Many of us will be looking at the price of holidays abroad this summer, compared to the relatively small cost of an apartment or villa, and wondering if it wouldn’t be sensible to buy our own. Property Guides editor Christopher Nye explains why, where and how to buy a holiday home.
Despite, or conceivably because of, Brexit, the British people’s appetite for holiday homes is undiminished. A lot of us could do with a holiday abroad right now, and a holiday home offers the possibility of affordable vacations – long and short – whenever you want them.
In Spain, for example, British buyers are still by far the largest number of foreign buyers of Spanish property. We make up 14% of all foreign transactions. Over the last 12 months, British people bought an average of 41 properties per day in Spain alone. This shows no sign of slowing down.
And why should it? A holiday home is a unique way of spending quality time with the extended family. Who hasn’t said at Christmas, “What a shame we only see you once a year!” but lacked a venue to enjoy together without imposing on one another? A holiday home can be fun for all the family, at any time of the year. Your kids can see their cousins, parents can invite old friends, the grandparents can get to know their grandchildren in relaxed circumstances. Those warm Mediterranean evenings encourage everyone to sit out chatting, playing games or cards, just enjoying each other’s company.
If you thought that Brexit would be a problem, holiday homes are in fact unaffected by Brexit. Property rights are not part of the EU treaties and, just like in the US, anyone is allowed to buy there. Under most versions of Brexit, including no deal, the British are likely to be ‘third country nationals’ in EU nations like Spain and France. So are Americans and Australians in the EU and they are allowed to stay for around half the year without a visa. So you will be able to enjoy your holiday home in Spain, France, Italy, Greece, Cyprus, Malta or any other EU nation without too much trouble.
It may not be your main motivation, but a holiday home can be a great investment too. While UK property is currently sinking in value in many areas, the majority of our favourite holiday home locations are seeing price rises. In countries like Italy and Greece, even France, that recovery is just beginning – you could be just at the start of a period of sustained capital growth.
Rental income is the other factor for investors, especially with the British government increasing taxes on UK buy-to-lets. It is far easier and less time consuming than it used to be, with internet platforms such as HomeAway and Airbnb to ease your path. You do need to be careful too, however, with Airbnb making it so easy for renters that there can be a glut of properties.
Authorities in many popular areas – such as Barcelona – are also clamping down severely, insisting on rental licences and special insurance for all properties, and clamping down on tax avoidance.
For holiday home insurance if renting your home out, you will need to be covered for accidental damage and theft within your home, employee liability for cleaners, gardeners, etc, unoccupied insurance (for when the property is empty), as well as public liability insurance. The cost of insurance will vary depending on the location of the property, the square meterage, number of bedrooms, facilities, etc. As a rough guide, the cost for a three-bedroom villa with a pool in the Costa Blanca with £10,000 contents and full accidental damage cover is just under €350 per year.
How to buy
Buying a property in al of or favourite holiday home locations from Florida to Fethiye is far easier than it used to be. Firstly, there are good, reliable, English speaking property lawyers available. Your lawyer should be completely independent of the estate agent or property developer. It is usually best to engage a lawyer before you even start seriously looking for property.
When you’re ready, you need to find a good estate agent. Most properties will be listed with several agents, so find an agent you feel comfortable with, who listens to you and doesn’t try any hard-selling techniques.
The processes of buying a property are essentially the same wherever you buy in the world. You pay a 10% deposit when you sign the sales contract and then the balance when you get the keys, two or three months later. There may be some differences – paying a small “reservation deposit” for example, of around €3,000 to €5,000 to secure the property at the outset. Many countries also use a notary to oversee the purchase. Note, however, that a notary is not your lawyer, they are impartial – so you still need your own.
In most European countries you will need to budget for around an extra 10-15% for buying costs – including legal fees and tax.
You also need a currency exchange specialist. With the two- or three-month delay between agreeing to buy and finally settling up, a lot can happen to the pound in that time meaning that the price to you will be changing every day. A property specialist like Smart Currency Exchange can easily fix that for you with a forward contract for no extra cost.