Our Top Three Tips for Purchasing Property Abroad

Listen to our deep-dive into this topic or read all of the crucial information below.

Twelve things to know before buying property abroad.

When buying property overseas, it is generally sensible to arrange your finance in principle first, instruct an independent bilingual lawyer, and get an independent valuation before you sign anything. Then work through the rest.

A word on finance. Arranging an overseas mortgage is not like a UK purchase. An overseas lender will typically assess the property, your income and the currency your income is paid in, and rates, deposits and early repayment terms vary by country, by lender and by your own circumstances. As a general guide, all of your monthly commitments together, including any existing domestic mortgage and the new overseas mortgage, generally need to sit within around 30% to 35% of your net monthly income, though this varies by country. Simon Conn’s advice is independent, and he works with overseas lending sources that understand local mortgage requirements. Keep an eye on exchange rates too, as currency movement could affect both your deposit and your monthly payments.

BASIC STEPS & TIPS WHEN CONSIDERING BUILDING A HOUSE OVERSEAS

Instruct an independent lawyer in Australia

Buying a property in Australia will be a significant investment and, given the distance involved, matters can get complicated. Once you have decided to buy a property in Australia it is essential that you instruct an independent, reputable lawyer to guide you through the process and protect your interests. The law and practice of buying a property varies from state to state and so you should instruct a lawyer in the state in which you intend to buy.

Foreign Investment Review Board permission (FIRB)

Buying in Australia usually needs Foreign Investment Review Board approval for most non-residents, plus state-specific legal advice, since property law changes from state to state. Where possible, make any contract conditional on FIRB approval, a satisfactory building and pest inspection, and finance. FIRB approval may take up to 130 days. Cooling-off periods typically run about 3 to 10 days in most states, though this varies. Guidance supplied by Worldwide Lawyers.

Visa Requirements

You will be required to have a visa to enter Australia. The type of visa you will need will depend on your specific circumstances and what you plan to do when you get there. Make sure you are aware of the visa options available to you and the costs and timescales associated with the application process.

If you apply for your visa through a lawyer or emigration agent make sure they are registered with the Migration Agents Registration Authority (MARA) and/or is a member of the Migration Institute of Australia (MIA).

Use An Experienced Mortgage Advisor

You should seek professional assistance from an experienced mortgage advisor with regard to financing your Australian property purchase as this may save you thousands in the long run.

They should also be able to advise you if you would be eligible for any funding to help with the property purchase. For example, the First Home Owner Grant which provides a contribution to some purchasers if they have not bought property in Australia before, are building a new home, and are or will soon become an Australian Citizen or permanent resident (or are buying jointly with such a person).

You should also make sure you know how far your budget will stretch once you have accounted for legal fees, property taxes and visas.

Building and Pest Inspection

It is recommended to have at least a basic building and pest inspection carried out on the property you wish to purchase to make sure you don’t get any nasty surprises later on. You should instruct a licensed building and pest inspector in the area in which you intend to buy and make the property sale contract conditional on receiving a satisfactory building and pest inspection.

The Contract For Sale

The process of entering into a contract of sale varies from state to state. In some states, like Queensland, the contract is usually prepared by the real estate agent and is signed before the buyer consults a lawyer and before any searches are done. In that case, it is important to include special conditions, which allow you to back out of the contract without penalty, if they are not satisfied. For example, you would make the contract subject to obtaining a satisfactory building and pest inspection report, FIRB permission, getting finance approved and any other matters that you may consider essential before you finally commit to going ahead with the purchase.

In other states, such as in New South Wales, the process is slower, and you will have a chance to show the contract to your lawyer, before finally signing it. Once your lawyer has completed all the relevant searches and investigations in relation to the property you wish to buy, the contract for sale will be signed and a deposit, usually around 10%, is paid.

Cooling Off Period

In most states of Australia there is a period of time after contracts have been exchanged where the buyer can pull out of the transaction without losing all their deposit, but you will usually lose an amount up to 0.25% of the purchase price if you exercise your right to pull out of the contract during the cooling off period. The length of the cooling off period varies from state to state, however, it is usually between 3-10 days.

Completion (Settlement)

Once all the sale conditions have been met Completion of the property purchase (known as Settlement) takes place. The property will be formally transferred to the buyer and their ownership registered with the relevant State Land Registry, who will issue a certificate confirming the registration of your ownership. Settlement typically occurs one month after the contract is signed.

Information kindly supplied by Worldwide Lawyers. If you need help to find a lawyer to advise you in relation to your property purchase in Australia, contact Worldwide Lawyers on 01244 470 339 or email info@worldwidelawyers.co.uk to be put in touch with a reliable independent lawyer in Australia.

Is the Buyer an EU Citizen OR Non-EU citizen?

EU citizens face no property restrictions in Cyprus, while non-EU citizens need Council of Ministers permission and may face limits on size and number. The title deeds position matters: new builds often lack separate deeds at first, so your lawyer should check the developer’s original land deed for charges. A property with deeds usually needs one contract; one without usually needs three. Guidance supplied by Eleni Philippou of Polycarpos Philippou and Associates.

Read our full guide: Buying Property in Cyprus: A Guide for Non-Residents and Mortgages, at https://www.simonconn.com/overseas-property-guides/buying-property-in-cyprus-guide-non-residents-mortgages/, which covers the legal process, non-resident lending and the current tax position in more detail.

In France the preliminary contract, the compromis, is usually legally binding and is not subject to contract as in the UK, so it is unwise to sign one without an English-speaking French lawyer. Expect to pay a deposit of around 5 to 10 per cent to a notary, and remember the completion meeting is normally conducted entirely in French. You can estimate your borrowing with our French mortgage calculator. Guidance supplied by Sophie Lagayette of Triplet and Associes.

Read our full guide: Buying Property and Getting a Mortgage in France, at https://www.simonconn.com/overseas-property-guides/buying-property-getting-a-mortgage-in-france/, which covers French lending criteria, costs and the buying process in more detail.

Buying in Italy calls for your own independent lawyer, not just the notary, whose role is limited to the final contract and tax. It is unwise to sign a proposta d’acquisto without advice, you should insist on the compulsory developer guarantee on a new build, and you should never under-declare the price, which remains an offence.

Read our full guide: Italian Mortgages for Non-Residents and Foreign Buyers, at https://www.simonconn.com/overseas-property-guides/buying-property-getting-mortgage-in-italy-as-foreigner/, which covers Italian lending criteria, costs, taxes and the buying process in more detail. Guidance supplied by Avv. Giovanni Lombardo.

Buying in Portugal usually runs through a written promissory contract, with your lawyer checking the Land Registry Certificate, Predial Certificate and Habitation Licence, and confirming there are no charges on the title deeds. Completion, the escritura, normally takes place before a public notary, and you will usually need to appoint a fiscal representative and budget for at least Transfer Tax, Stamp Duty and Annual Property Tax. Guidance supplied by Paula Xabregas.

Certified Professionals

Always work with certified professionals. Above all, it is most important that you have a Portuguese Lawyer to represent you in the acquisition of the property. This professional shall do all the necessary searches on the property, shall confirm that all the documents are in order and will defend your interests and position in the negotiations with the other party.

Negotiations prior to the signature of the Promissory Contract

Inform your lawyer of all the terms and  conditions previous to the signature of any contract. On negotiations phase the most important issues to be discussed between the parties are the price, conditions of payment, deposit to pay simultaneously with the signature of the promissory contract of purchase and sale together with any special concern that any or both parties may like to see inserted in the promissory contract.

Promissory Contract and Notarial Deed (Completion)

There must be always a written promissory contract to protect the purchaser’s position and interests. With the signing of the contract the Lawyer must check the following relevant documentation of the property: Land Registry Certificate, Predial Certificate and Habitation License.

At this stage the lawyer must also confirm that there are no mortgages, liens or responsibilities on the property.

Completion of the property purchase takes place in the period of time agreed by the parties at the offices of a Public Notary. The Notary records the transaction, which is often referred to as the «Escritura». It is also time for the Purchaser to pay the balance of the price and take possession of the property.

Terms and Conditions of the purchase and sale

In case of any change to the terms and conditions agreed with the vendor the lawyer must be immediately informed.

The purchaser must fulfill all the terms and conditions agreed in order to avoid any penalties. Therefore, when acquiring a property the purchaser must be informed by the lawyer of all costs and expenses involved as well as all the obligations.

Survey

A survey to the property is advisable in case such property is not new. Any defects that may be found must be listed and the vendor must be responsible for the repair of such defects.

Maintenance costs

It is important to confirm with the lawyer what the maintenance costs of the property such as infrastructure charges, property tax and condominium fees are in order to avoid future surprises.

Taxes Due

The lawyer must inform the purchaser of all the necessary and relevant information on the Portuguese Fiscal System, mainly regarding the taxes due when acquiring a property in Portugal (Transfer Property Tax, Stamp Duty and Annual Property Tax).

Fiscal Representative

A fiscal representative must be appointed to represent you before the Tax Administration in all the matters related to the property.

This information has been kindly provided by Paula Xabregas a Lawyer based in Faro, Portugal – Visit our Portugal legal services page here for further information.

Do your research early

Find out how the buying process works before you even go and have a look at properties. The process of buying in Spain is significantly different to that in the UK so don’t assume that things will work in the same way.

Look into the finances early

Work out your budget. Look at the total cost of buying including legal fees, taxes and so on. Identify how much of a deposit you are likely to need and when that is payable. If you need finance to help fund the property look into this as soon as possible.

Do not try and cut corners to save money

It is likely to cause you a problem in the future. If there is a problem with the property it is better to find out before you buy as solving problems afterwards can be much more expensive. Not obtaining a survey or a valuation or cutting corners with legal fees is very short sighted.

Think about why you are buying and be honest with yourself

A property for personal use is often very different from a property that you would rent out, which in turn is often very different from a retirement property.

If you are buying for an investment do your research and be realistic about the amount of income that you can get from the property

Do not believe the sales hype in relation to number of weeks rental or money per week – carry out your own investigations into the true figures.

Think about exit strategy when you buy

If you are likely to want to sell the property in the future then think about who is going to want to buy your property from you and how marketable it is likely to be. Just because you like it doesn’t mean that other people will.

Think about inheritance at this stage

Make a Spanish Will to make sure that your wishes are followed and that the inheritance is carried out in the most tax effective way.

Take advice on who should own the property before you buy

The form of ownership is probably the most important decision that you will make when it comes to the property and has a major effect on taxes and inheritance. Taking advice now can save you thousands of pounds (if not tens of thousands of pounds) later on. Once you have completed many of your opportunities are lost.

Use an independent lawyer to help you buy your property

Do not use the lawyer who is acting for the seller, use one who is interested only in protecting your position. Make sure that your lawyer understands both Spanish law and also the law of your home country as there is an interaction between the two jurisdictions in terms of taxes and inheritance.

Investigate your ongoing obligations after you have bought

Once you have bought your property there are still things that need to be done. You will have to pay certain annual taxes. You may have to pay community fees. It is recommended that you have contents and buildings insurance Understand your obligations in Spain and also your obligations back home.

This information has been kindly provided by Peter Esders of Judicare.

E-Mail: peteresders@judicaregroup.com and quote SLC/LSP

How much could you borrow?

Take a look at our Spanish mortgage calculator here to see how much you might be able to borrow. Then complete our Overseas Mortgage Enquiry Form for an indication if you may possibly be able to get a mortgage for a property in Spain, how much you may be eligible to borrow and at what rates.

Do your research early

Find out how the buying process works before you even go and have a look at properties. The process of buying in the UAE is significantly different to that in the UK so don’t assume that things will work in the same way.

Look into the finances early

Work out your budget. Look at the total cost of buying including legal fees, taxes and so on. Identify how much of a deposit you are likely to need and when that is payable. If you need finance to help fund the property look into this as soon as possible.

Do not try and cut corners to save money

It is likely to cause you a problem in the future. If there is a problem with the property it is better to find out before you buy as solving problems afterwards can be much more expensive. Not obtaining a survey or a valuation or cutting corners with legal fees is very short-sighted.

Think about why you are buying and be honest with yourself

A property for personal use is often very different from a property that you would rent out, which in turn is often very different from a retirement property.

If you are buying for an investment do your research and be realistic about the amount of income that you can get from the property

Do not believe the sales hype in relation to the number of weeks rental or money per week – carry out your own investigations into the true figures.

Think about an exit strategy when you buy

If you are likely to want to sell the property in the future then think about who is going to want to buy your property from you and how marketable it is likely to be. Just because you like it doesn’t mean that other people will.

Think about inheritance at this stage

The laws on inheritance in the UAE are likely to be very different to those that you are used to as Sharia Law applies to assets in the UAE. Make a Will prepared and registered according to UAE Laws to make sure that your wishes are followed.

Think about tax

One of the advantages of buying in the UAE is the considerable tax advantages. However, unless you are tax resident in the UAE you will probably still have to pay tax in your “home country” on any income, capital gains or inheritance. It, therefore, makes sense to think about taxes even when buying in the UAE.

Take advice on who should own the property before you buy

Although the UAE is advantageous as far as tax is concerned you may still be The form of ownership is probably the most important decision that you will make when it comes to the property and has a major effect on taxes and inheritance. Taking advice now can save you thousands of pounds (if not tens of thousands of pounds) later on. Once you have completed many of your opportunities are lost.

Use an independent lawyer to help you buy your property

Do not use the lawyer who is acting for the seller, use one who is interested only in protecting your position. Make sure that your lawyer understands both UAE law and also the law of your home country as there is an interaction between the two jurisdictions in terms of taxes and inheritance.

This information has been kindly provided by Peter Esders of Judicare.
E-Mail: peteresders@judicaregroup.com and quote SLC/LSP.

Do your research early

Find out how the buying process works before you even go and have a look at properties. The process of buying in the USA is significantly different to that in the UK so don’t assume that things will work in the same way.

Look into the finances early

Work out your budget. Look at the total cost of buying including legal fees, taxes and so on. Identify how much of a deposit you are likely to need and when that is payable. If you need finance to help fund the property look into this as soon as possible.

Do not try and cut corners to save money

It is likely to cause you a problem in the future. If there is a problem with the property it is better to find out before you buy as solving problems afterwards can be much more expensive. Not obtaining a survey or a valuation or cutting corners with legal fees is very short-sighted.

Think about why you are buying and be honest with yourself

A property for personal use is often very different from a property that you would rent out, which in turn is often very different from a retirement property.

If you are buying for an investment do your research and be realistic about the amount of income that you can get from the property

Do not believe the sales hype in relation to the number of weeks rental or money per week – carry out your own investigations into the true figures.

Think about visas

If you are looking to spend significant amounts of time in the USA or intend to live there then take advice on the Visa situation before you go too far down the line as what you are trying to achieve may not be possible.

Think about zoning restrictions

In some areas you may not be allowed to rent out the property for short term lets so take advice on this if you are considering renting out your property.

Think about the exit strategy when you buy

If you are likely to want to sell the property in the future then think about who is going to want to buy your property from you and how marketable it is likely to be. Just because you like it doesn’t mean that other people will.

Take advice on who should own the property before you buy

Taking some advice on tax when you buy can mean significant savings later on in terms of income tax, capital gains tax and inheritance tax. Once you have bought the property some of the options available to you may be lost so take advice on this before you buy.

Use an independent lawyer to help you buy your property

Do not use the lawyer who is acting for the seller, use one who is interested only in protecting your position. Make sure that your lawyer understands both the law in the USA also the law of your home country as there is an interaction between the two jurisdictions in terms of taxes and inheritance.

Don’t forget that in the USA the laws often change between states.