Many people in the UK now own a second home abroad. The popularity of purchasing a foreign property has soared over the last decade in particular and even the global economic crisis has not stopped this trend in its tracks.
There are many factors that explain why more and more people are looking abroad. First and foremost, travelling across the globe has become easier and more affordable than ever. The emergence of regional airports and budget airlines means heading overseas is a relatively simple process these days, so the world now seems a much smaller place.
Many are tempted by the lifestyle attractions on offer in foreign destinations, such as the sunnier weather and the prospect of enjoying a more relaxed way of life in beautiful surroundings. And with people living busy and stressful lives, the idea of being able to jet off to a holiday home in a hot, sunny and beautiful location can be very appealing indeed.
But some are going even further and choosing to relocate to their overseas property on a full-time basis. Retirees in particular are often very keen to emigrate and set up home outside the UK. This makes sense for many reasons – their children will have grown up and left home so they do not have major family commitments in Britain and they no longer need to go to work every day. People in this age group are also more likely to have paid off their mortgage and have a healthy amount of money in the bank that they can transfer abroad to purchase a foreign property. They can then enjoy lifestyle attractions such as sun and sea every single day.
Financial factors can often play a part too. Chancellor of the Exchequer George Osborne recently announced that age-related allowances for people who turn 65 will be abolished, prompting the deVere Group to suggest it could lead to more retirees deciding to settle overseas in order to keep hold of their assets.
Most of those who have already packed their bags and set up home outside Britain appear to believe they have made the right decision. Indeed, a recent poll by NatWest International Personal Banking showed nearly three-quarters of expats do not believe their quality of life has declined since moving abroad, even in the face of rising living costs. Furthermore, the survey showed the proportion of people planning to return to Britain has dropped in the last few years – another sign that people are not regretting going overseas.
However, other overseas property buyers are not placing a priority on their own enjoyment and recreation when purchasing a residence. Some are mainly interested in the investment potential that bricks and mortar can offer, as a property located in fast-growing markets can be sold on at a healthy profit when its value has gone up.
Demand for rental accommodation among workers and holidaymakers in certain locations allows buyers to collect strong returns in the meantime, as second home owners can charge people for staying at their property throughout the year.
So where should overseas property buyers look in order to purchase their ideal home? This depends on many factors, mainly what exactly they want a foreign residence for. Lifestyle buyers will not always be looking in the same places as investment buyers.
The global financial crisis has profoundly altered the overseas property landscape, as countries like Spain no longer offer the same capital appreciation rates that they once did. However, they still have the lifestyle attractions, so holiday home buyers can make the most of these and also cash in on the strong rental demand from holidaymakers. And traditional European destinations are easily accessible, which makes them even better for those who want to enjoy a foreign property and let it out to tourists when it would otherwise be unoccupied.
Meanwhile, other countries are emerging on the international property scene, such as Brazil. With the country gearing up to host the 2014 World Cup and the Olympic Games two years later, international interest is surely set to grow over the coming years, while its tourism sector looks likely to boom as well. With authorities spending money on infrastructure upgrades and businesses increasingly considering opportunities in cities such as Rio de Janeiro and Sao Paulo, the market may offer good potential for investment buyers and plenty of attractions for those who want a second home for their own use.
Overseas property buyers can easily be swept away by the excitement of purchasing a residence outside the UK, but it is necessary to keep a cool head in order to avoid making potentially costly mistakes.
Liz Rowlinson, editor of A Place in the Sun Magazine, recently advised buyers not to "forget the fundamentals of buying a property", such as its location and accessibility. The basic questions a person asks themselves when making a purchase in the UK should be asked in other countries too. But overseas property buyers may still need additional expert advice, so they can get guidance on a country's legal system and the various rules and regulations they may need to abide by.
Professional assistance on exactly when a person should transfer money online to purchase a home may also be worthwhile, so buyers don't end up losing out because of unfavourable exchange rates. A currency comparison can help purchasers identify the best rates on the market and which moment they should choose to part with their cash, so they can get a good deal for their overseas property.