Buying a holiday home abroad involves a lot of factors to think about. Sure, you need to consider where it is and what kind of property it is, but you also have to pay attention to the local rules and laws. In some places, they might limit what kind of property a foreign buyer can get. Plus, there are risks that come with owning a home abroad, so having the right insurance can help reduce these risks.
In this guide, we’ll try to cover some important topics about costs, research, and mortgages so you can make a more informed decision when choosing a property.
Follow Your Instincts and Budget
One of the dilemmas in buying a holiday home is whether you choose one where you can enjoy the city life or coastal properties so you can be near nature. This choice boils down to your personal preferences and budget. Some want convenience by living near restaurants and shops in the city, while resorts attract guests and families because of the amenities and activities they provide. Property prices may also vary in these two areas — living in a holiday home in the city may be more expensive than those in the province or coastal area.
Dominic Volek of Henley & Partners recommends homebuyers to check the property’s history for any issues or disputes that may affect its value. He also said that home buyers should get a real estate agent who is knowledgeable in the local market. You may also need to consult with a tax specialist or lawyer to help you navigate any tax implications for your property.
Seek Advice from Experts Who Know the Location
If it’s your first time buying a holiday home, it can be an unfamiliar territory to you. Check the latest trends, and talk to real property insiders and friends who have already experienced this property investment. According to Knight Frank Singapore’s head of sales for residential international project marketing Clarice Lau, Singapore continues to be the top choice among ultra-high-net-worth individuals (UHNWI) in Asia.
But Lewis Cha of List Sotheby’s International Realty Singapore states that Malaysia is the best country in Asia to invest in based on the Global Property Guide (GPG) ratings; next to it are Indonesia, Philippines, and Vietnam. These findings could be attributed that these areas have fewer restrictions on foreigners owning property.
You may think buying a holiday home abroad is smooth sailing, but it’s actually difficult if you don’t know anyone from the area. You may reach out to local real estate agents, holiday cottage agents, or even the local residents in your area. However, if you are planning to get an agent to assist you, make sure that they are locals in the area.
Generate Income for the Long-Term
Consider having rental income on your holiday home, especially if you’re only staying there for some parts of the year. Most prospective buyers of holiday homes make sure they get a return on their investment by renting the property out to holiday-makers through short-stay services like Airbnb. The rental income you derive from this may help you pay mortgage repayments.
However, you may also need to look into the rental income tax that might come with the property. In some countries like India, it impose a lowest tax rate of 5.8% as compared to other countries that impose a 20% to 30% tax.
According to Bjorn Fjelddahl of Odin Properties, if your holiday property is managed well, “your running costs and more can be offset by rental income.” Depending on the location of the property, your holiday cottage may only be in demand for certain times of the year. Thus, it may be difficult to find guests to stay outside of peak season.
As mentioned earlier, a good long-term investment will come in the location of your holiday home. Do extensive research on the location and invest in a good holiday house with a healthy demand from expatriate professionals and even from the local tenants. You may also consider your second property to be put up for a holiday rental as holiday rentals are most in-demand in most areas.
Checking the New Value of the Holiday Homes
Investors buy holiday properties on many factors: rental income and capital appreciation. Other reasons for the increase in house prices include the reputation, history, and quality of the developer.
For home buyers or investors, experts say that they need to check if the holiday home has any restrictions to foreign ownership, taxes involved, and the ease of moving funds when selling the property. In Hong Kong and Singapore, investors do not pay capital gains tax upon disposal of property, while investors in Taiwan need to pay a 35% capital gains tax, one of the world’s highest capital gains taxes.
In financing property overseas, if you’re buying a holiday home as your second property and for your personal use, a standard residential mortgage is ideal. But if you are letting out a property, you need a furnished holiday let mortgage and they are more expensive. There are providers in the property market that can help bring down mortgage costs as the demand for holiday homes becomes increasingly popular.
When estimating the renovation costs of your investment property or second home, homeowners should treat it as if it’s your primary residence. Experts strongly advise doing a thorough inspection to check for any mechanical, electrical, construction, or plumbing issues. It is also highly recommended to check any design-related matters in the kitchen and bathroom.
The repairs in your second home shall be considered in the potential property value versus the purchase price. Make sure that in renovating your holiday house, check the newspapers and search the internet for the prices before talking to a real estate agent, so you know you are paying the right price. It is also ideal to work with a reliable and reputable local architect for faster logistics management.
Safety and Security of Home
One of the considerations when purchasing a holiday home revolves around the level of maintenance required. Experts emphasize the importance of taking into account the local weather conditions, such as hurricanes or heavy snowfall, and their impact on maintaining the property.
You must do your research on maintenance expenses like lawn care, pool upkeep, and snow removal, as well as the availability of housekeeping and caretaker services.
Another significant factor to bear in mind is security. One cannot assume the same level of comfort and security in their holiday home abroad as they would at home. Ensuring protection against theft and fire is paramount, and it’s vital to verify the functionality and updating of security cameras.
Personalize Your Home
Most holiday homeowners ask if can they live in their holiday homes. The answer is yes since it’s theirs to enjoy. It’s important to make your holiday house ome fit your needs.
According to Derek Lim, who works at a luxury furniture store, think about why you have the holiday home. If it’s for hosting family and friends to enjoy holidays, make sure it’s set up for that. For example, get a sofa that can be arranged in different ways, make sure there’s good lighting to make it cozy, and have a well-designed kitchen for cooking.
When you buy furniture for your holiday home, Lim recommends buying from trusted sellers, especially for things that need setup or customer support.
Discover Luxury Living with Brittany Corporation
Brittany Corporation, a prestigious luxury real estate developer with branches in Alabang, Tagaytay, Sta. Rosa, and more, can make your dream a reality. From city vibrancy to coastal serenity, we have diverse properties to match your preferences and budget. Consult with our local experts, explore holiday rental potential, and personalize your holiday home with ease. Experience peace of mind and create lasting memories.
Contact us today and embrace luxury living in paradise. You may also visit our website, YouTube, and LinkedIn for more details.