A Guide to Buying Property Overseas

September 7, 2020

According to data released by the United Nations in the International Migration Report 2017, there are around 258 million people who live in countries other than where they were born. While a majority of expats prefer renting, the number of those who wish to purchase homes in foreign countries remains significant. If you, like many others, plan to buy a home in a foreign country, various factors require your attention.

Local Regulations

Local rules and regulations regarding whether foreigners may or may not purchase property tend to vary from one country to another. For instance, if you are relocating to the U.S., the UK, Germany, or Spain, the rights you have when purchasing a property remain largely similar to those that apply on local citizens, although certain local jurisdictional restrictions might apply. If you want to buy a home in India, you should qualify as a person resident in India as described by the country’s government. In Thailand, you are basically limited to buying a unit that is part of a condominium.

Professional Assistance

Understanding rules and regulations surrounding buying a home as a foreigner can be tricky. You should ideally work with a lawyer who specializes in real estate, so you have someone who can guide you through the process every step of the way. For instance, you can expect your lawyer to verify the property’s title and get its registration transferred in your name. You might also consider using the services of local real estate agents because they are usually privy to the latest listings.

Tax Implications

The cost of buying a home does not limit to how much you actually pay for the purchase. Property taxes are part of the parcel no matter which country you live in, and you will have to keep paying them for as long as you own a property. You also need to consider how much you will pay as capital gains tax when you decide to sell the property. Tax implications vary depending on the country where you plan to buy a home. If you move from the U.S. to the UK, buy a home, and then sell it for less than $250,000, you might qualify for the private residence relief.

Lawyer and Real Estate Agent Fees

How much you pay your lawyer mainly depends on who you select, and these fees are generally open to negotiation. Real estate agent fees, on the other hand, are usually more streamlined. However, they do vary from one country to another.

In the UK, home buyers do not pay any estate agent fees, and the buyer pays 0.75% to 3.5% of the home’s selling price. Home buyers in the U.S. are not required to pay estate agent fee. In Germany, you might need to pay 2% to 6% of the property’s value as fees. In India, it typically varies from 1% to 2%.

Surveying the Property

If you plan to buy a home listed on the secondary market, it is in your best interest to have the property surveyed by a professional. The surveyor will look for all possible flaws in the property and make a report accordingly. Bear in mind that while minor shortcomings might not cost much to repair, fixing structural damage or a home’s plumbing system can leave a big dent in your pocket.

Getting a Loan

Banks in most countries that allow foreigners to purchase real estate provide home loans for expats. However, just how easily you find these offerings depend on the country in question. For example, while foreigners in the U.S. and the UK may legally qualify for loans, only a handful of banks cater to this niche. Another drawback is that you might have to pay up to 40% of the home’s value on your own.

If you plan to get a home loan, consider getting pre-approved. This gives you a good indication of your budget and you may look for properties accordingly.

Making Payments

You might need to make different types of payments such as legal fees, real estate agent fees, and the deposit even before relocating. While your bank might let you make overseas money transfers, using the services of a specialist money transfer company may lead to noticeable savings because of favorable exchange rates and little to no transfer fees. Some of the leading overseas money transfer companies you may use include WorldFirst, OFX, TransferWise, CurrencyFair, and WorldRemit.

Buying a home requires time and patience, all the more so when you plan to purchase one in a foreign land. Make sure you do your groundwork well and do not hesitate to seek professional assistance along the way.