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Buying property abroad: Everything you need to consider before signing a contract

Properties are still the most sought after investments for people living abroad. While the international aspect can create additional complexities, if handled correctly buying property abroad should be no more complex than buying property in your home country.

Written on 25 October 2018

Even in today’s turbulent times, buying property abroad should ultimately be no riskier than buying property in the UK. The major factor to consider is that each country will have its own rules and its own legal requirements along with different processes.

However, no matter what country you are looking to buy property in, there are common factors that you need to take into consideration before you sign any agreements or pay any money.

In partnership with Simon Conn, we have created the following guide that will provide you with useful guidelines to help you avoid making a very expensive mistake – and ultimately should make the process of buying property abroad much clearer.

Get legal advice

As with any property purchase, it is absolutely imperative that you engage and consult a lawyer that not only speaks English, but that also is qualified to practice law in the country you wish to buy your new property.

The lawyer will be able to conduct searches regarding the property itself as well as the land it is built on, enabling them to uncover any hidden dangers such as whether the land is in a greenbelt or on a flood plain.

They will also be able to establish whether the property has been constructed with the correct permits ensuring that you do not fall into a trap where your property is demolished.

Get a legally binding will

Aside from buying the property, you will also need to ensure that the property is correctly managed in your Will. If you or your partner were to die, it is important that you do not die intestate and let the local government decide what happens to your property.

Do your research into the location

When you move locally, you may be more aware of potential local issues. For example, when buying property in the UK you are unlikely to have to deal with many natural disasters such as earthquakes, volcanic activity or hurricanes. And if there are local disasters such as flooding, it’s likely you would have heard about them in the local or national news.

When buying property abroad, you are much more likely to encounter natural events that could be disastrous for your property investment.

You should also check out the local neighbourhood. Again, in your home country you are more likely to be able to spot particular features such as nightlife, bad neighbourhoods and crime. Abroad, the signs can be very different. For example, in some cultures, people can start socialising later at night, so be aware that even if somewhere is relatively quiet at 9pm, it may still become noisy later in the evening.

Check the construction company and seek local advice

If you are considering buying a new build, whether a house, villa or apartment, you must review the construction company behind the building. In most countries, different construction companies can be infamous for their lack of quality of work, especially when compared to other firms.

Understanding the differences can have huge consequences on the quality of the property you invest in and could save you significant amounts of money on future improvements.

You should also seek advice on the land that the property is being built on itself to ensure that the foundations are not going to lead to major problems like subsidence or become victim to sinkholes.

Know and understand what you are signing

In most countries, any contracts will be created in the local language which means that if you are not fluent and completely understand the legal terminology, you must seek independent translation services that can fully translate any contracts.

Not understanding a contract will not protect you if you later discover issues or have a discrepancy with what you believe you had signed.

If you are provided with a second contract in your language, it is still important to get the original translated to ensure that nothing has been missed in the translation.

Never sign any contract before you know and understand everything that is written in the contract.

Management of rental properties

It is increasingly common for foreign investors to buy property with the intention of either long term letting – or short-term holiday lets.

If you are considering your property purchase as a source of income you will need to decide how you are going to manage the property. If you are living locally, you may wish to manage the property yourself, however that would include you managing any contracts.

It is probably more suitable to engage a management company to assist with the management of the lettings. While you may have to pay between 10% and 15% of the rental income, the reduction in stress of managing the property is often worth the investment.

You will also need to decide how often you want to visit/check the property yourself to ensure that it is up to any standards you set following the departure of any renters.

Seek tax advice

If you a buying a second property, it is essential to get advice about the tax situation (income tax, capital gains tax, stamp duties, etc…) in the country of the property, your country of residence and also your country of domicile.

While many countries have established double tax treaties to help people avoid paying tax more than once, you will still need to use a qualified tax consultant to understand and file the correct taxes.

This is especially true if you have purchased the property as an investment opportunity as capital gains tax and income tax is likely to apply in multiple jurisdictions.

How are you going to pay for the property?

Some people are lucky enough to be able to buy the property outright. However, most of us will need some kind of mortgage when we’re buying property.

Much like in the UK, different types of mortgages are available, however the rules surrounding mortgages differ from country to country, and mortgage suppliers may be reluctant to deal with foreign nationals.

Therefore, you should seek independent mortgage advice if you need to generate funds for your property purchase.

You must always get your finances in place before signing any contracts when buying a property. Local laws will side with the seller if the deal falls through if your financing option gets rejected and you may be committed to paying a large percentage of the value of the property if the sale collapses.

Currency considerations

Once you have decided on how you are going to pay for your property, you are probably going to need to convert and transfer a significant sum of money for the deposit.

This is often overlooked, and some banks may be reluctant to transfer such large sums abroad.

You also need to consider how cost effective converting that sum of money is likely to be and you should at least consider opening an account with a foreign exchange company where you are likely to convert money at a more competitive rate.

If you consider that when dealing with deposits, even a small percentage change in currencies can result in a massive change in the value of your deposit locally, getting expert advice about timing and minimising your spread can save you thousands of pounds or dollars.

Future options, such as onward selling

While many people probably don’t think about selling the property they are looking to purchase, it’s a very important factor when buying property abroad.

For example, in some countries where there is a massive surplus of unsold properties, when you come to sell your property in the future, you may find it is not so easy.

Always consider the future appeal of any location, any future local developments and potential events that are likely to affect the saleability of a property. In some cases, an area may become more desirable because of a proposed transport link – however, if that link never materialises, you may find it very difficult to sell or rent the property in future.

Request a free, independent consultation

If you are considering purchasing a property abroad and need assistance, particularly with locating a mortgage we should be able to help.

Enter your details using the form and once we have received your enquiry, we will send you a automatic response confirming receipt of your details. Feel free to reply to this with any additional information that you may feel is relevant to your situation.

Once everything is received, we will select who we feel is the most suitable consultant from our network and ask them to contact you directly. They will then be in touch with further information about themselves and you will be able to arrange your consultation directly.

Request a free consultation (click to show form)

If you are considering buying property abroad, submit your details using the form to request an independent, free consultation with an expert from our network.


Request a free consultation

If you are considering buying property abroad, submit your details using the form to request an independent, free consultation with an expert from our network.