While there has been some good news concerning the UK housing market recently the same cannot be said of markets in Europe. Due to the Euro Crisis, the economies in countries such as Spain, France, Italy and Greece are all suffering, leading to house prices plummeting. This means that a large number of landlords from the UK are starting to consider investing in European properties, however there are some things that need to be considered before taking the plunge…
Be Wary of Struggling Economies
House prices in some of the most popular European holiday destinations are currently extremely low, with many landlords benefitting from purchasing luxury properties for heavily discounted prices. However, if a country is suffering due to economic difficulties it may not be wise to rush into investing in their property market. Many tourist locations in Europe are visited by those living in the same country or countries nearby, and if these people are facing financial difficulty then it is less likely they will be looking to rent out a property in the near future. Furthermore, economic decline can lead to shops, restaurants and other amenities surrounding your property to close, leaving a once thriving and popular area desolate in a short period of time.
Political Policies will Change
Falling house prices and economic uncertainty are huge issues for European politicians, which is why they are trying to find new ways to improve the situation. At this point in time nothing overly drastic has been decided upon, however if the economic situation doesn't improve controversial decisions may have to be made in the future. Add this to the fact that British politicians are currently debating leaving the Eurozone and you can see how the relationship between the UK and Europe may change drastically over the next few years. It is therefore important for all landlords thinking of investing in overseas properties to keep abreast of current affairs and have a back-up plan in case policies change in the future.
Budget for Additional Costs
Banks differ from country to country, which means if you are looking for a buy-to-let mortgage in France you may end up having to pay more fees than in Spain or vice versa. Banks in European countries may also have strict rules when it comes to who can apply for buy-to-let mortgages, so be prepared to fill out a large amount of paperwork and have all your credentials ready to be checked. Even after you are approved for a buy-to-let mortgage you will probably find that you will have to pay fees in order for it to be legally leased, as well as for overseas property insurance and letting agents. To try and reduce this cost make sure you do some research before heading to the country the property is based in as it will prepare you and ensure you won’t encounter any nasty surprises.
Do you Have the Time?
Letting an overseas property is extremely time-consuming and due to the language barriers, cultural differences and constant political changes you could find yourself spending double the amount of time on an European property than on one based in the UK. While letting agents and solicitors will be able to help with paperwork and keep you up to date with important information, as a landlord you have a legal responsibility to ensure that your property and tenants are safe. If investing in a European property you will automatically become what is termed an ‘absentee landlord’, which means that the likelihood of you being to deal with issues as and when they arise is very low. So before investing in a new property ask yourself if you realistically have the time to manage it properly, and plan how often you will visit the country it’s based in each year.
Even though the thought of owning a luxury property in a European country is extremely tempting, it comes with certain risks much like any other property investment. The only way to protect yourself if to keep a keen eye on the European property markets and ensure that you have an experienced team of letting agents in the country you are investing in.
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