The Association of Overseas Property Agents (AIPP) formed in 2006 to provide some regulation in the industry. After five years of operations, it’s now well placed to offer insight into the common pitfalls....
1. Use a lawyer recommended by an agent or developer
Not only is it vital to use a lawyer, but make sure the one you choose is independent and has no connections with the agent or developer from whom you are buying.
2. Ignore the effect of fluctuating exchange rates
Remember, the buying power off your pounds decreases or increases as the value of the Euro or Dollar fluctuates.
3. Overstretch your finances
It’s a dangerous strategy to rely solely on rental income to cover your monthly mortgage repayments. Always have funds in reserve.
4. Believe a verbal promise will always appear in the contract
Rental guarantees, in particular, are often promised verbally but strangely absent from the contract. Ensure your contract is watertight.
5. Sign a contract without having it checked
This is especially crucial when buying an off-plan property and during inspection trips, when you might feel pressured into signing something. A good lawyer will always be available by email/fax to check a contract.
6. Buy off-plan without a bank guarantee
It’s a legal requirement in many countries for off-plan developers to protect any deposits they receive with bank guarantees – insist on it.
7. Confuse a lawyer with a notary
Easily done, as notaries aren’t part of the conveyancing process in the UK whilst in most popular overseas destinations they must, by law, rubber-stamp all property transactions.
8. Turn a blind eye to additional buying costs
In some countries taxes and fees can add another 15 per cent on top of the purchase price – bear this in mind when budgeting.
9. Ignore the local taxation system
Get advice about your tax obligations and never assume things are done the same as in the UK, especially when it comes to inheritance issues.
10. Under-declare the purchase price
It was common practice on the Continent and some locals still consider it acceptable BUT don’t be tempted – it’s fraud and could land you behind bars.