This article was created in partnership with Western Union.
An overseas property investment offers both financial and personal benefits that should interest investors of all types. Here’s a look at how you can get involved in this growing trend and how to prepare for your first investment.
Benefits of investing in real estate abroad
One of the key benefits of an overseas property investment for U.K. citizens is a lower financial entry point and less stringent criteria for loan applications compared with local real estate. Initial deposits in many foreign countries are lower than those in the U.K., and as such, you’ll need less upfront capital. This is particularly useful for young people looking to make their first property investment. And, with easy-to-use mobile solutions like the Western Union® app, you can transfer money overseas to buy and manage your property quickly and reliably.
Another financial benefit is the potential for a high return. An overseas property investment in a country that stands to see significant economic growth within the coming years could be far more lucrative than a local investment. In addition to this, overseas investments add diversity to your portfolio, providing you with a possible hedge against economic decline back home. Add to this the fact that real estate value usually increases in line with inflation — something that other investments or savings accounts may struggle to match.
On a personal level, investing in property overseas opens up opportunities for you to migrate and gain citizenship if you move to another country permanently.
Even if you plan to rent out the property, you can use it as a holiday home between guests. In some cases, you may even be eligible for personal tax benefits as a result of your investment abroad.
How to find and choose a property
The hardest part of making an overseas property investment is choosing the right property and location. Thankfully, the wealth of free information available online means you may not have to travel to the country in person. However, if you are uncertain about a country’s political or economic environment, you should always consult an expert. Changes in a country’s geopolitical situation can affect property prices, as noted in a recent Wall Street Journal article regarding the U.S. property market.
The safest option is to get in contact with a local agent, preferably one who is fluent in both English and the native language. They can be an invaluable resource if you are looking to invest in a country where the language barrier is insurmountable. Take into consideration that many foreign countries conduct business in a different manner to the U.K., so having someone who knows the ins and outs can make or break a deal.
Whether you choose to do your own enquiries or enlist the help of an agent, always consult an impartial lawyer first. You don’t specifically need a local lawyer so long as they are proficient in the language and property law of the country. U.K. law firms dealing with such matters should be registered with the U.K. Law Society and specialise in international transactions and property conveyancing.
What to look for in an international property investment
This depends largely on what you plan to do with the investment. If you are looking to rent out the property, it’s important to research local laws regarding tenancy and landlords. Not all properties are eligible for letting, and in some countries, the restrictive (or lax) nature of the rules may make the exercise unfeasible. While some properties may allow long-term rentals, not all will allow short-term holiday rentals like those found on Airbnb.
If you are thinking about living in the property, then consider the same factors you would when purchasing a home locally: Is it a quiet neighbourhood? Is it safe? Are there schools nearby? That said, a property located in a foreign country also begs additional considerations: What is the cost of living there? Is there an expat community? Is there access to decent health care? Do local stores stock those familiar comforts you can’t live without?
How much should you expect to spend?
If you don't already have a chosen country, it's a good idea to calculate the initial deposit you can afford, and then do some research into the average cost of housing around the world.
Tools like Finder’s cost of a flat around the world can help you compare approximate property prices to make a shortlist of countries that fit your budget.
Many property developments offer low entry points for early investors who buy prior to construction, but this comes with significant risks. Countries with less strict property and construction regulations may be left with unfinished real estate developments when funds dry up, leaving investors out of pocket.
For U.K. citizens, Spain and France have long been popular destinations for overseas property investment. This makes them two of the easiest countries for British citizens to secure loans and mortgages in. Currently, British citizens taking out mortgages in EEA countries are covered by the same consumer protection offered within the U.K., although it is uncertain whether this will change after Brexit.
How to transfer funds overseas
Whichever country you choose to invest in, moving money between the U.K. and an overseas bank account will quickly become a necessity. As one of the longest-running and most reliable money transfer services available, Western Union offers a simple way to transfer funds to 200 countries and territories worldwide through their mobile app.