Buy to let property overseas? David Lawrenson of LettingFocus.com looks at the risks
One of the highlights for property saddoes like me is the London March and September Property Investor and Homebuyers shows run by Homebuyer Events.
The guys behind the London show also ran events in past years in Manchester and Birmingham.
Unfortunately, these events have just become a casualty of the downturn in the property market as vendors seem unable to commit to having a presence at the show.
It’s a shame because whilst the show was usually pretty choc full of stands occupied by over zealous highly commissioned real estate salespeople, the organisers were always keen to also give a big platform to old wise independent voices – the likes of me and Richard Bowser (of Property Investor News) among a few others.
The fact they did this was pretty unique amongst property shows and I know we’ll all miss the show and I hope the guys from Homebuyers bounce back soon.
RISKS OF OVERSEAS PROPERTY INVESTMENT
In recent years, many exhibitors at the various property shows were busily promoting buy to let overseas. (I’m talking here about properties to be let to long term tenants here, not holiday lets, which is another story for another time.)
Now, I have always been very sceptical of the wisdom of buy to let overseas because I think the added risks usually don’t justify the possible gains.
The risks are many. They include currency risks, the hassle of trying to understand a different legal process - whether that is to do with getting a good legal title on a property or simply trying to understand the legal aspects of foreign letting arrangements.
To that you can add poor quality and expensive estate and letting agents, strange new taxes that the vendor or promoter “forgot” to tell you about, the difficulty of ultimately selling easily in what are often, thin and immature property markets, high exit costs, property insurance issues and a different and complex tax environment - especially as regards capital gains and inheritance taxes.
But most of all – and this is why all the big successful landlords here that I know don’t “do overseas” – is the impossibility of controlling something that is far away. What do you do if the agent says you need a new boiler? (On which topic see yesterday’s blog.)
FOREIGN GAINS
Over the years, I have seen lots of vendors trumpeting the gains of whatever foreign buy to let ghetto they are selling.
Often these are currency gains only. All too often the underlying investments have not done too well, especially in the big buy to let ghettos overseas – think about the oversupply of flats on a Manchester and Leeds scale - and then double it.
Sure, some investors have done well - especially those investing in Euro linked areas. But I think if you want to speculate on currency then you should become a currency dealer instead.
Also, many countries in Europe are as indebted as we are but I don’t think the markets have realised this yet– and I think when they do the pound could rise against the Euro.
So if you have made money on a buy to let ghetto in Europe, maybe now is the time to sell – whilst there is at least some currency gain to be had.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property letting and investment blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for a fee to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2009. This blog is updated once a week.
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The guys behind the London show also ran events in past years in Manchester and Birmingham.
Unfortunately, these events have just become a casualty of the downturn in the property market as vendors seem unable to commit to having a presence at the show.
It’s a shame because whilst the show was usually pretty choc full of stands occupied by over zealous highly commissioned real estate salespeople, the organisers were always keen to also give a big platform to old wise independent voices – the likes of me and Richard Bowser (of Property Investor News) among a few others.
The fact they did this was pretty unique amongst property shows and I know we’ll all miss the show and I hope the guys from Homebuyers bounce back soon.
RISKS OF OVERSEAS PROPERTY INVESTMENT
In recent years, many exhibitors at the various property shows were busily promoting buy to let overseas. (I’m talking here about properties to be let to long term tenants here, not holiday lets, which is another story for another time.)
Now, I have always been very sceptical of the wisdom of buy to let overseas because I think the added risks usually don’t justify the possible gains.
The risks are many. They include currency risks, the hassle of trying to understand a different legal process - whether that is to do with getting a good legal title on a property or simply trying to understand the legal aspects of foreign letting arrangements.
To that you can add poor quality and expensive estate and letting agents, strange new taxes that the vendor or promoter “forgot” to tell you about, the difficulty of ultimately selling easily in what are often, thin and immature property markets, high exit costs, property insurance issues and a different and complex tax environment - especially as regards capital gains and inheritance taxes.
But most of all – and this is why all the big successful landlords here that I know don’t “do overseas” – is the impossibility of controlling something that is far away. What do you do if the agent says you need a new boiler? (On which topic see yesterday’s blog.)
FOREIGN GAINS
Over the years, I have seen lots of vendors trumpeting the gains of whatever foreign buy to let ghetto they are selling.
Often these are currency gains only. All too often the underlying investments have not done too well, especially in the big buy to let ghettos overseas – think about the oversupply of flats on a Manchester and Leeds scale - and then double it.
Sure, some investors have done well - especially those investing in Euro linked areas. But I think if you want to speculate on currency then you should become a currency dealer instead.
Also, many countries in Europe are as indebted as we are but I don’t think the markets have realised this yet– and I think when they do the pound could rise against the Euro.
So if you have made money on a buy to let ghetto in Europe, maybe now is the time to sell – whilst there is at least some currency gain to be had.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property letting and investment blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for a fee to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2009. This blog is updated once a week.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It’s easy.
If you are on the home page of our blog, go to the bottom of any post, and click on “LINK TO THIS POST” to bring up the page for a specific post, then hit END …and on the right you’ll see “Site feed.”
If you are already on a specific post page, just hit END and you will see the site feed.
You then just copy the link that comes up into your News Reader or News Aggregator. Even a non techie like me managed to do all this.
Please note if you have a website & are thinking of reproducing material here - that’s fine but we DO require the full links shown in each blog to be included, including also the links in this section. The full article including all links must be available to ALL VIEWERS of your site and not restricted to members.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
Please Contact Us button at our main site http://www.lettingfocus.com/ if you have any queries about this.
ADD A COMMENT
Feel free to add a comment.
Please note that to view past comments you'll need to click on "Link to this blog"
Labels: buy-to-let abroad, buying property abroad, fly to let, landlord expert, overseas property investment
This entry was posted by lettingfocus, on
Wednesday, January 28, 2009.
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You need to be very careful buying abroad. I have been involved in the Bulgarian property market for nearly 4 to 5 years. I have built up a portfolio of renovated and unrenovated houses (all now for sale as one business) and have managed to find longer term tenants. However, I get many queries from people with apartments sat empty wanting to resell or rent out. These are usually in over hyped and over developed areas.
Rachel Gawith, owner of Bulgarian property advice site at http://ww.thetravelbug.org
Thanks Rachel. I note from your side email direct to me, that Trading Standards decided against prosecution in your case, stating that the UK company in question were protected from further legal proceedings because of a loophole in UK Law where they were not caught by either the Property Misdescriptions Act, which does not cover property outside the UK, and the Trade Descriptions Act, which does not cover land and property. Interesting - and people buying property abroad should take note. David Lawrenson LettingFocus.com
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