Relocating to a foreign destination is something that appeals to many people in the UK, but the current economic climate means that some families have been forced to sell their homes overseas as they cut back on luxury spending.
Due to favourable rates abroad, this may not be such a bad idea. More individuals than ever before are selling their properties abroad and exchanging their funds for pounds using a sterling account through their bank.
However, before getting started with this important step, it is important that you consider your finances and get help with repatriating money to ensure you do not lose out in the long term. On top of this, knowing the basics about overseas property is a must for those who may not be clued up on the matter.
Sellers are growing more tempted to put their property on the market overseas as declining currency at home makes the foreign market seem more appealing. In addition, foreign investors may find they can pick up a property for less than in their own country, using it as a rental or holiday home.
If your house is located in a popular tourist destination, it could be a good idea to opt for an overseas buyer when putting the property up for sale.
Taking advantage of the internet when selling a home abroad is also recommended. Use social media and other popular tools to spread the word about your property, as this could make it more accessible to foreign investors who are browsing for new projects.
It is also advisable for sellers to specifically target the market where you think a buyer is more likely to come from, such as landlords on the lookout for new holiday homes.
Learn the tax rules
If you are lucky enough to sell your property abroad in the current economic climate it is likely you will have gained on the change in exchange rate as well as capital gains, but it is important to be aware that in some overseas destinations – including Spain – there is a capital gains tax to pay.
For this reason, you should seek advice on tax issues before putting your property on the market overseas to ensure you will not lose important funding.
Legal and agency costs
Knowing that selling agents may charge a substantial fee for their duties is another important factor to consider. The sum can total around ten per cent or more of the transaction value, on top of local duties and legal fees.
Keep up-to-date with transfer charges
Overseas banks often make charges based on a portion of the sum transferred to another account, which can often end up being substantial amounts of money. This is why it is important that sellers ensure they will not incur charges when sending money back to the UK.
Fix the rate of exchange
Property owners can fix a rate of exchange that will stand throughout the selling process, which may mean they do not have to worry about rates moving against them and losing out as a result. Doing this is known as a forward contract, with a percentage of the total sum usually required as a down payment.
To ensure you get the best deal when selling a property abroad, it is essential to shop around for the best brokers, as high street banks usually do not offer competitive rates of exchange. However, it’s wise to ensure the financiers are reliable, as they are not regulated by the Financial Services Authority.