Plenty of Brits decide to invest in property abroad and develop a place of their own, either from scratch or by re-developing a property that simply needs some TLC. There are a whole host of reasons to do that: it’s a great way to ensure some income for later life if you want to rent it out or sell it, for example, while it may also be a good retirement or holiday home destination if that’s your ultimate goal.
But whatever your reasons for purchasing a property abroad might be, there are all sorts of different costs you’ll have to pay. You might have to hire a specialist, such as an internationally minded estate agent or a language interpreter, to help you out. Or you may need to apply for certain permissions, such as planning permission, in order to proceed – and this can cost both money and time. This article will explain how it’s possible to go about developing property internationally in the most cost-effective way possible.
Whether you’re buying a holiday home in the South of France or a hundred buy to let apartments in Australia, you’re going to need to rely on a whole host of professionals in the locations who can give you the assistance you need to get your project started. Some of the reasons are obvious: buying in a location where English is not widely spoken, for example, means you’re without a doubt going to need a translator. Or if you’re buying in a place where foreign property purchase rules exist, locating a lawyer with a global mindset who can work out some of the problems for you is a smart move as well. Of course, these people are professionals – and you should be prepared to pay high fees and see the cost as an investment in getting your development project off the ground.
Applying for permissions
You’ll need to apply for certain permissions before you’ll be able to go ahead with your foreign property development purchase. They vary from place to place, so you’ll need to do your research. If you want to develop property in France, for example, you’ll need to get permission for everything from some changes of use to increases in the external surface area. But don’t be too put off: the experience of international investors including Fahad Al-Rajaan of the Kuwait Real Estate Investment Consortium show that even with hurdles in the way, building a property portfolio is possible.
Perhaps the biggest cost of developing a property abroad is finding purchase finance. If you’re planning to buy either a plot of land or an existing property with a mortgage, for example, you’ll need to make sure that your mortgage provider covers properties purchased abroad. This will usually require the assistance of a specialist who will charge for the service.
The rise in online comparison tools, however, means that you can easily filter out those who are charging over the odds for property purchase finance. Alternatively, if you have substantial resources it might be worth hiring someone who can go to the purchase destination for you and do some in-person negotiating to find the best possible deal.
Exchange rate costs
Although it probably costs more to cover the above expenses abroad than it would to cover their equivalents back in Britain, it’s also the case that most of the above are costs that would be incurred even if you developed property back home. But something that is unique to buying abroad is the exchange rate cost – and it’s two-pronged.
The first exchange-rate related cost is the difference between your own currency and the currency you’ll need to buy the property: while this could go in your favour depending on what the international exchange rate looks like at the time of your purchase, it could also go against you if the value of the currency in the purchasing location is stronger compared to the pound. But in some circumstances, you may also find that you’ll be hit with fees from a broker. In this scenario, you could find yourself paying up twice – so it could be worth building in some buffer time to wait for the market to hopefully reverse in your favour, or spending time finding the cheapest possible broker.
Developing property abroad isn’t a cheap exercise. It’s something that costs a fair amount of cash if you want to do it properly, and it’s not something that you can do overnight. However, despite costs including everything from exchange rates to specialist staff, there are ways you can keep the costs down and avoid having to pay over the odds for your property development project to get off the ground.