TorFX’s Guide to Investing in Overseas Property
Posted by Matthew Andrews on December 12th, 2023.
Competitively priced two-bedroom flats can be found for as low as £100,000 in parts of Greece and Cyprus, in comparison to London’s average of £250,000. As the demand for homes in the UK dips amid rapidly increasing mortgage rates, now could be the perfect time to invest in overseas property.
Estate Agent Today estimates that 10% of Britons own property overseas. For many buyers, the most common reasons to purchase a second home abroad include:
As a Holiday Home
Perhaps the most obvious reason to invest in an overseas home is the lifestyle boost offered by a year-round sunny escape. The promise of low-cost holidays for family and friends is a key selling point for many buyers.
An Extra Income Source
Better yet, letting out your property can provide you with an extra source of income while you reside in your country of domicile. Using your property as a rental business, whether for short or long-term letting can help chip away at mortgage and upkeep costs.
Long Term Investment and Asset Diversification
Property tends to appreciate as time passes. Though some countries have seen property values depreciate slightly this year, others have seen house prices soar in a matter of months. For example, foreign investor interest contributed heavily to a 13.4% leap in Croatian house prices in the second quarter of 2023.
Buying property overseas can also be a great way to spread your assets, helping you to mitigate the risks of limited and narrow investment. In short, owning property abroad could potentially provide a safety net of sorts in the event of market volatility in your home country.
Financing your Purchase Mortgages: Overseas or Domestic?
While it’s possible to purchase property using personal savings or a pension, the Office for National Statistics (ONS) reports that roughly a third of Brits require a mortgage or loan to take the first steps to buying a home.
You can seek out a mortgage provider in your country of residence, or even overseas. The most popular option for many buyers is the use of high street banks, which offer the added bonus of familiarity and security. Be sure to check if your chosen bank deals with foreign mortgages though, as some local banks do not extend some service overseas.
Some people opt instead to make use of overseas mortgage brokers. Overseas mortgage brokers will have a breadth of knowledge surrounding the legal and financial implications in your chosen country, and may even offer better rates, limiting your purchasing costs. When deciding how to finance your overseas property, take the time to shop around and consider what the best route will be for your personal needs. Speak with professionals and think it through; this is a key step in making sure you get the most out of your purchase.
Costs to Consider
SDLT
Stamp Duty Land Tax applies when purchasing residential properties in England and Northern Ireland, when the value exceeds £250,000. Brits will have to pay additional Stamp Duty Land Tax when buying a second home, and it is worth noting that a surcharge applies for additional properties, even if they are overseas. Consider the possibility of future SDLT costs when considering your purchase.
Legal and Estate Agent Fees
As with any large conveyancing sale, legal fees are a given, and these can quickly rack up if complications or issues arise. Estate agent’s fees will also apply, so be prepared for additional costs in these areas.
Capital Gains Tax
You might also need to consider possible Capital Gains Tax, which is payable on overseas properties for UK residents. Find Gov.uk’s guide on how to calculate any potential CGT fees here.
Transferring Money Overseas
Sending large amounts of money abroad will likely be necessary to complete the purchase of your home abroad. As foreign exchange specialists, TorFX can help you avoid any unfavourable shifts in the currency market and secure the lowest costs when transferring your cash.
Our highly competitive exchange rates and award-winning service can help you save time and money during the buying process. With personalised support from start to finish, our team of experts will find the transfer options most suited to your needs.
Buying a second home isn’t cheap, so soften the cost by ensuring you aren’t paying any unnecessary transfer fees. If you’re thinking of taking the leap and buying property abroad, explore your currency options to see how you could make significant savings when transferring funds overseas.
© TorFX. Unauthorised copying or re-wording of this blog content is prohibited. The copyright of this content is owned by Tor Currency Exchange Ltd. Any unauthorised copying or re-wording will constitute an infringement of copyright.
