Investing in a Holiday Home Abroad

Housing in Spain has very well lowered its prices and many investment and foreign funds have launched to find opportunities. However, a falling domestic market in the short term is not as profitable as some foreign locations. Therefore, there are many investors who are considering buying a house outside Spain and… also – why not?

But a different legal system, different cultural’ know-how’, classic winkery of the place and even the ignorance of the area can take away the buyer from making an important and profitable investment. For this reason, going to a specialized real estate agency will make things much easier to know the viability of the local markets we are interested in and will also provide us with security.

First step: finding the house

To find a suitable house, it is highly recommended to know the local market:

1. One possibility is that we have a very detailed knowledge of ourselves by spending long periods of time in the place or having visited it thoroughly. Likewise, it is also necessary to be clear what we want the house for: as a second home or as an investment, because for each option it is advisable to know which are the locations of the country with the highest profitability.

2. Another option is to go to the real estate agent who gives us a general introduction on the local market to know where we are interested in finding the property we are looking for. In each country there are areas of high, medium and low demand and the desired investment could lead to a catastrophe if we are not well advised. “The investor must establish contact with internationally renowned professionals and agencies of international stature to help them determine the right investment,” says Ignacio Sobrino, associate agent at RE/MAX Casagrande & Asociados in Tomares, Seville.

3. A previous personal interview with your trusted agent in Spain, who is internationally accredited and also takes charge of monitoring the entire process of the operation, will help you find the right house.

Second step: legal certainty

Knowing how home buying and selling laws work is crucial.

1. When we have found the house, we ask the real estate agent to give us a general introduction on the legal particularities of the country that must be known and the differences most pointed out with Spain to make this transaction. It is the contact agent abroad who must inform the referred client of each of these particularities, taxes, expenses, rights and obligations, and if possible that the contracts to be signed clearly detail them,”says Sobrino. For example, in France, as Eva Souza, director of Engel & Völkers’ Cannes shop, explains, once the purchase contract for the house has been signed at the notary’s office, the buyer has seven days to withdraw.

2. To overcome the language barrier, it is essential to have a sworn translation into Spanish. In Spain, for example, in the case of a foreigner who does not speak or cannot communicate in the official language of each community, he or she is obliged to hire an official translator to assist him or her in the purchasing process. The presence of such translator shall be required at the notary’s office. This is what usually happens in any notary’s office in another country,”says Sobrino.

3. Hiring a local lawyer is the next step, and if possible be fluent in both Spanish and the language of the country of origin, although there are also many real estate agencies that already have a legal department included among their services. We advise them but it is always mandatory to hire a local lawyer, and we provide them with a serious and reliable law firm,” says Eduardo Lluzar, Catalan licensee of Engel & Völkers who works in the Dominican Republic. Some of their basic tasks in all countries are to check that the property is in the name of seller or to facilitate translations in contracts. Also to avoid the particular scams of each country, as Lluzar puts it:”In the Dominican Republic it is not possible to sell a property without having the approved demarcation that guarantees the individualization of the property with respect to the other adjacent properties, its own cadastral designation and a serious property registry”.

4. Know the taxes involved in the purchase and sale operation, both for the seller and the buyer. Depending on the country, it will be necessary to know whether there are taxes for the increase in wealth, double taxation, that is to say, whether taxes have to be paid in Spain and in the country of origin. Also those that have to do with renting the property, its maintenance, local fees, community fees, etc.