Selling Property Abroad and Bringing the Money Back to the UK
Head of Private Clients
Do you own an overseas home but find that after many happy years of memory-making, the time has finally come to sell up? You’ll be pleased to hear that the overseas selling process is similar to the approach you took to make the initial purchase. Or have you inherited a foreign property you want to sell during stressful times? Whatever the reason for putting your international property on the market, don’t be daunted.
Selling abroad, whether it be in France, Portugal, America or wherever, should be no more complicated than selling a UK home. Here’s what you need to know about selling property abroad and bringing the money back to the UK.
How to sell overseas property – step-by-step
Simply follow our step-by-step guide to understand how to sell your property safely and successfully and bring the money back into the UK. With a bit of know-how, you can avoid the associated pitfalls.
1. Figure out your finances
Before taking the first step on your selling journey, you’ll need to get a rough idea of your property's worth. You can start by researching sale prices for homes similar to your own in your local area. However, your figures will only be a guesstimate until you have exchanged contracts and have a completion date. It's at this point that you will know your mortgage's precise redemption (total outstanding) value.
Are you using the proceeds of your sale to buy another property – whether you’re downsizing, upsizing, moving to a new location overseas or returning to the UK? Dig out your mortgage paperwork or speak to your lender to check if you need to pay early repayment charges for switching to another lender or whether you can transfer the outstanding amount to a new property. If you’re planning on buying a more expensive property or your mortgage deal is ending, now is a good opportunity to open a new mortgage and find a better deal.
2. Seek professional guidance
The fundamentals of how to sell overseas property are relatively straightforward: putting it on the market, preparing for viewings, and accommodating viewings. In addition to this, however, you will also be exposed to some technical factors, such as legal and financial regulations, including local taxes, which can differ depending on where your property is located and whether you’re domiciled in the UK. If you are a UK resident but not domiciled in the UK, you may be taxable on the remittance basis, under which you’re liable to pay tax on foreign income and gains you bring back or remit to the UK.
To navigate these often-confusing elements of the selling process, you must engage the services of professional experts. These specialists possess the knowledge and experience to help you get the right information as and when it is needed - helping you to sell your overseas property without a hitch.
You'll need to enlist the services of a range of specialists as early in the process as possible, such as a reputable estate agent, solicitor, independent financial advisor and currency specialist. Don't forget to factor in their costs to your finances.
Another helpful resource is The Alliance of International Property Owners – which provides free knowledge, support, guides, inspiration and special offers to British owners of a foreign property.
3. Choose an estate agent
Finding the right estate agent is crucial when selling a property, particularly overseas. A good one can help you secure a fast sale at the right price.
- Choose an agent registered with a regulatory body in the country you’re selling the property.
- Choose an estate agent that understands the requirements for selling to the local market and foreign buyers – this will help you set your expectations about the sale price.
- Research into the agency to make sure they are genuine, e.g. check they are registered with a real trading address.
- Choose an agent with plenty of experience, so you’re confident they have established a good reputation and have a 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.
Your estate agent can also arrange professional photography, write a compelling property listing, advise you on the best time to sell, and target expat buyers – giving you the best chance of making a successful sale.
4. Choose a lawyer
As soon as you decide to sell, you'll need to engage the services of an independent, English-speaking solicitor who specialises in property law.
Here are some top tips for choosing a reputable lawyer:
- Ask for recommendations and request testimonials.
- Research their credentials - check that they belong to the local bar association.
- Check they have experience in property laws.
- Check if they speak good English.
Most countries use the 'notarial system'. A notary is a person authorised - by you - to perform certain legal formalities, especially to draw up or certify contracts, deeds, and other documents for use in other jurisdictions. For example, in Spain, the notary is called ‘the escritura’, and in France, they are called ‘the notaire’.
If you cannot attend to the sale of your property personally, your lawyer should offer a notarial service. Sellers typically grant power of attorney to their estate agent or lawyer, who can undertake the transaction and sign the deed on their behalf. You can sign the relevant paperwork before a notary public in the UK.
5. Choose an independent financial adviser
Selling property abroad will have tax implications in the UK. An independent financial adviser (IFA) can help you manage your tax obligations and reduce your costs when selling property overseas – especially if you’re eligible for tax relief. They can help you complete your tax returns to make sure you include all the relevant information. Many countries have a double tax treaty with the UK, which can make you exempt from paying tax in both places.
If you live in the UK and own a second home abroad – whether it's a sun-drenched villa in Spain or a ski chalet perched high in the French Alps – you might be in for a shock if you don’t seek expert advice around the relevant laws surrounding tax on overseas property or holiday homes. For example, if you make a rental income or gains through letting your property to tourists or long-term tenants abroad, you could be liable to pay capital gains tax on the disposal of the property. The sale could be subject to inheritance tax if you have inherited the property and are a UK tax resident. You may also have to meet foreign tax obligations when you sell or dispose of your property.
Choosing a currency specialist to bring your money back home
Choosing a currency specialist is just as important as working with an estate agent to facilitate your sale, a good lawyer to ensure it is legally sound, and an IFA to oversee your tax obligations. That’s because there's another considerable risk when selling overseas property: currency risk.
From estate agent and lawyer fees to the lump sum from the final purchase, every transfer you make as part of the overseas selling process is exposed to foreign exchange risk, which means you could potentially have to pay out far more than you planned and budgeted for. The amounts of each transfer need to be converted into pounds for UK tax purposes.
Currency specialists can guide you on the pitfalls of potential market volatility and offer competitive foreign exchange rates when it’s time to transfer your money home. Timing is essential when making international money transfers exchange rate fluctuations will affect the value of your proceeds once converted into sterling.
Currencies can strengthen and weaken by the second because banks and investors purchase huge volumes in response to political and economic news: positive news about a country typically causes the value of the currency to rise (“strengthen”) while bad news causes it to fall (“weaken”).
We cannot predict whether they will move up or down or by how much. Even slight fluctuations can significantly affect the amount of money you will receive. In some instances, the political and economic variables that influence exchange rates can be severe, as recently proved. Take Brexit and the Covid-19 pandemic, for example:
- Brexit: On 23 June 2016, the UK voted to leave the EU, which surprised markets. 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 1974 and its lowest level against the euro since the lowest point of the financial crisis 11 years earlier.
The dynamic nature of exchange rates means they can also have a habit of presenting opportunities, even during times of heightened economic uncertainty. So, as the Covid-19 crisis continues to trigger historic levels of currency market volatility, a currency specialist can help you capitalise on favourable rates so more of your money makes it home with you.
While you can transfer the funds from selling your overseas property back home using a high-street bank, you could end up paying additional fees and getting an unfavourable exchange rate. A currency specialist like Clear Currency can offer a dedicated service with competitive exchange rates and no hidden fees.
How to avoid common mistakes when selling property abroad
Selling your home can be time-consuming and emotionally challenging, especially if you’ve never done it before. With the technical elements of your sale in good hands, don’t fall into the trap of making these common mistakes:
- Getting emotional: Putting your house on the market exposes it to scrutiny from agents and buyers. It’s natural to feel emotionally attached to your home, but remember that this is a business transaction, so try not to take feedback personally.
- Setting an unrealistic asking price: When you’re emotionally attached to a home, you may be tempted to overprice it. Overpriced homes typically don’t sell. Research conducted by the informational home sale website HomeLight.com showed that 70% of estate agents said that overpricing is the number one mistake that sellers make.
- Selling when the market is quiet: Winter - especially around Christmas - is typically a slow time for property sales in warm climates. People are less inclined to travel to these locations out of season. With fewer buyers in the market, it may take longer to sell your home, and you may not achieve your asking price.
- Rushing listing photos: People often drop the ball when selling their home online by failing to showcase their property at its best - from taking photos in the evening to sharing images of dirty or untidy rooms. Take the time to get this right; it will set your listing apart and help generate extra interest.
- Hiding significant issues: Any issues with your property, such as dampness or subsidence, are likely to be uncovered during viewings, or when the property is being surveyed. Therefore, as a seller with integrity, you have two options: fix the problem before putting your property on the market or price the property below market value to account for it.
- Not preparing for the sale: Sellers who do not clean their homes before viewings are already on the back foot. Suppose you can’t afford to hire a professional cleaning service; set aside time to give your property a deep clean yourself. Failing to do simple DIY jobs - such as fixing a broken doorknob or dripping tap - can add up in a potential buyer's mind, making them less inclined to offer the asking price.
Use Clear Currency to transfer your money home
Transferring large sums of money overseas can be daunting and confusing. Clear Currency uses its knowledge and expertise to cut through the jargon and give you a friendly, personal service.
We recognise that it’s impossible to predict how exchange rates will perform accurately; therefore, planning for all eventualities is prudent. With this in mind, when you join us, 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 the profits from your property sale.
Your account manager will partner with you throughout the selling process - not just when the time comes to transfer your proceeds back home. Because fluctuating exchange rates make it hard to judge how much money will make it back into your bank account, your dedicated expert can help you execute a forward contract. This will allow you to lock in a favourable exchange rate for a date in the future, so you know exactly how much you'll be spending.
How to Mitigate Foreign Exchange Risk
Currency risk can have a significant effect on the efficiency and profitability of any international business. Each exchange rate movement affects how much you receive from sales and what you pay to suppliers.
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