Costa comeback
Costa del Sol summer tourism figures have shown an end to the decline in visitor numbers that has been seen every summer since 2002, with tourism authorities confident that the boost will be sustained through to the end of September.
Hotels and property investment holiday homes on the Costa del Sol achieved a 90 per cent occupancy rate over the summer months, with more than two million overnight hotel and jet to let stays, said the Costa del Sol tourist board.
The increase through August by five per cent on 2004 figures was achieved despite the number of beds in the Costa del Sol needing to be filled every summer rising by 4,000 over the last year.
July figures rose by two per cent on the same period of 2004, with a 70 per cent bed occupancy rate. Tourism officials have stressed that the increased returns were a result of redoubled efforts to draw visitors back to the region.
"Now we have to do a lot more to achieve what before we could do with just four telephone calls", Jose Prieto, the president of the hoteliers association Aehcos told Spanish newspaper Sur.
The authorities also pointed out that while visitor numbers have crept back up from the lows of 2003/2004 visitors have been less keen to spend while on holiday, a reflection of the lagging consumer confidence of much of northern Europe.
Mr Prieto believes that the market has been buoyed by an increasing trend of discounted last minute bookings offered on jet to let websites, property investment holiday rental sites and by travel operators such as Thomas Cook.
An increase in interest from domestic, Spanish visitors has also been noticeable said Costa del Sol travel agents spokesman Pedro Garcia, with the increases in Spanish tourism playing a larger role than a major revival of foreign visitors in the regions recovery.
Tourism officials agree that visitor numbers will stay up through September, with the Junta de Andalucia predicting a 1.7 per cent rate of growth in the region, and the Costa del Sol tourist board expecting a three per cent boost.
Time for Tellytubbies?
The builder calls this house ‘un capricho’, ‘una cosa caprichosa’ which translates to ‘a whim’ or ‘a whimsical thing’. Whether one interprets that as quirky, peculiar, whacky, funky or comical is irrelevant. This home is the collector’s item of the real estate world. Something you buy because you fall in love with it not because it is highly practical and functional. ‘Un capricho’ is certainly a perfect description of a home that is without doubt the most fantastical on the whole of the Costa del Sol.
It looks like a property commissioned by Fred Flintstone on behalf of the Teletubbies using the services of a stoned architect, but by golly does it work. Split into two, the main home with three bedrooms and a separate guest home with two bedrooms with the pool nestled in between; this curvy, childlike palace would be great for two families to purchase and share. Resting on a hilltop just outside the real-Spain village of Monda, just 25 minutes from Marbella, this crazy creation is surrounded by the most peaceful and stunning countryside. Gnarled trees laden with tasty olives, orchards of bright oranges set against a majestic mountain backdrop. Andalucian ‘campo’ at its best.
Aside from its head-turning good looks, the home also boasts the fact that it is absolutely not ready to move into. The builder has kindly left matters of taste up to the eventual occupant. Kitchens, bathrooms, tiling, flooring, even the exterior paintwork can all be chosen so, when finished, the home will fit like a glove. Add an estimated 100.000 euros to the asking price of 582.000 euros for these works, including landscaping, and you’ll have your own tailor-made frivolous folly. And with over 13.000m² of land, there’s plenty of room for pool parties, barbecues, lazing in hammocks and of course Fred, Wilma, Pebbles, Tinky Winky, Dipsy, La La and Po.
Bedrooms – five
Bathrooms – three
Plot size – 13.160m²
Build size – 295m²
Price – 582.000 euros
For further information please contact Marbella Residences
email info@marbellaresidences.com
web www.marbellaresidences.com
It's a matrix revolution
Lucia Adams of The Times says a research data-cruncher could save investors from expensive errors.
Whether it’s for pure investment or pure pleasure, most buyers want their overseas property purchase to be a canny move: unearthing that hidden enclave that will produce Jack and the Beanstalk house price growth, or finding a place where there is a steady stream of tenants and fat rental returns.
But the problem for any buyer venturing overseas is that understanding everything from the buying process to what is happening to prices and rents can be difficult. Legal and tax rules have caveat after caveat and buyers are faced with promises of wildly alluring rental returns and maddeningly varied accounts of house price growth. How do you know whether your overseas bolt hole will one day contribute to your pension or end up obliterating it? According to a poll of 700 overseas owners, which is due to be released on Monday, many overseas investors are finding the going for holiday lets tougher than expected. More than half the respondents in the Overseas Property Owners’ Survey have properties in Spain, a third in Florida, and the rest are spread between traditional destinations, such as France and Portugal, and less usual ones. One unifying factor is that most of them bought with holiday lets in mind, but as the graph below shows, almost a third of owners are unsatisfied with their level of bookings over the past year. About a third of respondents just broke even, about a third made a profit and the rest made a loss. Low occupancy levels may not be a big worry for those who see income from their holiday home as a bonus, but are disastrous for those who rely on the income to cover costs.
But help is at hand. The residential research team at Knight Frank are addressing some of the burning questions on investors’ minds. They have designed a matrix that takes account of key factors that affect a country’s prospects and attractiveness for the British buyer. Digesting data feeds from 700 information sources on everything from tourism trends, the economic outlook, political stability, market transparency and taxation, it chugs away keeping up to the minute with the latest hotspots in the overseas property market. Although the matrix is highly sophisticated — it was originally designed for the use of big financial institutions — Liam Bailey, of Knight Frank, feels that overseas buyers who want to profit from their investment would do well to learn from the model. He says: “Big investors are taking this incredibly seriously — ploughing quite a bit of money into research. If this is the amount of work these guys are doing to try to understand the market, think how much an individual purchaser needs to do. Those people who are going to make it work are those who are going to invest time into the research.”
A good place for buyers to start is to think carefully about their objectives. “If it is to make money from investment property, you’ve got what you might call business lets where you are looking to local employed people for renting; and then you’ve got the holiday-let scenario. Things differ in each country — how you let property and how you get into the market.” He says buyers should also consider the ease of getting in, and out, of foreign markets: “
How easy is it to get title to property, how easy is it to get rid of it? The key entry and exit point in the investment is fundamental to realise your gain,” he says. He advises buyers to keep doing their homework: “Look at the business pages. Take an interest in how countries perform. As places become successful, they become more wealthy and encourage job creation, which, if you buy a place that is going to let to local people, will benefit you directly. For the tourist market, keep an eye on where new airports are opening and which places are opening up.”
So, where does the Knight Frank matrix tip? Where can you find a stable political outlook with an economy that may be about to turn the corner? A place where rental returns are better than at home and where house prices are perceived to be undervalued and set to rise? Well, the answer is not some far-flung place no one has ever heard of. No. It’s Bavaria.
Knight Frank, 0113-297 1950, www.knightfrank.com; www.iposurvey.co.uk
Blue Heaven go shopping for a new boat
It has often been said that the Costa del Sol is a hotbed for new business initiatives and to prove it, Blue Heaven Yacht Club, based in Marbella, has gained so many members in such a short period of time that they have had to go shopping for a new yacht in order to accommodate them all.
Mike Cohen, Director of Blue Heaven Yachts, comments, “We officially launched the concept in May of this year as an excellent value alternative to ownership and yacht charter. Blue Heaven members gain access to one of our brand new yachts for 30 days per year and once paid-up, don’t have to put their hands in their pockets again for mooring, insurance, maintenance, anti-fouling and so on, we take care of all of that. We expected success as membership is cost-effective and immensely enjoyable; however signing up an incredible 11 members in less than four months came in way above our target for that period. As a result we’ve just taken delivery of a Fairline Targa 40 to add to our existing Fairline Phantom 40 in order to keep our promise of just ten members per yacht.”
Blue Heaven yachts are all moored in the glitzy marina of Puerto Banús and each member gets a coveted port pass for the car on their sailing days. The entry fee for Blue Heaven also includes a four day training course leading to RYA day skipper and ICC certification qualifications, so not only can you have your boat, but you can park it too.
The yachts:
The Fairline Phantom 40ft flybridge cruiser has been designed for adventure and exploration in the utmost of luxury. It provides solid, sea-keeping qualities, refined comfort and would make a perfect live-aboard boat. Fine woods and high quality fabrics are used throughout.
4 – 6 berths
Speed up to 30 knots
The Fairline Targa 40ft open-cockpit cruiser has a sleek athletic shape that cuts effortlessly through even the heaviest of waves. All creature comforts and equipment are on-board from a well-equipped galley to upholstered sun pads and an integral RIB garage.
4 – 6 berths
Speed up to 39 knots
Prices:
One-off entry fee including four day training course – £1.500 (GBP)
Silver membership - £15.000 (GBP) per year (open cockpit)
Gold membership - £21.000 (GBP) per year (flybridge)
for further information contact:
mike@blueheavenyachts.co.uk or www.blueheavenyachts.co.uk
or telephone UK 00 44 161 202 0077 Spain 00 34 952 929 194
Spanish Property Price Myth
Rather than Spanish property losing value, the first quarter of 2005 saw price rises of 4.2 percent, and appreciation of approximately 25 to 30 percent in certain areas (source: Spanish Red Guide 2006). This is supported by recent figures published by the largest independent Spanish property portal, Kyero, which indicate that Spain continues to be a growing market.
Martin Dell, Managing Director of Kyero, believes that recent claims of a price crash are inaccurate: "My impression is that it's primarily properties at the very top end of the market that are experiencing slight price erosion, most notably in some of Spain's more developed areas. That's not the same thing at all as a general slump in the price of all Spanish property."
The statistics compiled by Kyero support the case for there being little evidence of a general price decline. While the Costa Blanca has seen prices for a four-bedroom property decrease by 5.8 percent to 356,000 Euros since June 2005, prices in the Costa del Sol have remained constant. Canary Island properties have seen increases of 60,000 Euros, or 14.9 percent, for four-bedroom homes.
Similarly, prices in Spain's less-developed regions remain steady, and have risen in many instances. The price of a two-bedroom property in Tarragona has increased by 18.7 percent from 150,000 Euros to 178,000 Euros. Similarly, a two-bed property in the up-and-coming Costa del Azahar has appreciated by 30,000 Euros (20.3 percent) since June. Martin Dell says: "Buyers are always looking outside of the more developed areas in search of a bargain, and it is in these areas that significant growth in property prices is evident. Even so, prices in the old favourites remain steady."
As well as providing free downloads of the price reports, Kyero's website also details almost 60,000 properties for sale and to rent from 400 agents throughout Spain. Each time they display a property, Kyero also show a number of average price calculations to enable the visitor to make a quick and easy price check.
The statistics published by Kyero strongly indicate that Spanish property is still accruing in value, albeit at a slower rate compared to previous years. As Martin Dell says: "These reports enable purchasers to make better-informed decisions and also serve to demonstrate that the market remains healthy, and still offers good investment potential."
Visit the Kyero web site for free download of the price guides and price trend reports.
Designed to service the needs of English-speaking property seekers, Kyero is the largest collection of thousands of Spanish properties for sale and to rent from hundreds of independent estate agents throughout Spain.
Spain grows old gracefully
A few years ago one of the main problems of small villages in Spain was the ageing of the population. Young couples went off to the cities in search of greater opportunities and the elderly stayed behind. Nowadays this phenomenon is no longer exclusive to villages : fewer babies are born and the elderly live much longer than before. Moreover, Spain in general and the province of Malaga in particular, is extremely inviting for senior citizens from abroad in search of the ideal spot where to spend their last years.
The latest data on the population of the province of Malaga confirm that the Costa del Sol has become the favourite retirement home of third age Europeans – not just for a second home but to live for most of the year – and this means that the number of octogenarians has shot up.
In just a decade the number of over eighties has risen by 50 per cent.
According to the National Institute of Statistics, there are currently 43,400 people in that age group in the province. Of that number 5,000 are foreigners – double the number there were ten years ago.
Sur in English (The number of over eighties in the province of Malaga has risen with the influx of foreigners ; 08/09/2005) reports that the vast majority are from the United Kingdom, followed by Germany, Denmark and Holland.
The increase in the population of elderly people – both Spaniards and foreigners – is putting pressure on the health services, which are not equipped to care for so many senior citizens.
The situation is further aggravated by foreigners with a second home in the province taking advantage of their stay here to receive free medical treatment, as guaranteed under an EU agreement.
In addition to saturating the health services the growing number of elderly people has led to a shortage of places in old people's homes.
Faced with a shortage of public resources and wishing to maintain their independence, foreigners on the whole opt to live on luxury developments on the coast with a wide range of leisure facilities on hand, and above all medical care.
www.surinenglish.com
Most unaware of property pension reform
Most people are unaware of pension reforms that will allow people to invest their pension in residential property, new research shows.
New rules allowing people to buy residential property as part of their pension plan come into force on April 6th next year - so-called "A-Day".
But research by IFA Promotion reveals that the majority of the public - 84 per cent - do not know what A-Day is.
Only one person in six identified the correct A-Day definition - 'a day when annuity and pension changes come in' - when asked to pick from a choice of five that also included Armistice Day, A-level results day and Armageddon.
The survey also reveals that two-thirds of those who are aware of the forthcoming pensions changes have no intention of reviewing their pensions arrangements before A-Day.
IFA Promotion's chief executive David Elms said: "This simple survey makes a forcible point: most people don't know pension reform is even happening, let alone what it might mean for them. As a result, millions could lose out by not reviewing their arrangements to take advantage of the changes."
Under the reforms, people with a self-invested pension plan (SIPP) will be able to invest in residential property both in the UK and overseas - tax-free.
Some experts are predicting that the number of people coming to the property market via pension funds could boost house prices by up to 15 per cent through increased competition for properties.
Nick Clark, managing director of the Property Investor and Homebuyer Show said: "This will benefit existing homeowners and property investors who could see their buy-to-let returns substantially increase as the market booms."
But given the potential complications involved, those considering investing in property as part of a SIPPs pension are being urged to make arrangements well before A-Day.
Mr Elms added: "While the changes are aimed at simplifying matters in the long-run, the immediate issue of how they affect each individual's current provision is not a simple one.
"An IFA who focuses on retirement saving advice is best placed to help you understand what steps you might need to take running up to April 6th 2006 and also how you might be able to take advantage of the new rules."
See IFA Promotion's interactive guide www.takepensionaction.co.uk for more information.
Head for the hills in search of a bargain
ALTHOUGH cheaper flights have opened up the holiday world for British tourists, Spain and France remain the most popular destinations - and still dominate the market for buying property abroad.
The latest figures show Britons own 69,284 properties in Spain, worth £7.6 billion. France is not far behind, with 51,322 properties worth £5.6 billion. Although other countries are slowly catching up, the next highest number can be found in Portugal, with just over 5,000 British-owned properties, then Italy with 2,566.
Peter Esden, a partner in John Howell & Co International Solicitors, who deal with properties in Spain, France, Italy and Portugal, says: "France and Spain are established markets for people from the UK to buy in, and that gives you confidence. Many of us have been on holiday in Spain or France and have some understanding of country and culture. They feel comfortable there.
"The system of buying is also a well-trodden path in both countries, as opposed to buying in the emerging markets, where you are more of a pioneer. Those looking to buy-to-let are also encouraged by knowing that there is a demand for rental of property from holidaymakers in both France and Spain."
Esden says France and Spain are very different markets, with re-sales more popular in France than new-build. But in both countries, growing popularity has helped fuel house prices.
According to the Spanish Ministry of Housing, the average Spanish house price has risen by 89 per cent in the last four years, to around £119,519. This is most obvious in the major cities, with Madrid seeing a 117 per cent growth since 2001, taking the 2004 average price in the city to £242,680. Average prices in Barcelona have increased by 97 per cent to £226,666.
Yet buyers looking for a bargain can still find one outside Spain's largest two cities. In Valencia, which also has quality housing stock, average prices stand at a more tempting £111,340, while tourist resorts Alicante (£136,247) and Malaga (£132,715) are still reasonable.
Esden says: "In the popular areas, prices have gone up a lot in recent years. But if you start looking at less popular areas, particularly inland, there are bargains. Even in the traditionally popular areas, if you look inland, where you walk a few minutes to the coast, it is much cheaper than a beachfront apartment."
While in past years most Brits have stuck to tourist areas like Benidorm, the desire to experience 'real' Spanish culture and escape the high costs of housing has driven many buyers inland.
Areas of the Andalusia region of southern Spain have seen popularity increase dramatically, with the whitewashed towns leaving an impression on tourists and encouraging them to invest. The neighbouring historic region of Murcia is also growing in popularity and is appreciated by those looking for a place in the sun away from the crowds.
Miki Reeder, director of the Homes Overseas Exhibition, says he is a 'Spanophile' and insists there's much more to Spain than booze, Benidorm and beaches: "Spain is like a continent within a country. Inland there are lakes, national parks and wildlife not found in the rest of Europe. When meeting local people, it's like stepping back 50 years, to a time when people were really decent to each other.
"There's a real charm about the interior, while there's nothing Spanish about coastal towns now. The things people fell in love with in Spain 20 or 30 years ago still exist, but only inland."
Rustic charm is perhaps still easier to locate in France, where four in every ten international property sales are to Britons, a figure which has doubled in the past five years. Again, this has had an effect on house prices, with popular cities seeing huge increases. In Nice, the average house price is now £256,389, while in Montpellier, average prices have risen from £60,331 in 2001 to £147,291 in 2005, a 144 per cent increase.
Reeder says rather than a desire to enjoy a place in the sun or to see France as an investment, most people buy there because of a love of the culture and see it as a place they would like to retire to. He explains: "France is a huge, underpopulated country, so property and farms have been very undervalued.
"But most people buy in France because they are 'Francophiles' and love France - its culture, people, food, wine and the generally relaxed way of life. France can still represent good value for money, although that is not a key motivator.
"Investment and France do not really sit together. The key motivators are holiday homes and eventual retirements." Access has been helped by 'no-frills' cheap flights to many smaller airports across France, although the Channel Tunnel and regular ferry services remain popular.
Yet there are downsides to France - planning laws can be tough and you need to be fully aware of the complex tax system (see below), which can add substantially to costs.
Spain too is not without its pitfalls - taxes, especially income tax, have risen substantially in recent years and you should expect to pay more than at home. Beware of taxes being levied on worldwide assets, rather than just on the value of a property in Spain.
There is also a specific property tax - Impuesto sobre Bienes Inmuebles (IBI) - which varies widely between both areas and properties.
Whether investing in France or Spain, the message is the same - get good advice upfront and find someone to explain everything clearly to avoid nasty surprises.
WHERE TO BUY: FRANCE, SPAIN OR ITALY?
FRANCE: PROS
• High standard of living
• Stable economy
• Politically stable
• High life expectancy (79.6)
• High levels of house price growth in last four years - most regions have seen annual rises of around 12 per cent
• Large amount of British-owned properties - 40 per cent of all international sales are to UK nationals.
• Very accessible - good air and sea links, great roads
FRANCE: CONS
• Highly complex system of property taxation. If buying in France, you will need to pay: a registration tax (7.5 per cent); taxe fonciere - a tax on ownership of a property; taxe d'habitation - tax paid by the resident of a property. Wealth tax will be paid on assets if, combined, they are worth above £488,000
• Prohibitive planning laws can be a real nuisance
• Good weather not guaranteed
SPAIN: PROS
• Good weather (almost) guaranteed
• High levels of house price inflation show no signs of slowing - forecasts of continued growth
• Stable economy
• Booming tourism market means almost guaranteed demand for rental
• Many hidden gems inland, where a real taste of Spanish life can be experienced, at reasonable prices
SPAIN: CONS
• House price inflation has pushed average prices in the main tourism areas very high.
• There are a range of taxes; income tax is high and there is a specific property tax which can vary widely by region
• Coastal areas have lost their Spanish appeal due to the numbers of foreign buyers in the area
• Some areas are remote from public transport and airports - less of a problem in France
ITALY: PROS
• No inheritance tax - makes it ideal for retiring
• Law is strongly in favour of the purchaser
• Large stock of older, run-down properties at low prices
• With properties in the popular Tuscany and Umbria areas seeing high inflation, Le Marche in central, inland Italy can offer a lot to the astute buyer - it has been untouched for generations inland
• Increasing number of low-cost flights
ITALY: CONS
• Not good for investment - Italians see a property as a home for life, so low turnover tends to keep prices fairly stable
• If you're seen to be speculating on property and sell up within five years, you will suffer extra taxation
• Higher registration tax for foreign buyers
• The entire purchasing process is very protracted and can often take as long as six months
Your palace or mine?
Granada, home to the Alhambra, is the place to pick up a bargain, reports Nicola Venning of The Times
IF YOU like to ski in the morning, snooze on a beach in the afternoon and squeeze in a spot of shopping before supper, there is a place you can do so, all from the doorstep of a smart apartment. Granada in eastern Andalusia has it all. And not only is property still relatively affordable, but the city’s spectacular location makes for a holiday home that is eminently lettable.
Situated in the foothills of the Sierra Nevada in southern Spain, the stunning fortress city of Granada is a 40-minute motorway drive to the Costa Tropical and its beach resorts and a mere half-hour from the mountain ski centre of Pradollano, where the season runs from November to April. But the principal reason why so many tourists are drawn to Granada is because of the Alhambra, its magnificent Moorish palace.
The medieval city, surrounded by ancient walls, bustles with shops, businesses and restaurants (it is one of the few places in Spain where tapas are still free) and has a popular university. Direct flights from Gatwick (Monarch) and Stansted (Ryanair) have made it easily accessible.
So it is surprising perhaps that property prices are — for the moment — still affordable. “Property in Madrid and Barcelona is as high as London,” says Alex Radford, a property lawyer with De Cotta, McKenna and Santafé, which has offices in London and Málaga. “It is less in cities like Seville — though it is still expensive — but in places like Córdoba and Granada, there are still bargains to be had.”
Barbara Wood, of The Property Finders, says: “Granada is 25 per cent cheaper than Seville and 50 per cent less than Barcelona.”
The most attractive areas of the city are in Albaicín — the old Arab quarter — and Sacromonte — the gypsy neighbourhood. Both are charming mazes of narrow streets, medieval whitewashed townhouses (in Sacromonte some are built into old caves) and have stunning views. The cheapest flat starts at about £100,000, but for just a little bit more you can buy something special.
“A flat in Albaicín in a low-rise building with a view of the Alhambra with one-and-a-half bedrooms and a great living room would be approximately £150,000,” says Wood. “There are also some really sensational refurbished apartments on Gran Vía de Colón (the main road into the old town) for £536,000.”
Michael D’Auray, 59, and his wife Mary, 53, both former hairdressers, moved to Granada 12 years ago. “We came out for a flamenco course,” says Michael. “My wife used to dance and I play flamenco guitar and we just fell in love with the place.”
The couple bought a four-bedroom medieval townhouse with patio and terrace for £165,000 four years ago and are now selling it through Andalucía-Alpujarra estate agents for £350,000 so as to move into the neighbouring Lecrín Valley. “We do not want to be too far away, because we have many friends here.”
The D’Aurays own two other houses in the Albaicín. “One is let to an estate agent and the other has been turned into three apartments, which we let to (foreign language) students,” says Michael. “From the point of view of letting, it is very good. The rents are not high, though they are increasing, but people are scrambling to let,” he says. The couple charge roughly €550 (£390) per student per month. “A refurbished two-bedroom apartment costing €200,000 (£143,000) on a long let is roughly €700 per month,” says Nicola Collier, director of Andalucía-Alpujarra. Returns hover around 4 per cent, but if you include capital growth they can often reach more. “In the past two years there has been a minimum 50 per cent increase in property prices and that is without substantial foreign investment,” says Collier.
If you want a higher return, consider holiday lets. “There is an increasing market for short-break rentals for people who visit for two or three days to take in the Alhambra,” says Wood. “A good two-bed, well-equipped apartment, brilliantly situated, could let for between €60 and €100 per night.”
Collier thinks that returns could increase by 200 per cent. “Many people do long lets in the winter (to students or Spaniards from Madrid who block-book for the winter skiing and use the flat at weekends), and holiday lets in the summer for a minimum of €500 per week — but it is much harder work,” says Collier. Management costs are roughly €50 per changeover with a 26-week rental season.
If you simply want a holiday home with space, there are some lovely villages a 20-minute drive away. Güejar-Sierra and Pinos Genil are both popular, though quite expensive. A three-bedroom two-bathroom penthouse with terrace and glorious view in Güejar Sierra is approximately €270,000. A rundown four-bedroom house would be €130,000. Prices in Pinos Genil are only slightly less.
There are also modern developments — such as the Santa Clara golf resort (one of only two golf courses in the area), which is a ten-minute drive from the city centre. “Santa Clara is very popular as a second-home destination for Spaniards (from Madrid) and English,” says James Stewart, a negotiator with Savills, which is marketing the resort in Britain. “In the first phase 80 per cent of the villas have been sold to Spaniards and 20 per cent to English.” A three-bedroom townhouse starts at £173,000 and includes access to the gym, spas and outdoor and indoor heated swimming pools. This is important because Granada is about 550 metres (1,800ft) above sea level and can become cold in the winter; the average temperature then is 12C (53F) compared with 30C (86F) in summer.
“If you want somewhere warm and a pool, Granada is not for you,” says Barbara Wood. “It is for people who are comfortable in another culture, want to speak Spanish, enjoy wonderful food and soak up the wonderful places. Granada is unique in Europe: where else can you ski half an hour from an 1,100-year-old fortress?”
How to buy an overseas property
Catalina Stogdon's essential guide
The checklist
Before you start looking for a property, ask yourself the following questions:
1. How often do you want to use it?
2. What will its purpose be? Weekend retreat, summer holiday home, permanent or retirement home, buy-to-let investment?
3. How important is it to be able to speak the language?
4. How long should travel times be?
5. Is there a limit to lengths of stay in your country of choice?
6. Are there any dangers, such as political unrest, in the country?
7. Do you want a renovation project?
8. Do you want it to be managed in your absence and rented out?
9. And, crucially, what's your budget?
The search
Should I use foreign estate agents?
A local agent will get you a cheaper deal, but you need to speak the language. Or go for an overseas property specialist, such as The Property Finders which has English-speaking agents (01908 218753, www.thepropertyfinders.com). Prime Location (www.primelocation.com) has a strong international online database. Knight Frank (020 7629 8171, www.knightfrank.com), Hamptons International (020 7244 4740, www.hamptons.co.uk) and Savills (020 7824 9030; www.savills.com) have overseas offices in Europe.
Before you buy
Should I get a UK or foreign mortgage?
Shop around. In Europe it is cheaper to arrange it in euros. UK admin costs are small, but interest rates are higher. The minimum deposit will be about 20 per cent. If you arrange it abroad, you need a bank account in the country, which must always be in credit. Halifax (affiliated to Banco de España) offers mortgages for Spanish holiday homes (01422 333868, www.halifax.co.uk). Abbey offers loans for France (0033 320 181877, www.abbey-national.fr). Savills Private Finance (020 7877 4710, www.savills.com) advises on international mortgages. Check if there is a reliable mortgage infrastructure in your country of choice if you choose to go locally. The lending market is far less developed in Morocco and Turkey.
Do I need a survey?
Few people have a survey done, but it can be a mistake. It can cost as much to repair and rebuild abroad as in the UK. Check if you are allowed to make structural changes or additions. The Royal Institution of Chartered Surveyors has registered members overseas. Call the helpline 0870 333 1600, or e-mail contactrics@rics.org. Alternatively, contact the local government building authority. Remember standards vary widely in each country.
What about legal assistance?
Check if there is a reliable local legal system in the country. Turkey has seen a lot of foreign investment recently but administrative systems remain frail. Use English-speaking international organisations such as Europelaw, (020 7420 0400, www.europelaw.com).
Find an independent lawyer who is familiar with both the law of the country you are buying in and UK law, and who is not linked to the estate agent. Or use an English legal firm with strong international links. Dawson Solicitors (020 7421 4800, www.dawsons-legal.com) advise on international mortgages and tax issues and have overseas links to legal firms.
Tax and insurance?
Your solicitor can advise on tax issues.
Be sure to take out the right property insurance - holiday homes that will be empty over long periods need special cover. Andrew Copeland Insurance (020 8656 8435, www.andrewcopeland.co.uk) is underwritten by Lloyd's. Prices vary per region. Turkey and Morocco are not covered. Local insurers may have a better knowledge of particular problems in the region.
Making the offer
Make your offer locally through people with first-hand knowledge of the area. Big organisations charge higher prices. Be careful if you are paying cash - you could be taking a risk.
For more information: The Complete Guide to Buying Property Abroad, by Liz Hodgkinson, (£12·99, Kogan Page). Buying Property in France, by Charles Davy (£10·99, Kogan Page). The Blevins Franks Guide to Living in Spain, by Bill Blevins & David Franks (£6·99, BlevinsFranks)
Spain, new land of opportunity
“IT’S like Bognor with botox here,” said Lesley Bunce, surveying the scene on the “frontline” in Puerto Banus.
She was referring to the stream of Ferraris and Daimlers trawling along the harbour side in one of the Costa del Sol’s most famous haunts.
Bunce, 44, who runs the Blue Bar in the resort, has been in Spain for only eight months. She refers to the “frontline” not just because the bar is on the seafront, but because the constant battles against Spanish bureaucracy “make it feel like a war zone”.
Bunce, from Southampton, has just won the latest round in this war over her electricity supply. “So far we are doing well, but I would say to anyone coming out here: sort out everything before you make the move to Spain.”
She is one of the new breed of British entrepreneurs staging a quiet invasion of Spain.
John Woodward runs Voyages Orsom, which offers team-building activities and corporate entertaining on his catamaran, moored off Barcelona. His bread-and-butter are corporate clients who want to take the sea air, sip a beer and watch the sun go down behind Gaudi’s Sagrada Familia. Woodward, 49, sold his cottage in Huddersfield and found partners to invest £120,000 in the business, which, after five years, is doing well.
“Brits are coming out here and starting their own businesses because they are in a no-lose situation,” he said. “If you have an idea, the necessary skills and a lot of determination, you might as well go for it, as you have given up so much to come here anyway.”
Near Torrevieja, on the Costa Blanca, Gina Marks is filming an episode of Dream Gardens. Last year, Marks, 33, set up Sol Productions, which makes a dizzying variety of programmes, from cooking shows about how to make paella to Mr Costa Blanca, a reality-TV show. She started the television company after spotting a market to make programmes to help expats integrate.
Meanwhile, Simon Lambert, 46, relaxes on his 81ft yacht off Majorca, enjoying the fruits of 25 years spent selling villas. Lambert, managing director of Parador Properties, one of the biggest British-owned property companies in Spain, set up his first company as a teenager and has been running Parador with a partner. The company made £4 million profit last year. “I came out to Barcelona when I was only 19 and I still love Spain,” he said, “but running a business here is just as hard as anywhere else.”
WORKING IN THE SUN
Population: 40,350,000
Labour force: 19,330,000
Self-employed foreigners: 141,000 (British 21,000)
Most popular destination for foreigners: Catalonia (followed by Valencia, Andalucia)
Smart investors look for strong yields with new homes
New homes can offer property investors impressive returns as the general buy-to-let market toughens up, according to an industry expert.
Shrewd investments in the new homes market could double investors’ money over the next five years according to David Bexon, Managing Director of SmartNewHomes.com which is about to launch its dedicated investor service, Smart Investor Services at the Property Investor Show (23 to 25 September, ExCeL, London).
David Bexon comments: “Many observers may have written off the property market as not being capable of providing substantial returns now that the housing market is no longer booming. However this is simply not true. There are plenty of places where money can still be made through the property market, providing you do your research thoroughly on how and where to invest. Investors are also finding that the current balance in the market is allowing them to make better deals on purchasing with many housebuilders willing to offer competitive deals and discounts for off-plan or investment buyers.”
Full service
Smart Investor Services matches up investors with suitable developments across the UK and overseas. Properties are typically available at substantial discounts from the general market rate as the service passes on discounts secured from buying bulk and off-plan. In addition, unique partnerships with other market leaders can provide investors with expert advice on mortgages, lettings management, tax advice and currency exchange.
Overseas opportunities
Much is currently being made of the low prices offered in the former Eastern Bloc countries and the growth rates of markets like Dubai. However according to Smart Investor Services, the stability and security of more traditional markets, such as the Costa Calida in Spain and Florida in the USA, are not to be overlooked; capital growth rates of 15-20% are presently available in these areas and the extended holiday rental season, especially when the site has an integral golf course, provides an enhanced income source that is hard to beat.
On the basis that residential property is a medium to long term investment, rather than short term speculation, Smart Investor Services believes that political stability, well established processes and a mature rental market are all factors that should weigh heavily in the balance when deciding where to invest overseas.
Sunset for Spanish property dreams
A staggering 500 people a day leave the UK in search of a new beginning abroad, the majority choosing Spain for what they hope will be cheaper property and a better life.
But for some, the dream turns sour. BBC One's Real Story met one couple who sank their life savings into land which turned out to be worthless.
Alan and Jane Brian sold their home in Buckinghamshire, left their jobs and flew to Pedrera, north of Malaga, to set up a business.
They paid 114, 000 euros (£78,889) for two acres of barren wasteland where they planned to build an upmarket caravan park. Their target clients were those looking to experience the real Spain rather than an English resort in the sun.
An environmental man told us, 'Your house.....is illegal
"We were planning to have orange and lemon trees so that people could come and pick their own," said Brian.
"We got the chickens so that they could come and buy the eggs."
But cracks started to appear in their plans shortly after they had agreed to pay 78,000 euros (£53,976) to a builder for a new house on the land.
Local police visited to request planning permission papers - but the builders assured the Brians that everything was fine so they paid 68,000 euros (£47,054) for the work done so far.
They were not given receipts or proof of planning permission.
High speed train
Just as the cement was drying, they discovered their new house was partly built on someone else's land - and the owners wanted it back.
Faced with having to demolish a metre of the house or pay the money, they agreed instead to give up some of their land as compensation.
But the battle was not over. The new property was also built on the access road to a neighbouring olive grove to which four people had right of way.
Passing tractors scraped the Brians' pool.
I think the major difficulty people have stems from not doing their homework before they come out
Meanwhile, a new high speed train line was being built just over the brow of the hill.
Then, after heavy rainfall, it suddenly became clear there was no chance of the house ever getting planning permission.
It was built on a flood plain.
"An environmental man told us, 'Your house is too close to the river - it is illegal,'" recalled Alan.
"We were told the river does burst its banks and has been as high as 3 to 4 foot - which is just under the windowsills of the house."
The Brians' story is a suprisingly common one in Southern Spain.
According to the Head of Municipal Communities of Costa Del Sol, Juan Sanchez, as many as 50,000 illegal homes have been built there in recent years by developers or individuals who have not sought permission.
The British consul in Alicante, Russell Thompson, has 150 active cases where people have been conned or have not complied with Spanish law.
"I think the major difficulty people have stems from not doing their homework before they come out.
"We have a very good website and there are others available. People have no excuse for not doing their homework."
Prosecution warning
In Spain, it is up to the homeowner to ask the town hall if a problem exists.
The Mayor of Pedrera told Real Story that the Brains' builder was respected locally - and that it was up to them to check for planning permission.
The advice, says Alan, has come too late.
"We're told that we can be prosecuted and told to leave because the site isn't suitable for a permanent dwelling.
"So the land that we've spent our life savings on is now a complete farce."
Spain without pain
THE promise of sun, sea and sangria is luring thousands of Brits to buy homes in Spain. Official statistics show 23,000 second homes were bought overseas in 2004 bringing the total to about 300,000. Spain now accounts for just over 100,000 of these.
'There are obvious reasons why Spain is so popular,' says the head of Halifax's European operations. 'The climate is ideal, the country openly welcomes English speakers and the emergence of low-cost flights has made travelling to Spain so cheap.'
TV shows such as Channel 4's A Place in the Sun have also boosted the popularity of Spain. But while these programmes show how attractive the properties are, they don't explain the ins and outs of purchasing.
Finding a property today is simple, with numerous reputable agencies set up to cater for the market. Also, visiting local agents while on holiday will give you an idea of what you can get for your money.
What is less simple is the buying process. Although property is generally cheaper than the UK, the proportion of costs associated with purchasing a home is higher. Buyers can expect to pay between 10% and 15% of a property's value in fees.
A tax of 7% is payable on the declared value of the property, while you also have to pay a Plus Valia - a type of capital gains tax levied by the local authority on the increased value of the plot since it was last sold.
Legal and connection fees are much the same, but there are annual fees that you should consider, such as the Contribucion Urbana, which is akin to council tax, plus fees relating to the upkeep of the property.
Lenders will also demand a larger deposit - typically around 30% - than if you were buying in the UK. Purchasers have the choice of a Spanish or UK mortgage provider, borrowing in sterling or euros and whether to have a fixed or variable rate.
Ray Boulger, technical director with mortgage broker Charcol, believes the way to mitigate risk is to take out the mortgage in euros.
A handful of UK lenders, including the Halifax and Norwich & Peterborough, offer mortgage products aimed at the Spanish market, but specialist brokers can also arrange mortgages with local lenders.
But there are pitfalls and the influx of Brits buying homes has attracted con merchants. If you are planning to build your home make sure you thoroughly vet builders and the organisation selling you the land. Earlier this year a British couple were told to pull down their £300,000 Spanish villa after building on land they did not know was reserved for agricultural use.
Would-be buyers are advised to avoid pressure selling; to ensure the price of the property is fixed at the time of buying and, if the property is new, to make sure the necessary builder guarantees are in place.
Another factor worth considering is the tax you pay when you come to sell. UK residents selling a second home in Spain are charged 35% in CGT. Also, if you die in Spain, 'succession tax' will be levied on the property and your beneficiaries will be liable. The UK taxman is also likely to keep a close eye on the property for both CGT and inheritance tax purposes.
The good news for those retiring to the country is that the terms of your pension will be the same as in the UK. All you have to do is register with The Pension Service which is part of the Department for Work and Pensions.
Property to provide pension boost
Britons are ready to invest billions of pounds after pension changes make it easier to add residential property to their portfolios.
From April 6th next year (A-Day) new opportunities for investment could boost both the ailing property market and address the pensions gap, the Property Investor Show finds.
On A-Day new rules come into force making it easier to buy property as part of a self-invested pension plan (SIPP), currently a SIPP can only be used to invest in commercial property (with a few small exceptions), but after April 6th residential property, both in the UK and overseas, can be invested with accompanying tax relief.
A survey of property experts reveals that over £6.5 billion is set to flow into property through SIPPs in the first year after the changes.
This could increase the UK's annual private pension contribution by seven per cent.
"The changes on A-Day are going to give a lot more flexibility to pension investment," said Nick Clark, managing director of the Property Investor Show.
"The housing market has long been attractive to investors and being able to use SIPPs to buy property is likely to encourage more people to look at investing more substantially in their pensions, and benefit more from doing so," he added.
"In particular, the ability to invest a pension in overseas property is going to encourage many people to take advantage of some of the countries where property prices are still seeing rapid growth, which could substantially boost their funds. Additionally, with the flexibility to gear properties in a SIPP, investors will have more opportunities to maximise their returns."
But not everyone is as enthusiastic about the possibilities that the new rules present.
Stephen Harper, managing director of pension and property specialists Millfield Fountain, commented: "A-Day brings with it massive potential for the housing market through the huge amounts of money it will bring into the market, both in the UK and overseas. However, as with any investment, it is essential that investors do their research and make sure they are dealing with an expert in pensions as well as property.
"SIPPs are the biggest bandwagon in the property and personal finance sectors of the moment, and this inevitably leads to a lot of people trying to get involved who don't fully understand the area.
"Buying property with a SIPP is not straight forward, particularly when buying international property where there are separate tax and legal issues to take care of.
"For example, although SIPPs are tax-free, many countries do not recognise the exemption status of trusts and so you could still be liable for tax. However these problems are solvable to a degree, providing you use an absolute expert."
Icelandic moguls invest in Spain
Iceland's highest paid CEO, Robert Wessman of Actavis, and Iceland's first dollar billionaire, Björgólfur Thor Björgólfsson, have jointly invested in a two million square meter property in the vicinity of Murica on the coast of southeastern Spain.
Morgunbladid reports that the value of the land is ISK 8 billion (USD 125). There they plan to build vacation homes for affluent individuals.
The owners plan to build a hotel, 2500 apartments and houses as well as sports facilities, golf courses and an outdoor area on the lot. According to Morgunbladid the investors are working closely with the government and advisers in Spain. The Spanish property specialist IREA and London-based architect firm RTKL are the main advisers.
A holding company, AB Capital, has been formed around the project. Investment company Burdaras, of which Björgólfur Thor is chairman, owns 20% of AB Capital while Björgólfur and Robert own the remaining 80%. Debt finacing was provided by Íslandsbanki, Straumur Investment Bank and Landsbankinn. Thor Kristjansson is the chairman of AB Capital. According to Morgunbladid the building project will cost ISK 9.5 billion.
Robert Wessman is the CEO of generic drug company Actavis.
Britons snap up holiday homes
THE number of families with a second home has surged by 40% in a decade - with the main boom seen in purchases overseas.
Some 393,000 Britons now have a second property, up from around 280,000 ten years ago.
The figures reveal a huge increase in the desire for a holiday home abroad. Foreign purchases rose 85% over the period - up from 89,000 to 165,000.
The total for second homes in Britain went up by a more modest 37,000 - 20% - to 228,000. Abroad, Spain is the most popular place for Britons to buy, ahead of France, Portugal and Italy. The US, particularly Florida, is also becoming popular.
The figures came from the Nationwide building society, which suggested second homes were often bought in a place that had been a favourite holiday destination. It said second-home hotspots in the UK, from idyllic villages to the Lake District and seaside resorts, have generally seen higher than average house price rises.
The society added: 'Whilst overseas holidays are popular, there is something for everyone within and around our shores. This has encouraged many to holiday here and even reach for a second home in their favourite part of the country.'
It pointed to recent research from Surrey University showing several UK beaches on the list of the world's best. St Ives in Cornwall came fourth, above Rio de Janeiro's Copacabana, while St David's, on the Pembrokeshire coast, was placed 18th, ahead of many Caribbean beaches.
In the UK, the South-West has 22% of second homes, some 19% are in the South-East and a further 20% are spread across the North-East, North-West, Yorkshire and Humberside.
Nationwide said there is an increasing number of second homes in cities. This suggests families are opting to have their main home in a cheaper area with good schools and a better quality of life, coupled with a city 'crash pad'.
The phenomenon of buying a second home overseas has been fuelled by TV programmes such as Channel 4's A Place in the Sun suggesting that fantastic properties can be bought at prices which are low by British standards.
Properties needing refurbishment, but with a good amount of land, can be bought in Spain and France for as little as £50,000-£60,000.
For £170,000, it is possible to get a three-bedroom property with two bathrooms, roof terraces and sea views on Spain's Costa Blanca. A similar budget would buy a home with four bedrooms, three bathrooms, a games room and a heated pool at Hampton Lakes in the Davenport region of Orlando, Florida.
The boom in low-cost airlines flying to regional European airports has also contributed to the second-home rush, driving up property prices around these hubs.
Many buyers are turning to second homes as an investment as well as an opportunity to escape. The poor performance of the stock market has seen people switching to property both in this country and overseas to build a nest egg.
Some 40% of all new homes built on the Spanish Costas last year went to British buyers. The clamour for properties has driven up prices by 20% and more. A similar pattern has been seen in France, particularly in towns close to the airports serviced by budget airlines.
PETER Jacob and his wife Caroline bought their second home on Spain's Costa Calida for less than £69,000 in December 1999.
The detached four-bedroom villa, which has a swimming pool, has more than doubled in value since then. But a similar-sized holiday home in Britain would still cost considerably more.
Mr Jacob, a 55-year-old estate agent, and his wife, from Chelmsford, Essex, say they have never been happier since buying the house in Mazarron. Mrs Jacob, 53, said: 'We live half an hour from Stansted airport and Mazarron is an hour from both Murcia airport and Alicante.
'We go out about six times a year but we also let friends and family use it. It is like a home from home. We have the best time with our children and grandchildren.
'We go to the beach in the day, but in the evening we sit around the pool and have a barbecue. Peter is still a workaholic when in the UK, but when we are in Spain he's a different person.'
She added: 'Buying the property was a very easy process. We were recommended a local Swedish lawyer who spoke excellent English and Spanish and she helped us.'
Spain is top spot for holidaymakers
Holidaymakers from Coventry and Warwickshire are having lots of fun in the Spanish sun according to new figures from Coventry Airport.
The resort of Malaga, on the Costa Del Sol, and Palma in Majorca have been revealed as the most popular destinations for sunseekers flying out of the Baginton site.
Low-cost airline Thomsonfly will be taking some of the millions of British tourists abroad this summer.
Nearly half a million have booked flights this year with the Tui-owned airline and the start of the school summer holidays has seen a surge in the numbers jetting off to the sun.
Thomsonfly are also getting closer to celebrating their millionth passenger from Coventry.
A new passenger survey has shown the majority of passengers are travelling for a leisure break but 20 per cent are flying to visit friends and relatives.
And the most popular business routes are Paris, Amsterdam and Jersey.
The survey also shows three of four passengers rates their flight as excellent and 79 per cent thought Thomsonfly was good value for money.
Des O'Connor saved my life!
Harbour fall Scot pulled to safety by crooner
CHAT show host Des O' Connor rescued a drowning Scots holidaymaker who had fallen into the sea in Spain.
The tipsy tourist was stunned when he realised it was the veteran crooner dragging him to safety at Puerto Banus harbour.
Des, 73, who was looking at properties in the Marbella area, had left a bar with PR guru pal Max Clifford when they heard cries for help.
The pair rushed to the aid of the man, who was in his 40s, hauling him to shore.
Last night, Des said that as the man was about to thank them, he looked upand exclaimed: ' You're Des O' Connor!' After drying off, the Scot - who said his name was Billy - added: 'My pals are never going to believe THIS.'
Des said: 'There was nothing remotely heroic about it.'
Des and Max left the resort's trendy piano bar The Edge at 3am and heard cries from the waterfront. Max said' There was this guy, clinging onto a boat, screaming that he couldn't swim. We grabbed a life buoy and threw it to him.
' He'd have been in real trouble if we hadn't come along.'
Buying a home abroad
Millions of Britons dream of owning a home abroad. But just how do you raise the money and what are the pitfalls along the way? Our guide to buying your foreign home answers your questions.
Finding a home
Many people spot something while they are on holiday. Otherwise, several magazines list foreign properties for sale, including Homes Overseas, Foreign Property News and Exchange & Mart. The internet is probably the best search tool at your disposal.
Raising the money
If you can buy with cash, do it. You will own the property outright without increasing your mortgage debt. This will mean fewer bills on your new property. If you don't have the cash, there are two ways to pay for a foreign home. You can extend your main mortgage, or you can get a new mortgage for the property. Extending your mortgage is presently a cheap way of raising cash, but you may not be able to get a remortgage for more than 75% of the second property's price. Remember, you risk losing both homes if you cannot keep up payments.
The other option is to take out a second mortgage on your holiday home. Several companies offer mortgages overseas, including Halifax, Abbey, which runs an overseas property service, Norwich & Peterborough building society and Barclays, which specialises in the French market.
You could also consider a mortgage in the local currency, but you need to be aware of all the risks. Taking out a foreign currency mortgage could be dangerous. The pound can move against the euro - if it weakens, your payments will increase. Properties generally have continued to rise in price this year (2004) as the pound has weakened against the euro. On the other hand if you are buying property in another country your home will be valued in that currency so it could make more sense to take out a mortgage in that currency. Abbey and Barclays both offer euro mortgages but the drawback is that you have to be paid in euros to be eligible.
Timescale
It depends on the country you are buying in. Buy property in France and it could take up to 20 weeks to complete the transaction. In Spain, Italy, Greece and Portugal it will average between 12 to 18 weeks. Be aware the longer it takes to complete the transaction the more at risk you are from rate fluctuations, which could add thousands to the real cost of the property in the time it takes to complete.
You can, however, protect yourself from currency fluctuations. One option is to arrange what is called a spot transaction. Basically an instant transaction, it allows you (the buyer) to transfer funds 'on the spot' to the agent or vendor abroad, in line with the exchange rate at that time.
You could also arrange a forward transaction. This is when you agree to fix the exchange rate at the current level for an agreed completion date up to 12 months in the future.
Halifax will arrange both forward and spot transactions to other banks for a charge. Transferrals to the Spanish arm of Halifax are free. Barclays will arrange forward transactions for existing customers, providing you meet certain conditions, again for a charge. Abbey National offers a telegraphic transfer service which takes between two to five days in Europe. There is a charge to send a sterling or foreign currency transfer.
Currencies Direct specialise in helping people who are buying property abroad and can offer spot and forward transactions where they fix a rate for up to two years. There is a flat fee and the exchange rate will also include a small weighting for profit but there are no charges on transfers over £5,000. Contact 020 7813 0332. Travelex has an information pack on how to carry out a spot or forward transaction up to 12 months in advance. Contact 0870 010 0095.
Language barriers
You will need a reputable solicitor and valuer who is local. Ask your bank or mortgage lender, they should be able to help you find these professionals who also speak English if you don't speak the local language. The Federation of Overseas Property Developers, Agents and Consultants has a list of lawyers who specialise in buying abroad as does the Law Society. Beware that in some countries lawyers act for you and the seller, so make sure you're getting independent advice. Talk to a British lawyer before you sign anything, and remember, you often cannot pull out of an agreed offer as you can in England and Wales.
The costs
These will probably be more than you thought. Britain has some of the cheapest homebuying costs in Europe. For example, French legal fees are high - ranging between 10% and 15% of the house price. There is also a regional tax and an occupancy tax if you live there more than eight months a year.
In Spain, valuation will costs you, and loans must be signed by the public notary. Taxes and legal fees will normally amount to 8%-10% of the property value.
In Italy, costs are between 8% and 12%. In Bulgaria, which is growing in popularity with buyers, there is a notary tax and local taxes to pay, which may add a total 3% to the sale price. Solicitors can cost a further 3%, while setting up a company to make the purchase will cost £1,000 or more.
In Florida, you need to allow 4% of the price of your holiday home to cover stamp duty*, local taxes, legal fees and set-up costs.
In Cyrpus, you face stamp duty at the rate of 0.15% on £100,000 or less and then 0.2%. There is also a transfer fee of 5% on homes of £50,000 to £100,000 and then 8% after that. There is also an annual property tax of up to 3.5%.
The buying process is not the end of the expense. Check carefully what other local taxes you must pay, and be aware that in many blocks of flats you have to pay a service charge. You'll need to open a local bank account, as services such as water and electricity may connect you only if you sign a direct debit. Local bills must be paid in local currency - this costs money to buy and in some cases foreign banks charge extra for transactions.
Tax implications
If you rent out your property abroad income will have to be declared to the British taxman. Check out the tax laws of the country you're buying in. There may be implications if you rent or sell the house. Many countries have reciprocal tax agreements with the UK so that you don't end up paying tax twice. You also need to make a will, as local inheritance tax laws may also come into play. For example, in France if there is no will a property cannot be passed solely to a spouse, but must be shared among any children.
You should also consider the extra insurance costs. There are a number of specialist insurers who cater for this. But you can also ask your own home insurer if they offer a deal to insure a property abroad.
The pitfalls
Don't get carried away with the holiday atmosphere and think very carefully before committing. Most homes look nice in the warmth and sun. Make a return trip out of season to make sure you still like it and that there is the same level of local services - many resorts close up for the winter. If you are buying a ski chalet, check what happens once the ski season ends. Then ask yourself these questions:
• If you buy somewhere that needs renovation, do you really want to spend your holidays doing DIY or negotiating with local builders?
• If something goes wrong, can you drop everything to sort it out?
• Do you really want to go to the same place every year?
• Can you afford the expenses to get to your holiday home? Remember budget airline flights may not remain at rock bottom cost forever.
Property prices
Remember that, like in the UK, the value of your home may rise or fall. Britons have a peculiar obsession with property prices, and wrongly expect them to rise above inflation indefinitely. You might find your holiday home will not rise in value and could be difficult to sell. Always bear this in mind.
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