Also, exchange rate changes have resulted in those still proceeding to purchase either having to borrow more, or borrowing where previously they were paying cash. The main countries are still popular – ie: France, Spain, Portugal, Southern Cyprus and the USA, but other countries although still showing interest, are still suffering with their political and economic uncertainty – such as Greece and Italy, while Turkey has the added problem of insurrection on its borders.
Further afield, the Caribbean, Thailand, Australia, New Zealand and South Africa are still of interest for holiday and future retirement homes, and Cape Verde could still be an opportunity if more infrastructure was in place.
In 2016, France and Spain have shown equal interest, but France still offers a higher loan-to-value at 80%-85%, compared to 70% in Spain. However, better lending terms are possibly available for 70% or less in France and 60% or less in Spain.
Both the Canary Islands and the Balearics are receiving increased interest and loan-to-value rates are similar to mainland Spain.
Interestingly, in both countries higher priced properties are being sought, so the high end properties in both the ski and coastal areas of France (south mainly) and Spain, such as Costa del Sol, have had a lot of interest.
This has, therefore, benefited Portugal where mortgages are available up to 80% loan-to-value (better lending terms are available for loans of 70% or less) and there has been quite a lot of interest in the popular areas such as the Algarve, parts of Lisbon, Cascais and Estoril. Portugal’s “Golden Visa” programme has also been very well received, but the purchases here tend to be more “cash only” rather than financed.
The USA has been quite busy, but the exchange rate between the US dollar to the pound since the Brexit vote has restricted the number of potential purchasers, although there has been interest from Middle East and Far East clients which have not been as affected by currency exchange movements. Maximum loan-to-value rates still tend to be 70%. Florida, New York, California, Colorado (for skiing) and Texas remain popular areas.
Italy has not been as busy in the last year and fluctuations have been seen within the market. This is partly due to the economic concerns and the recent referendum. At the moment, the maximum loan-to-value rate is 60%, which will hopefully increase in the near future.
Lending remains unavailable through my lending sources in Greece, unless the property is valued at €1million or above.
There is increasing interest in Cyprus and loan-to-values remain at between 60-70% with a minimum loan of €50,000. However, please be vigilant about local legal and title issues.
Although popular, interest rates in South Africa are high, in the 10.50% range, compared to those offered currently in Europe and the USA. Lending is still very restrictive, with only 50% loan-to-value if you are a non-South African national, or 70% if you are a South African expat. Mortgages are still only available in Rand.
Other countries where there is some interest include:
Australia and New Zealand – both countries are still popular for retirement and long term investment.
Dubai – there is increasing interest in Dubai, but lending is still restrictive. The maximum loan-to-value is 70%, but new builds can be as low as 50%. The issue of too many rental properties is leading to lower rental returns. Purchasers are still buying mainly for holiday, retirement and work purposes.
Caribbean – restrictive lending is in place for certain islands, although none of the islands are especially popular with Brits. The Caribbean seems to be more attractive to North Americans and Canadians.
Thailand – is less popular and, as with the Caribbean, lending is restrictive. You can only buy a condominium or apartment if you are a foreigner and you will not be allowed to buy land or houses.
Canada and Switzerland are popular with ski enthusiasts and for holiday homes. There is also interest in Canada for retirement properties.
Holland, Belgium and Germany have a lot of interest from expats for future retirement and also work-related purchases.
Croatia, Czech Republic, Hungary and Poland are the most popular countries for non-UK buyers in Eastern Europe, as properties are still keenly priced. However, other than the Czech Republic, lending in these countries is currently severely restricted for foreign nationals.
My top tips for 2017 are Malta and Gozo. They are both very popular with Brits because of the good climate and reasonable prices. The maximum loan-to-value is 70% and the only concern may be a restriction in lending and property stock available, if this impacts too much on local property ownership.
Please keep in mind that if you are looking to buy abroad for investment purposes, most lenders do not take rental income into account. Also, all mortgages are normally based on a client’s affordability, overall personal financial profile and the valuation of the property.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
There is so much to recommend around retiring to Spain. However, the many opportunities inherent in a move to the country also bring a great many challenges. As such, if you want to join the approximately 250,000 British expats who currently live there, you will need to consider a number of important questions, not least the cost of retiring in Spain.
Generally speaking, saving money and planning for your future are two key aspects of financial planning. So, getting this right as early as possible should be one of your main priorities, to ensure that there are no nasty surprises down the line. There are a multitude of reasons that you might choose to put money aside, such as for a “rainy day fund”, a house purchase, your children’s education or making sure that you can retire comfortably.