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Home thoughts on abroad

There is nothing new about buying abroad. You only need to pick up a Sunday newspaper to see the array of choice that is available, clearly in response to the real demand for overseas property acquisitions.

I believe that the time is right for advisers to be sowing seeds with clients to be reconsidering an alternative property acquisition abroad. With yields on investment properties in the UK declining fast and with the impact of rising interest rates on the UK property market, it is time to look at the attraction of overseas property.

What are the pros and cons of buying a second property in the UK versus, for example, Spain, which is still the most popular place for the British to buy another home?



•No exchange rate risk.

•Known market. Clients are less comfortable with buying abroad.

•A continuing buoyant buy-to-let market. But for how much longer?

•Local. The property can be easily maintained and managed.


•Rising interest rates.

•Reducing buy-to-let rental yields.



•Low interest rates. The average mortgage rate is just 3.5 per cent. Fixed rates are available from just 4 per cent for five years.

•Loan to value. Up to 80 per cent with the average at 70 per cent.

•Yields. Long-term lets (if the property is not needed as a holiday home) from an average £500 per week in tourist areas. It is not unusual to find yields way into double figures.

•Appreciation. The south coast of Spain has seen rises of up to 30 per cent in the last year alone and is still buoyant.

•Holiday home?


•Exchange rate risk. This applies if a mortgage is arranged on the new purchase in Spain (euros) but it can be avoided by remortgaging the UK property.

•It is overseas. The major reason for concern with many would-be purchasers. The great unknown.

Having decided that a closer look is warranted, where and why? The most popular destinations for British buyers are as follows.


With 500,000 properties under plan or construction, of which an anticipated 50,000 will be snapped up by British people, Spain is the most popular place to buy a second home, either for investment or as a holiday home. There is a big British population on the south coast, all the way from Gibraltar in the southeast to Murcia in the south-west, 400-500 miles of coastline. It is not that easy to find a deal on beach frontage these days but most properties are within a few minutes from the sea.

The attraction of the area is self explanatory – English-speaking in the main, cheaper properties, easy access from the UK, lower cost of living and the weather.


Even easier access of and, while the north offers a similar climate to our own, the sun is just a couple of hours away. Door to door in times that you could sometimes not hope to match within the UK.

There is a different reason for buying in France though. The rental capability is more limited than the Spanish equivalent so if that is the client&#39s primary interest, the property numbers and areas will be limited. People buy in France for different reasons – the culture and countryside. And with property prices to enhance the attraction.

Portugal and Greece

Fairly similar reasons to Spain, with the weather and ease of rent the most attractive reasons behind the decision to buy. The cultures have been less corrupted by foreigners.


English-speaking, cheap property and a fantastic climate. The negative is really only the travelling distance. Far less of a risk perhaps than some of the alternatives available to the would-be purchaser of a property in mainland Europe.

Why would you, the adviser, want to raise this idea to discuss with your client? It is another string to the bow. You need not get involved with the detail which can be handled by specialists. However, you can give the client the opportunity of realising their dreams and it will pay off for you in some way. Consider the ancillary sales that could spin off from a property deal overseas.

If you do not cover this in your normal fact-find conversation, try it. Ask your client if they have ever dreamed of owning a holiday home. Who will say no? Would you?


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