More tips for buying property in a foreign country:

• Go on an inspection trip or dedicated overseas property exhibition. Inspection trips are usually package tours that aim to give you an overview of what the properties look like in the country where you want to invest. Although an inspection trip can be valuable, be careful of being given the hard sell or feeling pressured into buying property that you are not absolutely sure about.

  Give yourself a ‘cooling off’ period and never agree to put down a deposit there and then.

  Companies like Chas Everitt Overseas Properties sometimes have deals with specialist tour operators and can facilitate inspection trips.

• Arranging finance. This is potentially the greatest headache when investing in overseas property.

  If you can, pay cash only. Many of the emerging countries where great investment opportunities exist have financing mechanisms that aren’t as refined as in South Africa, while some don’t allow foreigners to take out mortgages. Even when you can get financing overseas, banks usually require a fairly large deposit from foreign property investors.

  In order to avoid needing finance, consider approaching friends or family to join you in making an overseas property investment.

  If you need financing always arrange it ‘in principle’ before signing anything or handing over a deposit. Ensure that any contract you sign has an ‘opt-out’ guaranteeing that your deposit will be refunded if the loan is refused.

  Companies like Chas Everitt Overseas Properties deal with developers who provide financing for you. You can avoid the banks, and the accompanying difficulties, completely. Another bonus is that the developers they deal with provide you with financing based on the value of the property you buy and not on your income.

• Seek specialist advice. Definitely seek specialist advice from estate agents, solicitors, architects and surveyors in the country where you plan to invest before making a purchase. Pepper them with questions, also regarding costs that the local authorities may charge, but that you might not be used to paying when buying property in South Africa.

  A local solicitor should be able to check that you do not inherit a debt on the property you plan on buying. This could happen if a developer had to take out a loan against the property so as to start or continue building.

  Only negotiate with professional advisors that are officially licensed and, if possible, have a good command of English and the local language.

  Make sure the specialist you approach for advice is independent and never rely on a lawyer that the estate agent or developer recommended.

• There are always costs that you didn’t plan on. There are many costs that you can plan for including lawyers, taxes, insurance etc. Keep in mind that these costs are usually much higher than in South Africa. It’s a good idea to budget an extra 10 percent for costs you will incur, but can’t think of before starting the process of buying a property abroad.

• Open a bank account in the country where you choose to invest. Some countries require a ‘Certificate of Importation’ for any money you bring in from South Africa. The bank where you open your account will advise you in this regard.

  In some countries failure to pay rates and taxes can lead to court action and seizure of your property. It is therefore a good idea to arrange for a debit order to pay rates and taxes.

• Make your offer in writing. Ensure that your offer is subject to the signing of a contract. Indicate what you understand to be included (i.e. furniture, etc.). Your written offer should stipulate the amount of the deposit and when you will pay it. Also include in your offer that it is dependent on there being no major defects that you have not indicated you will accept.

• Never sign a contract in a language you do not understand. Don’t except verbal translations — insist that the entire contract is translated into English. The contract should include a clause stipulating that the English contract takes precedence in the event of a clash with the contract in the local language. Remember this point. These conflicts happen more often than not.

• Verify your title deed. When buying property in South Africa you get a document confirming that you are the rightful owner. In some countries property rights aren’t so clear cut. Make sure there cannot be any claims on the property by someone who might be many generations removed from the original owner.

  To assess the risk contact a notary. They verify legal documents for a living and can assist you in researching the property’s title history to find out if there is anything to be weary of or whether there has been or still is a claim on the property.

• What about a ‘bribe’? While any kind of bribery would be considered highly irregular in South Africa, this is not the case everywhere. Again, it might be useful to consult a local estate agent.

  In certain Middle Eastern and Asian countries gift giving is not considered bribery and is a completely accepted and required part of doing business.

• Be wary of buying off-plan. This entails buying a property before it is built. The dangers inherent in buying off-plan are obvious, especially when you’re not even on the same continent as the developer. You won’t see what you’re buying and you might have problems if the developer can’t stick to the schedule.

  The only way buying off plan is a good idea is through a South African company that specialises in overseas property. At the moment only Chas Everitt Overseas Properties fits the bill.

  The main advantage of buying off-plan is the massive discounts that usually come with these transactions.

• Public transport. In most of the developed world, unlike South Africa, there are many people who prefer to use public transport rather than their own cars. Proximity to transport nodes is therefore an extremely important factor to consider in many countries.

• A room with a view, but for how long? Check planning regulations to ensure your stunning view cannot be spoiled a couple of years down the line by an unsightly concrete monolith.

• Choose a location that is desire by locals and tourists alike. Your property might be in spot that’s popular amongst tourists, and that’s great, but what do the locals think? When choosing where to buy you have to consider the day that you will want to sell. You want the property to appeal to the biggest possible market.

• Learn the language. The advantages of speaking the language of the country you’re buying a house in are obvious. Don’t be daunted, you don’t need to be fluent and you’ll have fun learning.

• Check the inheritance laws. In addition to your will in South Africa you might also need a separate will in the country where you buy. In some countries your children automatically inherit your house and your estate won’t pass to your spouse unless explicitly stated in your will.

• Look for the undiscovered hotspot. Buying in the most popular countries and in the most trendy areas implies that property prices are already high and might not have as much scope for appreciation as buying in a less-fashionable area or country might have.

  If these less-fashionable areas have all the virtues of the well established ones, they will be discovered, leaving you in the pound seats.

  A good place to start looking is neighbouring the more expensive and popular hotspots.

• What about winter? Have you seen the property in the off-season? What might look like an excellent property in July might be not be that great in January.

“You have a responsibility to yourself and your family to protect your assets,” says De Villiers. “It’s not about a lack of confidence in our market. It’s about balance. Investing in a property abroad is not difficult, it is not risky and it is not expensive.”

www.overseasproperties.co.za

Page: 2 of 2 - back