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FACT
FILE - Buy to let in Europe
Buy to let – Holiday
Homes outside the UK
See
also
How
to present your rental property for letting
How
not to present your rental property for letting
The
Buy to Let market has been growing considerably in the
UK since the mid 1990’s and now with the growth of
second homes outside the UK there is even a greater
market.
Where
to begin? First
of all decide on why you are buying – Do you intend to
live in the property for holidays or purchase a property
purely to let out permanently?
Long
term renting:
If
you are going to buy a property purely to let out, then
you should seek the assistance of a professional
estate/letting agent in the country that you choose.
Most countries have different systems for letting out a
property and you could find that you have to commit the
letting up to nine years. You should also seek
specialist help regarding the location, whether to let
it furnished or unfurnished.
Holiday
Rentals: If
you go down this route it will mean that you have the
benefit of an income from the property plus the
opportunity to take your holidays there.
First
of all you have to decide on a country - France one of
the most popular, Spain still very popular like Portugal
and Cyprus. Then there are the less well known
destinations - Greece, Turkey and Eastern Europe.
Many
people start their research by looking at a country they are
familiar with. You then have to decide on the location. If
you are aiming to let the property to cover costs and mortgage
repayments then you must purchase it in an area that is going
to be popular with visitors. You should also take care right
from the start not to overstretch your budget. Remember that
you will often have to pay a purchase tax on the property,
lawyer’s fees and in some countries agent’s fees when you
purchase.
The
next decision is your market. Are you aiming solely at
the UK and Irish market – this will mean it will have
to be located close to airports or are you considering a
wider market – Dutch, German & Scandinavia for
example? A
wider market will naturally give you more opportunities
to let the property, but you also have to promote it in
those additional countries.
You
have now decided upon the country and the area within that
country. How do you find that property? There are several
ways. Companies organize expositions in many countries like
the UK and Ireland. Here you go along to a local hotel and
collect the information and this is followed up by an inspection
flight. You will often find that these properties are just
being built or are going to be built. Many of these companies
are now offering second hand properties.
There
are numerous property and country magazines with pages
of ads for new and second hand property that is
available and many newspapers advertise similar
properties.
A
very popular method is the Internet. If the agent’s
site is good you should get several photos of one
property and many agents will be happy to email you
further pictures. If you are then planning an inspection
visit, arrange several appointments so that you get an
idea of what various properties are like. Many agents
speak your language as well and if in doubt take along a
friend who can help.
If
your property is located in a country that is very warm,
particularly in the summer and you have the opportunity
of buying a place with a pool, this can certainly boost
rental income and make it more attractive to rent. There
are of course additional maintenance costs involved with
a pool.
Furnishing
it 
– You now have the right property – the next step will be
furnishing it. Equip the kitchen well. People on a self catering
holiday don’t want to spend a lot of time washing up – provide
a dishwasher if possible. A washing machine is an essential
and a television is very welcome particularly on a wet autumnal
evening. Along with a television you might have to consider
a satellite system and which one will depend on your core
market.
Most
people have mobile phones, so it is not necessary to
provide a telephone. If you do, contact the telephone
provider to find out ways of providing one in a holiday
home whereby you don’t find you are paying someone
else’s phone bill. Even if you have incoming calls,
someone can always accept a reverse charge call to your
phone!
Remember
to take into account safety measures. Install a smoke detector,
have your appliances checked (in some countries it is the
law) and make sure that the furniture is smart, in a good
state of repair and if applicable compliant to local safety
regulations. Breakages can occur so provide crockery and glassware
that can easily be replaced at the local supermarket or department
store.
Bedding
& bed linen. Decide whether you provide this or not.
It is an additional cost – not only for the initial
(plus replacement purchase) plus the ongoing associated
laundry costs.
Local
agent
-
You will need to consider in your financial planning the costs
of employing a local agent. This can be in the form of an
agent who finds visitors to rent the property and checks them
in and out, arranges maintenance etc, or purely someone who
just acts as a key holder and checks your visitors in and
out and generally manages the property for you.
Alternatively
you can just employ an agent to check the visitors in and
out and organise routine maintenance. Some people get to know
a neighbour and ask them to do this. If you go down this route,
it should be on a business footing.
WARNING
- RENTAL SCAMS IN HOLIDAY LETS CLICK
HERE FOR DETAILS YOU COULD BE NEXT!
Letting
& Marketing
– don’t reserve the best letting weeks of the year
to yourselves, particularly if you need the rental to
pay for the property. Try and visit it off season. It is
good to go there at least twice year, to check on its
state and condition and also to carry out any repairs or
garden tasks that have not been attended to.
The
amount of time during the year the property is let will depend
on your outgoings; there are several ways to find holiday
renters. You can use the Local agent, list it with a holiday
company back home or advertise it yourself using a specialist
holiday publication (or several of these) or try the national
newspapers. Advertising costs can mount up, particularly if
you are not getting the enquiries. As more and more people
are turning to the Internet, look for a specialist site like
www.jmlvillas.com.
You
simply pay an annual fee of under £12 and the enquiries
go straight to you. Many people then decide to have
their personal website.
This can
provide a lot more additional information about the
property, area and if it is well illustrated with
photographs, you have then developed your own brochure
on line. The costs of building a website can be quite
high, so shop around and don’t go for
something that is too fancy, has long introductions and
large photos\that take a long time to download. People
using the web, so get bored and want quick results.
Finally
remember – get your rental price attractive to
attract renters.
Wills
You should make arrangements whilst you are in the
process of purchasing your property to make a will in that
country in relation to the overseas property. In some countries
like France there can be inheritance problems whereby children
automatically benefit rather their mother. The lawyer handling
your purchase can be consulted about local formalities
Check
List rules for a Buy to Let Property
-
Buy in a country that you know – As you
will also be wanting to stay there, make sure that
you can get there easily.
-
Research the up and coming areas.
-
Target the market you want your property to appeal to.
-
Don’t make too many restrictions on the letting – You
must consider family lets, pets travel all over Europe these days.
-
Get the rental price correct. It is no
good setting a high price when people are not interested in renting
your place. Check out the prices of the competition.
-
Location of property – is it within easy traveling distance
of an airport? How far away is the nearest motorway – town or
beach or lakes the property located with regular water supplies and
electricity? If the property is on a septic tank remember that the
maintenance has to be arranged.
-
Don’t just buy a property that appeals only to you – if
you are buying to let you need to consider firstly those who will be
paying the costs – your paying guests.
-
Finance – Your rental income has to cover the mortgage –
the upkeep of the property – the marketing costs – Paying for a
local agent to administer guest transfers – Tax (local property
taxes plus income tax in the country the property is located in / or
back in your home country)
-
You must think about this as a long term investment – you
should also take into account that you might buy when property has
had a history of rising in price, however there can always be the
possibility of prices falling in your chosen country or region and
your property no longer being in a “fashionable” holiday area.
-
Insure
the property – Buildings, contents and for your paying guests.
-
Provide
your visitors with an Information folder for the property and
don’t refer to them as “Tenants”. Many people do not like this
term.
-
If
you are going to spend your own holidays at the property and want to
keep some of your own personal belongings away from your paying guests, try and build, or use a specific cupboard,
cellar area etc to keep locked.
N.B.
This information should not be relied on for accuracy and is presented here without the responsibility of jml Property Service
and the website it is being displayed at. ©jml
property Services 09-04
Advertise
your Holiday Home Property for just £11.75 / €17.05
per year - CLICK
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Details
Fact
File - Gas
checks on Property for sale in France:
Since
1st November 2007 all properties offered for sale in France
with natural - mains gas services installed more than 15 years
ago must include a Diagnostic Gaz in the Dossier de Diagnostic
Technique (This is rather like the HIP - Home information
pack in England and Wales). It costs around 100 - 150
for the test that includes supply pipes, boiler, water heater
and radiators. The certificate will be valid for three years
and the seller has to organise and pay for this before a compris
de vente can be signed.
There
are also new rules for surveys from November 2007 all the
technicans carrying out these tests must be accredited by
COFRAC Comité d’accreditation français (Similar to Corgi in
the UK). The new rules could effect around 10 million properties
when they go on the sales market. If a property has bottled
- cylinder gas (like calor gas) this is not covered by the
new test.
FACT
File - Property Taxes in France
So you are about to purchase that ideal property - If you
require finance or don't you still have to take into account
the payment of property taxes. In France the tax system is
centralised, however the location of the property will ultimately
determine how much you pay.
First of all you have to pay the"notaire's" fee. Most
of this in fact goes to the government like Stamp Duty in
the UK. This will work out around 6% to 8% of the purchase
price. There is also a small land registry tax to pay.
The property sale is now complete. You have the"Taxe D'Habitation"
which is a local tax. The amount you will pay is determined
from the cadastral value of the property. This is based on
the size and location -not market value. It is generally thought
to be reasonable particularly in rural areas.
It should be noted that if you let your property as a holiday
let and go there a few times a year you still pay the"Taxe
D'Habitation", but in many areas you will also have to
collect a"Taxe de Séjour" from your "paying guests".
The authorities see it as you are making money from renting
out the property then so you should pay them some revenue
as well. This might only be a few cents per person per day,
but it still has to be paid and it will depend on your local
town hall.
The "Taxe foncière" is also paid annually. This generally
quite low. There is also a wealth tax "Impot de solidarité
sur la fortune" that is paid by owners of property worth
in excess of €732,000.
Inheritance tax:"Impot sur les successions" this usually
has to be paid when the owner dies or one of them.
You are also expected to pay tax on any rental income and
although France has tax treaties with many countries including
the UK it is worthwhile employing an accountant to help you
manoeuvre through the French tax minefield.
The above information is given without responsibility
of accuracy. ©jml Property Services 09/05
FACT
File - Property Taxes in Spain
So you are about to purchase that ideal property - If you
require finance or don't you still have to take into account
the payment of property taxes. In Spain.
You have to pay an income tax "Impuesto de la renta"
and a wealth tax -"Patrrimonio". This is arranged on
a sliding scale climbing to 2.5% on properties over €10.7m.
The base rate for the tax"Impuesto de la renta" - income
tax is 1.1% of the cadastral value of the property. This determined
by the size and location. Non residents pay 25% of the tax
base.
If you are renting out the property the tax rate you have
to pay is 25% of the annual rent. You are not allowed to make
deductions for expenditure.
When you sell the property a non-resident is subject to 35%
capital gains tax, however you can take off the costs for
improvements during ownership.
There is also a local tax"Impuesto sobre bienes inmuebles"
This based on the cadastral value of the property.
It is probably worthwhile using an accountant to assist you
with these tax returns.
The above information is given without responsibility
of accuracy. ©jml Property Services 09/05
See
also
How
to present your rental property for letting
How
not to present your rental property for letting
Back
to Property Information
Looking
for Buy to Let Books?
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jml
Property Services are members of the National
Federation of Residential Landlords, National Landlords Association
in the UK and British Chamber of Commerce Cote d'Azur - France
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