,000 (approx £214,000). Villa in Duras, Lot-et-Garonne, France, €470,000 (approx £400,000). Villa in Leivi, Genoa, Italy, €250,000 (approx £214,000). House in Tuscany, Italy, € 259,000 (approx £222,000). New-build townhouse in Paphos, Cyprus, €348.000 (approx £298,000). Villa in Aljezur, Faro, Portugal, €418,000 (approx £359,000). House in Agios Georgios, Corfu, €220,000 (approx £189,000). Townhouse in Polis, Cyprus, £222,670.
Financing and legal considerations
Unless you have enough cash to buy outright, you’ll need to raise the money to do so. If you’re keeping your home in the UK and have a decent amount of equity, you may be able to fund your purchase through remortgaging; otherwise, you’ll need to apply for a new mortgage. Mortgages on overseas properties are available, but the options from UK lenders can be more limited than for UK properties, so many buyers arrange finance through a lender in the country where they’re purchasing. Deposit requirements are often higher than those in the UK, and repayments are usually made in the local currency. Contact a broker specialising in overseas mortgages to discuss your options, including the loan term and whether a fixed or variable rate would be best suited to your circumstances.
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Always hire an independent lawyer who can work in English to represent you, protect your interests and advise you throughout what can be a complicated process. Legal fees vary by country and the nature of the transaction. While recommendations from sellers, agents or developers can be a useful starting point, it’s important to satisfy yourself that any lawyer you appoint is completely independent. Ask other recent buyers for recommendations, or look for information on local lawyers through the Foreign, Commonwealth and Development Office via GOV.UK, and make sure they have appropriate professional indemnity insurance where applicable. If the lawyer is based in the UK, check they are regulated by the appropriate professional body and, where necessary, are qualified to advise on matters relating to both countries. An independent translator can also be invaluable if your language skills are limited.
When purchasing primarily as a holiday rental, investigate occupancy levels, the income the property is likely to generate, whether a licence or registration is required, and make sure there are no restrictions on short-term lets. Check out the competition too: a villa in pristine condition will usually have the edge over one that’s dated, while the absence of features that guests expect in the area, such as a pool, may make it harder to attract bookings. Consider how you’ll market the property, whether through your own website, online booking platforms or a combination of both, and decide whether you want to manage bookings yourself or use a local agency to handle marketing, cleaning and guest handovers. Management fees vary depending on the services provided and the local market. While some costs may be deductible against rental income, you may be liable for tax on any profits, depending on the rules in the country where the property is located and your tax residence status.
Budgeting for hidden costs
You’ll incur many expenses over and above the cost of the property itself. These include legal and translation fees, the cost of a surveyor to assess and provide a report on an older home, stamp duty or transfer tax, registry and possible mortgage arrangement fees. You may also be liable to pay a proportion of the estate agent’s commission and the equivalent of VAT on a new-build. Depending on where you buy, extra taxes might be due – for example property taxes and income tax on earnings from a rental property. There might be implications for your pension and inheritance planning, so factor in the cost of an accountant. Then there are insurance, running, maintenance and removal costs and extra flights to pay for if you’re coming and going from the UK.
When buying a home that isn’t brand new, at some point you’re bound to hire a tradesperson – whether for a small project or complete renovation. Ask locally for word-of-mouth recommendations and look for positive reviews on local expat websites. Find out what qualifications contractors should have, ask to see evidence of this and get at least three written quotes for the work. For bigger jobs, discuss timescales and payments – ideally in stages – and ensure that planning permission is in place if required. Reduce the stress of the build by brushing up on your language skills beforehand and arranging for any fittings or materials to arrive in good time. Aim to be on-site as much as possible so you know everything’s getting done and to deal with any issues before they escalate.
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What £200,000 gets you in Europe
A currency specialist can help with all the international payments relating to buying a property overseas. Specialists offer better exchange rates than high street banks – and on a large amount for a property deposit or investment, even a fraction of a percentage point can make a big difference. UK high street banks charge higher fees and when you add up all the payments you need to buy a property, including legal fees and local taxes, this could make a dent in your budget.
Simon Conn, overseas property and finance specialist.
What £200,000 will get you in Europe*
San Vito dei Normanni, Puglia, Italy
Two-bedroom villa from €119,000 (approx £107,000).
A charming villa set on a generous plot with just under an acre of land. The property features a kitchen, spacious living room and covered veranda, with mature gardens offering privacy and potential for further development. White walls with pops of playful red are perfect for some stylish sprucing.
Two-bedroom apartment, from €190,000 (approx £163,000).
You’ll find high ceilings, original wooden floors and two spacious bathrooms in this irresistibly chic apartment. Located within walking distance of shops, restaurants and the city’s main attractions, it offers an ideal lock-up-and-leave home or rental investment.
Two-bedroom apartment, from €230,000 (approx £197,000).
This luxury apartment is part of a residential complex with a large communal pool to cool off from the sun. Complete with a wrap-around balcony, breathtaking sea and mountain views and minimal interiors, it’s a blank canvas for you to create your dream holiday home.
Two-bedroom town house, from €142,500 (approx £122,000).
You can practically hear the cicadas looking at this sun-soaked terrace. In the quiet residential golf valley of the Sierra Cabrera mountains, this recently renovated home boasts cool, tiled interiors and characterful touches.
Vila Nova de Gaia, Porto, Portugal
One-bed apartment, from €225,000 (approx £193,000).
If sleek luxury is more your style, this smart apartment just outside Porto offers plenty to please. With cutting-edge appliances, modern stone details and access to a communal gym, its proximity to the new Metro line makes it ideal for jam-packed city breaks.
*Exchange rates correct at time of press and rounded to the nearest £1,000
