Your guide to successfully buying a property overseas
Head of Private Clients
Many people say moving house is one of the most stressful life events - and they’re not just talking about the day the removal van arrives. The whole buying process, from the property search and making an offer to dealing with the paperwork and hoping the chain doesn’t break, is nerve-wracking. So, imagine embarking on this journey in another country where you have a different language, new laws, unusual processes, and a foreign currency to consider.
As with any major investment, purchasing a property overseas requires thorough planning. The buying process varies from country to country, which presents unique challenges depending on your chosen destination. But don’t be put off - with a little knowledge of the overseas buying process, a comprehensive checklist and a bit of savvy you can make your dream a reality without pulling your hair out.
Buying abroad should be no more difficult than buying in your home country if you follow our step-by-step guide. We aim to provide you with information that will help you secure your ideal property overseas safely and successfully by avoiding potential pitfalls.
Pinpoint your ideal location by identifying the reason for your purchase: holiday home, retirement home, emigration, buy to holiday let or pure investment - because different locations will tick different boxes.
For example, for a holiday home, you should choose somewhere with convenient access to an airport and ensure the property is easy to maintain and lock-up-and-go. Meanwhile, for your retirement, you might want an expat community on your doorstep and all the amenities and social opportunities it offers.
Whatever the reason for your purchase, check out the location at different times of the year - some places are bustling during summer but deserted in winter.
Start your property search
Once you have decided which country is right for you and which region ticks all the boxes, it’s time to begin your property search. Specialist websites are a great place to start browsing. Narrow down your search by considering what type of property you’d like to own, which will be influenced by your reason for buying.
Consider these factors:
- Size - how many bedrooms and bathrooms?
- Off-plan or resale - are you prepared to wait for a new build to be completed?
- Ready to move into or a fixer-upper - how much work are you prepared to take on?
- Own garden/pool or shared - consider maintenance responsibilities.
Establish your budget
You know what country you want to buy a property in and what type of property you want to purchase; now you are in a position to establish your budget.
Remember to budget for at least 10% extra for buying costs and to consider exchange rates. If overlooked, these unpredictable currency market movements have the potential to increase the cost of buying overseas. We will delve deeper into mitigating the impact of currency on your overseas property purchase later in this guide.
There is much to consider when purchasing a property overseas, including technical elements such as legal and financial regulations. Therefore, it is important to engage the services of trusted professional experts who possess the knowledge and experience that’s required to provide you with the right information when you need it - setting you on the path to successfully and safely purchasing a property overseas.
Ensure you have specialists on your side by getting in touch with an estate agent, lawyer, currency specialist and independent financial adviser at an early stage. Another useful resource is The Alliance of International Property Owners - which provides free knowledge, support, guides, inspiration and special offers to British buyers and owners of a foreign property.
Choosing an estate agent
Once you’ve found a property (or properties) that match your requirements and budget, choose a reliable estate agent and organise a viewing trip. The right estate agent will play a vital role in ensuring the success of your overseas property purchase; a bad one on the other hand can cost you time and money - and cause potential heartbreak.
Top tips for choosing a reputable estate agent that is legal, reliable and, most importantly, understands the type of property you want in the area you have chosen:
- Choose an agent that’s registered with a regulatory body in the country you’re purchasing a property in.
- Choose an agency with a real office with a real address.
- Choose an agent with plenty of experience, so you’re confident they have established a good reputation and a have wealth of local knowledge.
- Read reviews and testimonials about their service.
- Check they are proactive by assessing how long it takes for them to respond to your requests.
- Check they have experience working with UK buyers.
Choosing a lawyer
As soon as you decide to buy, seek the services of an independent, English-speaking solicitor who specialises in property law - and include their fees when budgeting for your purchase.
Top tips for choosing a reputable lawyer:
- Engage with an independent professional who will represent your interests and no one else’s.
- Ask for recommendations and request testimonials.
- Research their credentials - check that they belong to the local bar association.
- Check they have experience in property and planning laws.
- Check if they speak good English.
Choosing an independent financial adviser
An independent financial adviser (IFA) can help you establish your budget, manage your finances and reduce your costs when buying overseas. A reputable IFA will be able to assist you with all financial issues - from pensions and taxation to wills.
Unless you are a cash buyer, you will probably need to contact a mortgage adviser - they can also help with life insurance.
Choosing a currency specialist
Choosing a currency specialist is just as important as working with an estate agent that can find you your perfect property and a good lawyer that can ensure your purchase is legally sound. This is because there's another big risk when buying property overseas: currency market movements.
Currencies are traded around the clock - 24 hours a day. Therefore, the value of the pound against other currencies is constantly changing - not just daily but by the minute. Even slight fluctuations can make a big difference to the price of your property. From a deposit and estate agent fees to a lump sum for the final purchase, every transfer you make as part of the overseas buying process is exposed to currency risk - potentially costing more than it should and denting your budget. Or, in the worst-case scenario, causing the cost of your home to disappear out of reach.
The dynamic nature of exchange rates means agreeing to buy a property at one price and paying for it weeks or months later involves a degree of risk. Between putting in an offer and actually paying, the price will be fixed in the currency of the country you are buying in - euros, dollars etc. - but constantly fluctuating in pounds. For example, just a 1% drop in the value of the pound will increase the cost of a €150,000 house by over £1,000. Don’t be surprised if the pound’s value falls by over 5% during the buying process.
In some instances, the impact of the political and economic variables that influence exchange rates can be even more severe - as has been proved in recent times. Take Brexit and the Covid-19 pandemic for example:
- Brexit: On 23 June 2016, the UK voted to leave the EU - a decision that took markets by surprise. Last-minute polling suggested that ‘remain’ had the edge, so when the Brexit result reverberated around the world the pound fell off a cliff, experiencing its largest intraday collapse in 30 years.
- Covid-19 pandemic: Back in March 2020, when the true extent of the Covid-19 pandemic became clear, the pound sunk to its lowest level against the dollar since 1985 and its lowest level against the euro since the depth of the financial crisis 11 years earlier.
A currency company that specialises in high-value transactions such as overseas property purchases can work in partnership with you to solve these kinds of ongoing problems; problems that aren’t limited to buying your property overseas. The process of selling your property and transferring the funds back home also exposes your finances to the unpredictable world of exchange rates, potentially costing considerably more than anticipated - denting your profits.
Clear Currency specialises in helping clients who are buying or selling properties overseas to save money when making international payments - both large and small.
Transferring large sums of money into another currency and transferring them overseas can be daunting and confusing. Aware of this, we use our knowledge and experience to cut through the jargon and give you a friendly and personal service.
We recognise that it’s impossible to accurately predict how exchange rates will perform; therefore, it’s prudent to plan for all eventualities. With this in mind, we will assign you a dedicated account manager. In addition to helping you benefit from quick, easy, reliable and secure transfers, they can help you mitigate the impact of currency risk on your property budget.
Your account manager will work in partnership with you throughout the property buying process. For example, before you make an offer on a property overseas, they can prevent you from being delayed in transferring funds and seeing the purchase collapse. Fluctuating exchange rates make it hard to judge how much you’ll pay at any one time; therefore, your account manager can help you execute a forward contract to secure the cost of your purchase. This allows you to lock in an exchange rate for a date in the future, securing the price of your property when the time comes to pay.
Open a local bank account
Banks typically allow you to open an account online, but you might need to go in person to your local branch to provide proof of identity and sign the paperwork. This is something your estate agent can advise you on.
Top tips for choosing a bank - ask the following questions:
- Does the bank speak English
- Do they offer a range of branches and ATMs?
- Do they offer online banking - preferably via an app?
- What do they charge for accounts and transactions?
Pick your property
Once you have a reputable team of professionals on your side, you’re in a position to view properties. During your viewing trip, schedule a meeting with your lawyer to brief you on the buying process. Once you’ve chosen your ideal home and you’re ready to make an offer, your lawyer can start checking the legal paperwork.
Make an offer: Once you’ve been out on a well-planned viewing trip or two and you’ve found your dream property, it’s time to make an offer. You must be prepared to move fast while remaining in control of the process. To be successful you must know your stuff, be assertive, and be prepared to make quick counteroffers. And if it falls through don’t stress - you will find an even better property down the line.
Once you’ve chosen your dream property and had an offer accepted by the owner, the buying procedure kicks off. This varies from country to country, but the general process will look something like this:
- Comprehensive legal checks are conducted by your lawyer - from ownership, planning status, and registry details to information about any charges on the property.
- A pre-purchase contract is drafted by your lawyer, including the conditions of the sale.
- You pay a deposit with the help of your currency specialist and you and the seller sign the contract.
- The legal checks are completed by your lawyer, who arranges for the title deeds to be signed.
- The timeline for completion varies from country to country. This will happen once your lawyer organises payment of all fees and taxes.
- You’ll receive the keys.
- Your lawyer will arrange utility transfers and direct debits.
- If you intend to let the property, your lawyer will provide advice.
- It’s time to move in, start any refurbishments or begin letting it out.
Once you have successfully navigated the overseas property buying process and the purchase is completed, don’t pop the champagne just yet. You still need to organise your ongoing international payment requirements. For example, you might need to arrange the payment of ongoing maintenance costs, you might need to transfer monthly rental income back to the UK, or you might need to make regular pension payments. And should the time come to sell up, you’ll need a cost-effective way of transferring the proceeds back to the UK.
Rather than executing your ongoing international payments manually, your Clear Currency account manager can help you automate each transfer according to your specific schedule - whether it’s weekly, monthly or more irregular intervals - using a regular payment plan. This vital tool allows you to set up convenient, fee-free automated payments that make managing your finances much easier.
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