Retire to the Sun

Moving abroad is a big decision, and probably the most significant part of the process is deciding what type of property to purchase, and where.

The sections below guide you through the general process. For more specific information, please visit the page of the country you are interested in.

Buying a Property
Countries can vary significantly from region to region and thorough research is recommended before you invest in a foreign property.

This includes several trips to the region where you intend to buy, at different times of the year if possible. What is a thriving summer coastal resort could be desolate in the winter months.
We would always recommend renting before you buy, if you can, so that you can make sure you are making the right decision.

Where to buy?
A place that you have enjoyed on holiday, even on several occasions, does not necessarily translate into a great place to live all year long. Seeing it at different times will give you a better idea of whether the area is right for you.

Climate can vary substantially between regions within a country. Make sure you are aware of the extremes of temperature in the place you are looking, to be sure that it will be neither too hot in summer, nor too cold in winter. Find out how much it is likely to rain, especially if that's what you are moving there to avoid. Does the area suffer from natural disasters, such as forest fires or flooding?

Once you have found a locality that you like, look into the amenities available. Are there sufficient shops, restaurants and health services for daily living? In some resorts, restaurants can close for months on end, re-opening with the tourist trade.

Check whether you can get around easily without a car, particularly to hospitals. Walk around the area and see if it 'feels' right; your instinct is often a good guide. If you will be sharing the new home with someone, do you both feel comfortable there?

In many areas, there is a large expatriate community where you can speak to others for advice on moving there, in our forum for example. Read as much as you can about the area, and research local authority plans. Find out the crime rates and what factors affect the resale value of property there.

Language is another key consideration. If you are moving to an area that is already popular with expatriates, speaking the local language is likely to be less of an issue.

Establish your budget, including costs, from the start. Although property may be cheaper, the actual house buying process is usually more expensive in Europe than the UK, for example.


The Property Market and Property Agents
Property markets across Europe vary widely. In many countries, the family home is still just that - bought to live in rather than for capital gain. You will probably need to stay for several years for it to be financially rewarding.

Look at newspapers and websites for the region to get a good overall idea of the market and house prices. You can then measure properties that you go to see against average prices.

Look in the windows of estate agents in the area to see what is available that has not been published elsewhere. This will also give you a good idea of how the agent keeps their own premises, helping you decide if you will be happy to use them.

In the more popular retirement areas, many estate agents cater for English-speaking buyers. This can be helpful when looking for property if you do not speak the local language.

However, if you want to move to a more remote area, it is quite likely that no-one will speak English and you will need to either know some of the language or make arrangements for translation.

Bear in mind that estate agents are working for the vendor, not the buyer. Do not sign anything until you have had it thoroughly checked by a lawyer who understands the language and the way of buying property in that country.


Types of Property
New build and 'off-plan' properties have the advantage of being unlived in previously, and you can often add extras, such as a swimming pool. They are often on purpose-built developments, which can have advantages in their own right, such as an instant community, facilities maintained by a management team and good security.

Avoid double contracts, where, in the same document, the developer sells you the land and agrees to build your property. You will not own the deeds until after building has finished, which can cause problems if the developer goes bust.
Ensure you have separate contracts for both stages of development.

With off-plan properties, you can often pay in stages during the build, spreading the cost. In many European countries, developers are obliged to give you a bank guarantee so that you do not lose any money you have already paid if they are declared bankrupt before completion of your new home.

Existing (resale) properties can have many advantages. They have had time to become established, and are part of the landscape and the community. There is no wait for construction to finish, and the price may include the existing furnishings.

Disadvantages include wear and tear and the possibility of hidden costs from damp, necessary building work or even localised problems such as termites. A full survey can warn you of many of these problems in advance and should not be underestimated in its importance, particularly in properties over ten years old.

Costs
The costs associated with purchasing property differ from country to country. For example, in much of Europe costs are frequently ten per cent or more of the asking price.

You will generally need to pay land registry fees, taxes, surveyor's fees, legal and conveyancing fees, bank charges and often costs for a notary.

It is a very good idea to put your finance in place before you go, especially if you require a mortgage. You may have to sign a preliminary contract as soon as you see a property you like, so arranging a 'mortgage in principle' beforehand means you are not committing to anything you will later be unable to find finance for. Mortgages can be arranged on the property itself, or against existing property in your home country.

You are also likely to have to pay a deposit as soon as you sign a contract. Taxes and fees are usually payable on completion, so you will need the money readily available to pay them.

Opening a bank account in your new country ahead of your move can save you time in setting up direct debits for utilities, and makes transferring money in the local currency easier. You will also need insurance as soon as the property becomes yours.

Legal
It is well worth instructing a lawyer before you begin your house-hunting trips, particularly one used to dealing in international property and with a good grasp of the local language.

Bilingual lawyers are especially useful for the technical aspects of any contract you may be asked to sign in countries where you do not speak the language. Some allow you to fax them a contract you have been given by the estate agent to be checked and returned in a couple of hours, with any comments that may need addressing.

Alternatively, you can use a lawyer local to the area. Note, however, that the same lawyer may be working for both parties, so try to find an independent.

Either way, a lawyer who can speak to you in your own language while understanding the finer details of the contract is invaluable. Do not sign anything or hand over any money until you are sure of what you are being bound to.

When you are happy with a propertyyou will usually sign a preliminary contract, drawn up by the vendor's lawyer, after which you cannot pull out without losing your money.

Your lawyer should ascertain whether:

• the seller has the right to sell the property deeds
• plans of the property and the land are correct
• the property registration documents have been verified
• there is proof that building regulations have been met and that any required planning permission is approved
• any development is planned in the area
• anyone else has access rights over your land
• land use on, or near, your property is subject to restrictions
• it is clear what furniture and fittings come with the property
• a number is needed for financial dealing (e.g. the,Número de Identidad de Extranjero and if so, that it has been provided.)

You can either apply for this yourself, or ask your lawyer to do it for you.

The process can take several weeks, so apply as soon as you have instructed your lawyer.

Understanding the roles of the notary and lawyer
In some countries, the services of a notary are required as part of the house buying process.

Their role as an independent government official is to draw up the deed, ensure both parties understand it, and witness the signing, along with performing various administrative duties. They are separate and distinct from your lawyer and will not give you legal advice. Neither do they act for the vendor, but you need to arrange for a notary to be involved before you sign anything. 

Once you have signed the final contract, you must pay the balance of the monies outstanding to the notary, including tax, land registry fees and  the notary's own fee.

Property Taxes
There are a variety of ways of purchasing property abroad, and your tax efficiency can be affected by the option you choose.

For example, you may decide to put the property deeds in your name, or in yours and your co-purchasers name, in your children's names or perhaps that of a limited company, whether at home, in your new country or offshore. The best choice will be dictated by your personal situation.

It is also worth bearing in mind future taxes, such as Capital Gains and Inheritance, as planning for these stages before you buy your property can make a huge difference later on.

The vendor may also attempt to persuade you not to declare the full value of the property, especially in rural areas. This has been a common tax evasion trick in many parts of Europe, but is now being clamped down on by the authorities.

Vendors may not be keen to declare the full price if they have previously under-declared it, as their Capital Gains tax bill will be bigger. The onus is on you, however, because if the authorities subsequently revalue your house to its true worth, you will be fined, and liable for the tax deficit and the interest that has been accrued.

You can reduce your tax liability at home and in the new country by receiving qualified tax advice such as our partners in the STM Group, who are used to dealing with expat finances.


Building and Renovating
The starting point for both building and renovating is to set yourself a budget. Obtain detailed estimates for the necessary work and do not be surprised if it is more than the asking price for a property you wish to renovate.

Bear in mind that you are unlikely to make much money on the property, certainly in the short term; have a clear idea of what you will do with the property once it is complete. Any gains you do make on the property will also be subject to tax.

Establish how much work is needed to plan and build, or rebuild, the house you want. If you are contemplating doing some or all of the work yourself, decide how feasible this really is. When will you be able to visit the site and are you willing to sacrifice your holidays to keep going back and working there?

Look around at local suppliers and builders to see what is on offer and how much it will cost - recommendations from others are best.

Plan your project in as much detail as possible. The better you do this before work starts, the easier life is when it comes down to the actual construction. Make sure you are able to visit the site frequently.

The planning application process can vary hugely from country to country, as can the costs involved. Your architect or builder may be able to help you with what you will require before you apply to the local council. Add a clause into your contract that makes the purchase conditional on you receiving the necessary permissions.

Take legal advice before putting pen to paper. You may not be able to get a mortgage up front for the property, particularly for new buildings. If this is the case, add in a clause that makes you obtaining a mortgage a condition of purchase.

Living in a community of owners
There can be many advantages to living in an area that has been purpose-built for people relocating overseas. You will have an instant community  around you, which can help avoid feelings of isolation.

There are often communal facilities and shops either in the complex or close by, and usually a maintenance team who will keep things running smoothly.

Buying property in such communities can offer reassurance from a safety and security point of view and usually means a short waiting time before you can move in. Things to check beforehand are:

• transport links
  
• any plans for developing the site further, in case your view is about to be blocked out by a new block of flats
• maintenance
• charges and what you get for your money
• regulations that could affect you, particularly restrictions on your visitors
• emergency cover
  
• access and facilities
• ease of selling and moving later on.

Try to speak to other residents in the area before committing yourself.

Letting your Property
A new lifestyle abroad is undoubtedly a big commitment. You may decide to keep your home as a way back if you decide that living abroad is not right for you. Letting out your family property can be a good way of doing this, if you have the capital to do so.

You might wish to let your property abroad, which avoids leaving it empty, useful for security reasons.

Rental income can also help towards the costs of paying a mortgage at home or towards the upkeep of your new property. The cost of letting your home can usually be deducted from your tax bill.

You need to check whether letting is permitted on your property if it is a flat in a block, as there may be restrictions. You will also need to insure the property and inform your mortgage provider, if applicable.

You can pay a property letting agent to find tenants and/or maintain the property for you while you are away. Get quotes from a number of agents and establish exactly what they will do for you.

Your responsibilities, even if you use a property letting company, are for the infrastructure, major appliances, heating and air conditioning systems. You will be legally obliged to conform to certain safety standards, e.g. fitting smoke alarms.

As part of their contract, your tenants should agree to maintain the property to a reasonable standard, allowing for daily use. This includes the garden.

You or your lettings representative should check the property regularly and carry out any necessary maintenance. An annual coat of paint will also help to keep the property looking fresh and should maintain the level of income you receive.