New versus old – which foreign property is right for you?
As the summer comes to a close, some people will still be thinking longingly about their holidays and wondering whether to buy a property abroad.
If you do decide to purchase, there are some big decisions to make, one of which is whether to buy a new or old property.
Simon Conn, an overseas property expert, who has more than 35 years’ experience in the market, said: “A client has two choices. Either they buy a property which is already built and they can see exactly what they are getting, or they buy it off plan, often as part of a community with all the promise of what will also be built.
Buying off plan can sometimes offer a discount, although this can go the other way and some properties can be overpriced,”
If you choose a new build, Simon’s advice is to do your own research and find out who is behind the development so that you know who you are buying from.
Simon Said: “Look at and buy from firms who have built similar properties previously and have the necessary experience. If it is an established and respected builder in the UK who has branched out to build in Spain, for example, then you could expect it to be a good buy. If, on the other hand, no-one has heard of the firm, even locally, alarms bells should ring.
Delve further into where they have built in other resorts and countries and see if you can find any reviews - positive and negative - as sometimes things go wrong,”
For example, if another of their projects has encountered problems, the knock on effect could mean they do not have the resources to carry on building the project where your property is located.”
Another potential issue if you buy off plan is around the amenities. “I have heard of people buying a property in an up and coming ski resort, with the promise that ski lifts and other facilities were going to be built in close proximity. But when they were constructed, they were not situated in the nearby location they had been led to believe, making their property a less attractive proposition,” he added.
Simon works closely with Peter Esders, a solicitor at international solicitors firm Judicare Law International, who said: “Generally people buy a property as a combination of the property itself and the amenities that are available. We have seen too many people who have bought on a particular development because there is going to be a new airport built nearby or a new theme park and it did not happen.
Once you have paid the full price for the property there is very little pressure that you can bring on the developer. The only thing that you can do is to have a clause in the contract whereby you do not complete prior to certain aspects of the communal areas or infrastructure being finished, or where you complete but have a retention to cover some sort of compensation if they do not finish these areas,” Peter added.
Simon again: “There are lots of positives to buying off plan, just make sure you carry out the correct checks, do the proper inspections and check that the correct planning permissions and building/habitation licenses are in place.
Lenders tend to be wary of lending against new properties and want assurances over the developer and their track record. They will not lend on a flat until it is built because there is nothing physical to take a charge over, although a developer’s bank may lend on a flat as they have the security of the underlying land, but often only offer a second mortgage as the first mortgage is secured against the development.
Simon added: “There are also cases where banks have not lent on a property even when it is built because of the question of legalities over the property and construction.
If the price is cheap, question it, even whether it is a new or older property. Find out why it is cheaper than everything else in the area, because if another developer has not been able to build as cheaply in the same area, how come this developer has?
Go into everything properly to protect yourself. And remember - if it seems too good to be true, then it probably is.”