Don't let your holiday-home plans come tumbling down

Hundreds of holidaymakers return home with dreams of buying a property abroad. Kevin Rose investigates the perils and pitfalls of doing so.

Saturday, 13 August 2011

"………We've called on a panel of experts to explain key issues to bear in mind when buying a home overseas.

Use your head

It's vital that would-be buyers think through the idea thoroughly before taking any action, says Louise Reynolds, who runs the independent property agency Property Venture, based in Weybridge, Surrey. "Generally, people can come to such a big decision while they are still in holiday mode and not always think things through properly. Some, for example, may have set their heart on a rural, peaceful setting, but then when they decide they want some income from the property and decide to let it out, their choice of remote location might not be the holiday renter's dream and it might end up difficult to let. So it is best to try to think things through up front." ........

“Check out the developer

If you are considering investing in a development, whether completed or "off-plan" before the property has been built, it is important to establish that the developer is properly financed.

Louise Reynolds says it is vital to be wary of start-up developers. "Without a track record, it is difficult to know that they are who they claim to be, that the property is theirs to sell, or even that they will finish the property to the standards that you expect," she says.

"This has been an issue in Spain for lots of buyers of off-plan property. They have parted with deposits only to find that a developer has folded, as a result of the global economic crisis, before completing on the property."

As part of the buying process in Spain, it is a legal requirement to have an insurance policy or a bank guarantee for a deposit on an off-plan property. This is designed to protect the off-plan buyer and the deposits paid.

"It is the responsibility of banks to ensure deposit amounts need to be placed in special accounts, separate from any other kind of funds belonging to the developer or promoter," explains Ms Reynolds. "It is in effect a developer's Escrow account, controlled by the bank. So make sure you have a bank guarantee." “................

“One of the biggest advantages of taking out an overseas mortgage is that the lender does its own checks on the property, ensuring that a proper legal title exists, that the property is registered in the buyer's name, and that a valuation of the property takes place. That said, Ms Reynolds recommends getting your lawyer to double-check that you are buying a property with the correct title, and that you are being registered as the official owner. "There are cases in Cyprus where buyers have found it can take a long while to get their ownership registered properly, and this can leave buyers vulnerable," she warns.

But there are ways to reduce the risk of title deeds taking a while to be registered in the buyer's name, Ms Reynolds adds. "For example, ensure that your legal adviser conducts a full search at a land registry office to make sure the title is clean and that no existing mortgages exist on the property or land. This will also disclose if any other previous contract of sale has been lodged." Another reason not to use the developer's own lawyer is that it could be in the developer's interest to delay the whole registration process, she adds. “..............

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own, because they offer grounded common-sense advice. Their focus is mainly: Spain property, Turkey property, Poland property, Morocco property, Cyprus property, Bulgaria property and Montenegro property. They are overseas members of the professional body: National Association of Estate Agents, the NAEA. This means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.