The three most important issues for those reaching retirement are money, health and property. Having covered the first two, we are now moving to the third one – your home in retirement.
Home is where the heart is. Since you have fallen in love with a certain place abroad and hold it so dear that you want to retire there, it is most natural that you want to establish a proper home there.
Our house, where we live, and what surrounds us directly impacts our happiness. Therefore, it is impossible to overestimate the importance of finding a perfect home in a perfect location in your dream destination while making sure you avoid all the possible mistakes and pitfalls on the way.
Rent or Buy
Perhaps the typical ‘dream’ of a retirement abroad includes living in a beautiful villa overlooking the calm Mediterranean or Caribbean Sea, sipping a long cool drink on a terrace on a balmy evening and enjoying a relaxing life in a stunning location overseas. After all, who would turn their nose up if such a fantasy became a reality?
However, should you actually buy property abroad and become the proud owners of the dream villa/apartment overlooking stunning views? Or should you perhaps rent a home overseas and never commit too much to their new nation of choice?
There is no right or wrong answer to this question. It all depends on your personal preferences.
However, even if you do feel strongly about owning a property, don’t rush into buying unless you are absolutely sure about the location you have chosen.
You need to try the lifestyle before you commit to it. Don’t rush yourself to buying property in a particular area until you’ve spent some time there and made sure it’s your cup of tea.
Once you’ve retired you’ll have all the time in the world to get to know your chosen country. Enjoy your relocation, invest some time getting to know different regions that you’re interested in. Travel around, meet local expats, stay for long holidays in different places.
If there is a location you definitely like, rent first to make sure it suits you best – get a little taster of what your life will be like if you buy a property there.
By taking this approach you are far more likely to succeed in moving abroad and making it a smooth and easy experience.
Choosing a Location
We all know that the three most important factors when buying a home are location, location, location.
Of course now, when you are retired, you don’t need to be within 15- minute walk to a train station or in a catchment area for good schools.
There are now other priorities. You are buying a property abroad the sole aim of making it a perfect home for your retirement. So the property should work for you throughout your retirement years.
The main factors to consider are:
How convenient the location is for day-to-day living
Look at the facilities around: shops, pharmacies, medical facilities. You might want them probably to be within walking distance if you are not a big fan of everyday driving.
Connection to the main cities
Consider how long it will take you to go to the nearest city for a fun day out and how good the transport links are. Is it close to the airport?
If it’s too far, you might find it tiresome when you go on holidays or pick your family up from the airport when they come to visit.
If it’s too close, your location might be overflown with tourists in summer and in winter you will find
Does it give you your desired lifestyle all year round?
Seasons can affect your location significantly. Check how the weather changes throughout the year. In many locations that attract us with their hot and sunny summer days, winters turn out to be wet and miserable.
How is the local life there when tourist season is over? Does it get too quiet and dead for your liking in winter? Are there enough amenities around to support your hobbies and interests? Are there social events and outdoor activities? Can you find clubs and non-profit organisations which will help you part of a community of friends with similar interests?
The easiest way to start building your social life when you retire abroad is to make sure the location you have chosen has a sizable amount of expat population. It’s not really difficult, as we are mostly drawn to the same places for the same reasons: the weather and lifestyle.
This is how the Algarve in Portugal, Malaga in Spain, Paphos in Cyprus have become magnets for expats, – because everyone has figured out they can find what they look for in those places.
However, if you are a bit bolder and more adventurous than an average expat retiree and the reasons you are fascinated by the country of your choice go beyond the weather, you might want to choose a place with truly local character and traditions.
If what you want in your retirement is to integrate in your new nation, learn the language, immerse in a new culture and make wonderful friendships outside of an English-speaking circle, you will need to go a bit further away from popular expat locations.
So do make sure the location of your choice can give you the social life and opportunities you desire
Purchasing a Property
Every country has its own rules and regulations when it comes to property market, and in most cases the procedure differs from to country to country.
However, the main participants involved in the process are pretty much the same: an estate agent, a lawyer (a solicitor), and a seller who might be as well a property developer (builder) if you are buying off-plan or a newly built property.
It is worth doing your own research into the buying process in your chosen country, so that you know the milestones, what to expect and what to watch out for.
Finding a Property
It is always good to do a proper research into a local property market to see what is available there and in what price range. It will give you an idea of what represents good value for money in your chosen location.
It is worth looking at properties from more than one agent to get a better understanding of the market and what’s on offer.
If you are on a developers’ inspection trip, beware of hard selling and never sign anything or hand over a deposit on your first visit! Even if you think it’s the best property you have seen, take yourself away from it and away from the agent/sales person to give yourself some time to think.
Getting good independent legal representation is essential when you are buying a property abroad. If you don’t speak the local language, make sure your solicitor speaks English.
It is vital that you understand the terms and conditions and all the legalities involved. If the papers are in the local language and you don’t understand them, get them translated in English.
In some countries it is common that one and the same notary acts on behalf of both buyer and seller. Notary is not quite the same as a solicitor, so you might want to hire your own lawyer to make sure your interests are protected.
It is worth finding an independent lawyer. While there might be nothing wrong with a lawyer that your agent recommends, they might not be completely impartial.
A Word About Title Deeds and Planning Consent
The title deed registration system varies from nation to nation and in some countries it is so out of date that it can be almost impossible to determine who has the right to sell you land or property.
In other countries there are ongoing battles about title deeds and finally, in some countries you as a foreign buyer are not entitled to directly hold title to a property and you have to buy through a company instead. Find out up front about the title deed quirks of the country you want to buy property abroad in.
Remember that you do not own your property until the title deeds have been officially registered in your name.
Your lawyer should check that the vendor has the title deeds in their name and hence has right to sell. He should also make sure that there are no mortgages or liens against the property in question or the land the property stands on.
You or your lawyer should check the planning status of the property, especially if you are buying from a developer. Make sure the property has the correct planning consent according to the rules of the country.
Just like when you buy a property in the UK, when you are buying abroad there, it’s documented through contracts. Very often the first contract will be an initial contract stating the buyer’s commitment to buy, and the seller’s commitment to sell. At this stage you might have to put in a deposit.
The second contract is usually signed on completion and you are handed the key to your property.
In-between it is your solicitor’s job to go through a list of checks from the legal status of the property, the boundaries, new developments nearby that may affect your property, etc.
Make sure that you get a specialist to undertake a survey on a building you are buying, especially if it’s not a new property. Otherwise you might risk having to pay for a lot of repairs that you haven’t been prepared for.
Budgeting for Additional Costs
Make sure you fully understand what additional cost you might bear on top of the purchasing price. The more legal help you use, the higher your bill will be. So ask in advance and budget accordingly.
Local Laws of Succession
You may think your property abroad is covered by your UK will, but that may not actually be the case.
In France for example, you may think your property will pass to your spouse should you die, but in reality the property can be divided among multiple members of your extended family. So find out first about the laws of succession and make sure your will covers your wishes and can legally be upheld.
Paying for the Property – How Not to Get Caught by Exchange Rates Fluctuations
If you buy a property abroad in anything other than pounds sterling,
bank charges and fluctuating exchange rates can have a big impact on the final cost of your purchase.
To make the process of moving your money to abroad cost-effective, safe and easy you can register with a currency exchange company as soon as possible.
Such companies allow you to literally forward book your exchange rate when it is most favourable for you. Thus, regardless of future possible fluctuations you will know exactly what your costs will be at the closing date.
It is possible to lock in your exchange rate up to 18 months in advance, so you can do it on the day you have found a property you wish to purchase and made an offer.
This service is not free, of course, but when it comes to such big numbers as a property cost, it might fully pay off to lock in your rate of exchange. Not only will it let you forward book the rate at a favourable moment, but also you will be able to see and plan all your costs in advance.
Buying Off Plan
If you intend to buy directly from a developer, which is not a rare case in many countries, where a big part of the construction market is specifically focused on foreign buyers, make sure you are dealing with a reputable company.
There are certain risks involved with buying a property which is not built yet.
Remember that the property market in most popular retirement destinations is abundant, so there is no real need to sign a reservation contract straight away under the agent’s pressure that the development is going to be sold off next day and you will be left behind.
When you are sure that you want to proceed, try to negotiate a better deal with the developer. There is always something you can negotiate on to improve the deal for yourself: either a straightforward discount, or fixtures, or financial terms, or/and any conditions about snagging period. It is even possible to negotiate a 5% price reservation on your side until the snagging period is over.
Make sure your lawyer checks whether the land the building is on is registered under the developer’s name, whether the land is classified appropriately and whether the development has been issued a building licence by the local town hall and the planning permission has been obtained.
Do your own due diligence as well on surroundings, infrastructure, facilities, etc.
If the country you are buying in requires developers to have an insurance to protect those buyers who pay stage payments for off-pan properties, make sure the developer presents you with a certificate from the bank or an insurance company to prove that a proper insurance has been taken out.
The process of buying a property in another country can easily be the most stressful experience in your moving abroad. The best course of action is to research as much as you can, talk to local expats and take advice. Don’t cut corners – do your due diligence and seek professional help to ensure your purchasing process is smooth and possible mistakes and pitfalls are avoided.