MGM Advantage put out a survey this week showing that Spain is apparently the top retirement destination abroad for Brits. Lovemoney.com then wrote that you’d be ‘daft’ to retire abroad for the following reasons:
1. Your villa might get torn down if you don’t have planning permission
2. You might lose your deposit if the builder goes bust
3. The exchange rate might move against you
4. You can’t claim social security benefits abroad
5. You’ll get bored and miss your families
6. The NHS won’t treat you if you are classified as an overseas resident
Well, overseas property experts like me can’t really do anything about the NHS or social security benefits and I doubt many people retire overseas and then get bored. However, I often help people with the first two issues when offering advice on buying overseas properties. If you follow sensible advice then there is nothing daft about buying abroad! In fact, it could be the best decision you ever made!
When it comes to buying properties abroad my philosophy is that prevention is better than cure. So, I advise all my clients to ask questions about where a property is built. For example if a property has been built on an area that should have been set aside for green belt or agricultural land then the chances are there is a risk. Take advice from an independent, English speaking lawyer, preferably one that is not from the same area as the property.
With regards to overseas planning permission, there are sometimes problems with overseas properties that have been constructed with incorrect permits, no permits or permits that have been granted as a result of corruption. Again, this is where an independent lawyer can hopefully save you from the heartache of seeing your overseas property being torn down. He or she should check the paperwork to confirm that all parts of the property have been built under the correct legislation. Local rules differ from regional legislation so the lawyer should extend checks further than the vicinity where the property is being or has been built.
Planning permission is one thing to consider, but equally licences are a common problem. Not having the appropriate licences (such as “Habitation”) could have an impact on what utilities you can obtain, as permission to access gas, water and electricity may not be granted by the local council. Something that I have previously come across relates to properties in a large development or apartment block – a developer may not register your property for the correct licences, until all the properties in that development have been registered in each clients’ name. One to watch out for! It’s really important to establish when the relevant licences will be issued, because this could be many months in the case of a very new development.
Taking the second point above, regarding lost deposits, the problem normally centres on developers or agents setting dates when a deposit is required without providing a cooling off period. My advice is this – before parting with any money, get your (independent) lawyer to check the contract, particularly with regards to clauses relating to withdrawing from a purchase. Ask for a cooling off period and be suspicious if they don’t agree.
Also, if the property purchase is linked to a mortgage being obtained, ensure any deposit paid is subject to receipt of a satisfactory and acceptable mortgage being provided.
One of the other big problems that you might find with buying property overseas, and one which you always see on the TV, is poor construction. This could be new properties built in poor soil and insufficient foundations, substandard building materials or dubious locations such as flood plains. One case we dealt with in the past was a property built too close to nearby cliffs.
Always, always, always obtain an independent valuation (ideally from a professional Surveyor expert in that country), even if it is a new property, as this will highlight any problems. If you are buying a new overseas property, check the developer’s past building record and look into re-sales on the existing development to see how they have ‘weathered’.
Ultimately, the only thing that’s daft about retiring abroad is not doing your homework when it comes to your dream retirement property. You wouldn’t take shortcuts buying in Britain, so why do so overseas? There are relatively simple and cost effective steps that you can take to try and stop that dream turning into a nightmare.