Channel 4’s A Place in the Sun's Jasmine Harman and Andy Bridge share their essential tips about relocating or buying a property in another country.
Holiday home or permanent base?
When buying a home abroad you need to consider how much time you’ll be spending there. Some people are looking for a holiday home; others want to move somewhere permanently. Whichever it is will impact the type of property you buy.
“For the former, particularly if they intend to rent out their property, then the focus is on accessibility and amenities. Distance from the airport is crucial if you plan multiple short visits, as is proximity to restaurants, the beach and places to visit,” says presenter Jasmine Harman.
“Equally the type of property you buy is key, an apartment on a development where you pay a monthly fee for the upkeep of the gardens and pool means you fly in and enjoy your holiday home and then lock up and leave, rather than having concerns about maintenance.”
Someone relocating permanently could be further from an airport and get a larger property with its own land, but Harman says you might not want to be too remote when it’s off-peak when everything quietens down.
“Some resort areas are significantly quieter in the winter with bars and restaurants closing down… Make sure you visit out-of-season to ensure you are comfortable with the feel of the place when the crowds have left.”
The buying process
Buying a property abroad varies from country to country but is broadly similar to the UK – you find a property through an estate agent and instruct a lawyer to help with the conveyancing process.
“Typically, estate agents work a lot harder for you than they do in the UK and will happily drive you around properties and work with you to find your place in the sun,” says editor Andy Bridge.
“They will also help you open a bank account, advise on getting your ID number, such as the NIE in Spain, and how to go about sourcing services such as Sky TV.
“In France there is no requirement to use a lawyer and many French buyers use the local notary, who processes the transaction, but overseas buyers tend to source a lawyer as a notary is not charged with protecting your interests to the same level, simply overseeing the sale/purchase.”
Stamp duty-equivalent taxes
In the UK, we have a stamp duty land tax, payable on most properties at completion, and most countries have something that’s equivalent.
“Purchase costs vary by country, in the case of Spain it varies slightly by autonomous region but (in Spain) you should allow 13% of the purchase costs to cover your legal fees and local taxes,” says Harman.
“In many countries, you can part-fund the purchase through a mortgage where typically you can get 60% to 70% loan-to-value depending on the lender, not including fees.”
Can you rent out your holiday home?
You can rent out your holiday home when you’re not using it, but you need to make sure you pay tax on this income in the country the property is in.
“You make a tax declaration in-country and pay income tax on this revenue,” says Bridge.
“You also declare it in the UK but are not charged a second time as it is offset by the double taxation agreements the UK has in place with most of the popular countries.”
How many days a year can you stay in your holiday home?
Following the UK’s departure from the EU, British citizens can only spend 90 out of 180 days in EU countries.
This can either be one stay of three months or you can be in and out as often as you like as long as it’s not longer than 90 days.
“For most, though not all, holiday home buyers, this is sufficient, but if you wish to stay four months over the winter you can no longer do so without applying for a longer stay visa, available in some countries,” says Bridge.
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“For buyers looking to relocate to somewhere like Spain, there is a clear process whereby you make an application to the embassy in Edinburgh, Manchester or London, submitting all the necessary paperwork including proof of funds to support yourself and private medical cover.”
How does living abroad affect your UK tax status?
It doesn’t unless you move permanently to another country or, in the case of the EU, spend more than 183 days a year there.
“Then you become tax-resident and that is where you make a tax return and pay your dues,” says Bridge.
“If you have assets such as a UK property, pension, savings or investments, it is a good idea to take advice before you move as you may hold a tax-efficient UK product such as an ISA, which does not benefit from tax-relief when you become resident elsewhere.”
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For more information about buying a home abroad, visit aplaceinthesun.com. A Place in the Sun returns with all-new episodes on 5 December at 4pm on Channel 4.