Overseas Property Investment - Emerging Real Estate

In recent years there has been a boom in overseas property investment with more and more people taking advantage of favourable exchange rates coupled with lower property prices abroad. Overseas property investments need serious planning, especially if buying a new development 'off plan' where there are several 'stage payments' during the construction of the property.

The decision to invest in overseas property is one of great significance. One aspect that is often over-looked is the issue of foreign exchange. The buying process can often take a considerable amount of time, and may involve conversion of assets into another currency. From the moment the decision is made to make an overseas property investment the fluctuations of the currency market will have a direct affect on your wealth, purchasing power and the amount of currency. For example the Australian or New Zealand dollar has fluctuated vastly over the past couple of years and the Euro has moved within a 20% range since its launch.

As one of the biggest investments anyone will ever make, the purchase of an overseas property – whether for retirement, for investment or as a holiday home – must be approached with caution. In order to try and minimize risk and stress follow these basic 5 steps:

• 1. Research the country
  
  When the desired overseas investment property is found, fast action may be needed to secure it. Make sure a quick decision can be made by taking time over the early research. Learn about the culture, politics, economy, local cuisine, weather, customs, and taxes etc before deciding where to start searching for overseas investment property.
• 2. Take independent advice
  
  Seek advice from an independent solicitor, well versed in the property laws of the chosen country and from an independent financial advisor, before deciding on an overseas property investment. Agents and developers may often offer the services of their own legal representative however be careful of accepting such an offer as it may not be objective due to conflict of interest.
• 3. Think it through
  
  Are you looking for a holiday home, an overseas investment property, or somewhere to retire to? How much time are you planning to spend in your overseas property? Do other members of your family really feel the same way about this as you do? Are you prepared to break all ties with your current home, or should you be thinking about retaining a bolt hole in the UK? All these factors will play a part in the process of buying an overseas property.
• 4. Get a bank guarantee
  
  If planning to buy a new overseas property investment, insist that the developer or agent offers a guarantee that the construction work will be completed as agreed. That way, should the company run into financial difficulties or even become bankrupt, any money you have already invested should be able to be reclaimed.
• 5. Make your money go further
  
  Seek the advice of an expert when deciding where to buy an overseas investment property. The most profitable countries in the past may not be the best countries for process of buying now. Consider the long term projections for the economy and the strength and fluctuation of the relevant currency.

Each of these steps will take a substantial amount of time if done properly, however an overseas property investment is not something that should be rushed into without due consideration.

The above steps are a guide to buying property abroad; the full purchasing process including the legal aspects is long and complicated and will require enlisting the aid of a legal representative who is fluent in both English and the language of the chosen country.

Purchasing an overseas property investment through an offshore company

Buying through an offshore company to avoid certain taxes, expenses and laws is sometimes an option open to an individual interested in purchasing abroad.

This may be advantageous depending on the country in question. Seeking advice from a local agent is not advisable as incorrect advice may be given if it is based solely on the local situation.

Specialist companies who advise on an individual basis offer the safest and most comprehensive service.

Opening Overseas Bank Accounts

If a bank account is opened in the country where you are making an overseas property investment’s country and money is deposited or transferred into it, it is imperative to get a ‘Certificate of Importation’ for the sum of money brought in, otherwise - worst case scenario - money laundering and/or tricky tax questions could be encountered both at home and abroad.

Consider setting up standing orders locally to pay regular bills and any ongoing taxes. If payments are late, services can be cut off and in some countries getting them reconnected can be difficult. Furthermore, in some countries such as France and Spain, the failure to meet tax payment schedules can lead to court action and possible repossession of the overseas property investment.