These days, people buying abroad don’t just do so because (for reasons we don’t quite get) they like going to the same place for their holidays every year. No, they do it because they think they are going to make capital gains on their holiday home too. But with prices falling in many areas of both Spain and France, that is no longer a given – something that makes it more important than ever that you don’t make a mess of the buying process. The more you overspend when you buy (and a recent study showed that on average the British end up spending £20,000 more than they need to), the less likely you are ever to make a profit.
This is generally a matter of common sense and research. The biggest unexpected cost is usually building work, which adds £3,777 to the average bill, says Moneycorp – so never buy without getting proper professional advice. “We had a lady buying a house in Tuscany who complained bitterly about the £1,500 cost of bringing in a geometra [surveyor], but he discovered that the roof would need replacing at a cost of £300,000. The advice was well worth the fee,” says Charles Weston-Baker of Savills. Legal fees are another cost not worth scrimping on. You may need more than one solicitor (never use one offered by a developer) and you will also often need a translator to be sure you don’t sign anything you don’t understand. The same goes for getting tax advice.
Do so and you will avoid “making simple errors, such as putting the property in the wrong name and incurring higher than necessary tax bills both at home and abroad”, says The Observer. But of all the costs people end up overpaying on, foreign exchange is the most common. According to Commercial FX, 86% of people buying abroad use their bank to carry out the transaction. That means higher commission costs and much worse rates than those offered by specialist dealers, such as Caxton FX.
And the costs of a holiday home don’t come to an end once you’ve got the deeds. Far from it. Make sure you understand what ongoing taxes you will have to pay in the country where you’ve bought and in Britain. Also research exactly what comes with the property. Buyers in Spain are often surprised to discover that light fittings aren’t included. Finally, before you buy a house, check the cost of getting to it out of season. A rural retreat in Bulgaria may sound great until you realise that it’s two hours from the airport and there is no public transport.