Buying or renting a property abroad can be a minefield if you don’t understand the legal system and housing market. Here, property experts offer practical steps to make the process easier.

If you’re thinking of buying property abroad, then you are in good company. An estimated one million British citizens already own a property overseas1 and many more are renting homes around the world. Before starting the process, it’s important to bear in mind that the legal systems and property market may differ significantly from those in the UK. Here we highlight some of the key considerations.

1. How and where can I find properties to buy or rent abroad?

If you’re trying to find a property to buy or rent abroad, there are two main options. Either track down an agent based in the country you want to move to or use a UK one that specialises in that market.

Andy Bridge, Managing Director of APlaceInTheSun.com, says: “If you want to see the whole market, then there are several multi-country property portals, such as RightmoveOverseas.com, as well as ours. Alternatively, you can search on a country-specific portal, such as Kyero.com in Spain.

“You’ll be put in contact directly with the in-country agent who will then send further details and coordinate a visit to the property.”

More information on estate agents overseas

2. How does buying property abroad differ from the UK?

Remember that the conveyancing process in most other countries is significantly different to that in the UK. That’s why it’s important to have an expert to help you. For example, much of Europe uses the notarial system. A notary is a government official who processes the property sale, negotiations and ownership transfer. This is quite different from practice in the UK, where each party has their own solicitor to handle the sale.

Peter Esders of overseas property lawyers Judicare, says: “Many places don’t have leasehold other than for commercial property. So, if you buy an apartment – normally leasehold in the UK – you’ll buy part of the freehold instead. This means you’ll own a share in the common areas of the property – much like ‘commonhold’ in the UK.”

More advice on buying property abroad

3. How do you choose a legal representative when buying property abroad?

Make sure you find someone who is independent and not acting for or recommended by the seller, developer or estate agent. They should understand the law of the country you are buying in, as well as the law of your own. Peter Esders of Judicare, says: “For example, literal translations from the local language may not reflect the actual situation and could mislead you. Your legal representative also needs to be familiar with ‘foreign’ buyers. Expectations of a British person buying a property in Spain are very different from that of a Spaniard buying in Spain, for example.”

More information on legal advice

4. What are the tax implications of renting out my UK home while I’m away?

“There are several aspects to consider,” says Andrew Watters, a director of accountant Thomas Eggar LLP. “If you move abroad and rent your home out while you are away, then all or part of the available relief from Capital Gains Tax can be lost. This is because the property is no longer your main home during that period.

“A careful decision needs to be made therefore as to what to do with the property if the absence from the UK will be long term and a return to the UK is unlikely.

“Any income earned from letting a property out while you are abroad is subject to income tax in the UK and you have two options for dealing with this. The first is to get your letting agent to withhold the tax and pay it on your behalf to the HMRC. The other is register for the ‘Non-resident Landlord Scheme’, receive the rent gross, deduct certain expenses and pay tax on the balance.”

More information on taxation

5. What about renting before buying property abroad?

“Fixed-term renting doesn’t differ that much around the world; it’s the terms and conditions that are the variables,” says Wendy Perez, Department Head Residential Corporate Services at Knight Frank.

“These include the differing levels of deposit, fees, contract terms, break-clauses and references. For example, you often have to pay your rent many months ahead in Dubai. And in Hong Kong you have to prove you’ve paid to have your curtains cleaned and that your air-conditioning contract is paid-up before you can move out.

“In the UK, the landlord pays most of the agent fees, in Hong Kong they’re split between landlord and tenant, and in the US the tenant usually pays.”

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