If you want to know how to purchase property in another country, the good news is that it is not that complicated. Many foreigners buy overseas property, and for the vast majority, it works out well. Whether they buy for rental income, a dream home for retirement, or use it as a family holiday home, their venture into foreign ownership brings them much pleasure. But most first-time foreign buyers get nervous because this is an area they know nothing about.
However, by giving yourself time to make the right decision and seeking good advice, you will pay your deposit with confidence and be on your way to becoming a proud overseas home owner. So, this guide aims to help by offering tips, discussing issues that may arise, and outlining the basic steps to owning your first house abroad.
How to Purchase Property in Another Country
1: Know Your Budget for Property Prices
Some buyers first look for their dream home and then find the finance to buy it. But we recommend finding the finance first. Some buyers, to purchase the home they fell in love with, overstretch themselves financially. Don’t forget that across the world, cash buyers have significant leverage, and there are always discounted prices on off-plan property. For cheap properties that are below average prices, always double-check the reason why. Sometimes that bargain buy is a financial headache.
2: Investigate Neighbourhoods and Locations
Within your chosen country, rather than looking at regional markets, look at local markets, since some perform better than others in terms of capital appreciation. Additionally, with countries like Spain and Turkey, which are holiday hotspots, foreigners tend to buy in certain towns and districts. In coastal cities, with strong tourism trades, most locals speak foreign languages, and this helps foreigners settle in with the local community. Looking at local regions, rather than countrywide, will also help you make a better choice that suits your lifestyle.
3: Hire Independent Real Estate Agents
The perfect way to find a credible agent is to have a list of direct questions ready and watch their response. In some countries, a wide range of agents deal with foreign buyers, but unfortunately, some are not as professional as they seem on the surface. Some specialise in luxury homes, while others sell only affordable properties. There are several questions to ask, but good places to start include the initial deposit, ownership of the plot of land, annual taxes, legal formalities, about expat communities, and anything to do with becoming a property owner.
4: Understand The Buying Process and Ownership Rights
Knowledge of the legal buying process and the time frame until completion is essential. Legal complexities vary from country to country, so research them independently. From our experience, the quickest and easiest international property transactions occur in Turkey, where foreign buyers receive their deeds in as little as a week. Other countries take anything from six months to a year to complete the sale, especially if a mortgage process is involved. Know the form of ownership, ie leasehold or freehold, and what legal documents are involved.
5: Study Residency and Visa Requirements
Putting aside real estate for now, overstaying residency or tourist visas results in legal issues. This is a problem with holiday homes because several countries have the 90-day rule, in that anyone on a tourist visa can only stay for 90 days out of 180. Also, to live in the country at a later stage, be aware of legal considerations for residency such as income requirements and healthcare.
6: Understand Additional Costs
The two biggest mistakes most international buyers make are to consider only the purchase price, not the additional and ongoing costs. Extra costs involve anything that is needed to close the sale. This usually includes notary office fees, land registry fees, lawyers, translators, agency fees and taxes. Some places impose cancellation fees if buyers back out. Ongoing costs include annual property taxes and household bills like electricity, water, and gas. Research the cost of living and the law as a factor in inflation and a buffer zone for currency fluctuations.
7: Consider Currency Exchange Rate Implications
Exchange rate fluctuations are everything. Most countries stipulate that housing prices are listed in their currency. Some foreign countries require overseas buyers to use their government-owned banks for currency exchanges and to buy a home, while others don't. Knowing the rules, market, and regulations, and keeping up to date with the foreign exchange rate could help you save lots of money.
In addition, consider the future, should you decide to sell your home and convert it back to your home country, you could be quids in or face a negative investment. Investigate international bank transfer fees and match them against currency specialists. Unfortunately, this is something that only a crystal ball could solve, and foreign currency is one risk of buying abroad.
8: About Overseas Mortgages
Some foreigners take out mortgage products overseas. Known as international mortgages, or expat mortgages, several foreign banks offer them to non-citizen residents. However, this rarely works out in the buyer's favour. Most banks only lend a small amount, leaving the buyer to find up to 50% of the purchase price. The interest rates are higher. Additionally, mortgage options are given in that country's currency, and should the exchange rate swing drastically, you could be further out of pocket. Seek the financial advice of a mortgage broker if unsure.
9: Use a Lawyer for Legal Advice
Some destinations don't require a lawyer, but from our experience, their expert advice is worth its weight in gold. Usually, the buyer will sign a promissory contract, leaving the lawyer to delve into the final points, like checking the title deeds ownership, legal disputes, additional licenses for renovation work, and outstanding debts. Ideally, you want a contract without penalty or a loss of deposit should you decide to back out of the sale. Always use an independent lawyer, and often searching that country will produce English-speaking lawyers proficient in property laws.
10: Responsibility of Maintenance
Although this is an exciting adventure, neglecting the maintenance of your home because you live in a different country or are a holiday home buyer leads to difficult times. Think about building insurance, floods in winter, and community fees. Most countries have adopted the condominium law in which apartment owners pool monthly maintenance fees to deal with the upkeep and maintenance of common areas. Failure to pay these fees results in fines. Most overseas owners pay a management or key holding company to perform regular checks and pay bills.
11: Think about the Future
Investigate the tax implications both in your home country and the country where you buy. For example, some countries don't apply capital gains tax if owners keep the home for a certain amount of time, but should you transfer the cash back home, you may be liable to pay stamp duty. A financial adviser will give expert advice, but check inheritance laws for that country, and how you would go about it should you sell.
Consider Turkey
If you have not yet decided where to buy, we present the country of Turkey as an excellent option. Last year, foreigners purchased nearly 24,000 homes. As an experienced real estate agent, we send an email guide on everything about buying in Turkey, including foreign mortgages, stamp duty rates, immovable property, and our portfolio. We have helped many foreign nationals in their international transactions and will do the same for you, regardless of your country of residence. Our property for sale includes holiday homes, retirement homes and sound investments, so get in touch today and learn more about how to purchase property in another country. The following articles will also be of interest.
Why Choose Turkey: With properties available at comparatively lower prices than in many European countries, Turkey offers high value for money alongside potential for strong returns, particularly in popular areas like Istanbul, Antalya, and Bodrum. Additionally, the country's improving infrastructure, Mediterranean climate, and appeal as a year-round tourist destination make it an attractive option for both lifestyle seekers and savvy investors.
Where to Buy in Turkey: An article detailing the best places to buy property in Turkey highlights several prime locations for real estate investment. Istanbul stands out as the country's largest city. Antalya, along the Mediterranean coast, is celebrated for its picturesque beaches and vibrant tourism. Fethiye, known for its stunning beaches and the Blue Lagoon, provides affordable property options amidst breathtaking scenery. Alanya boasts sandy beaches and a lively expat community. There are also many other places to consider when buying property abroad.
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