Beware The Foreign Property Sharks

Posted on September 18, 2009 by Roberta
Posted in Foreign Property Tagged beware, foreign, High, property, risk, sharks

Business_Shark_1 I was reading an article today from Property Wire about foreign developers who are trying to hoodwink international buyers by making claims which are either unsubstantiated or simply unclear.

As the UK market is taking such a bashing it can be very tempting to look away from all the doom and gloom at home and seek more speculative investments abroad. Remember though, speculative is the word here. (As I commented in our past blog: read it here )

One example case is Egypt where some agents are using the lack of inheritance tax and CGT as a marketing point. But what is not clear in their claims is that this is true only if you are a resident in Egypt.

If you are, for example, a UK resident and buy a property in Egypt to use for holidays or to rent out, then you are not an Egyptian resident and therefore you will not be subject to its tax laws but to those of the country which is your main residence.

Some of the so called advantages are downright misleading and very crafty. Always remember when looking into foreign property, they do not play by our rules-they play by their own. Check the small print, get tax advice pertaining to YOUR own situation, and, have an independent adviser versed in the country’s laws and rules re investments to foreigners.

Or how about this one: In Silesia apartments / Poland investors are being asked to sign a ‘waiver of claims’ which would allow the developer to swap parcels of land with the local council. An investor commented ‘There is nothing in the purchase contract which allows them to do this and even though we have paid the developer in full, they will not sign. We are left with either paying more legal fees to investigate and undertake the waiver or head towards court proceedings.”

In the case of Poland in particular ( which has seen a huge drop in property values, particularly in the commercial sector), as a non EU citizen investor you may have to apply to the Ministry for a permit to own the land. Applications would likely be rejected if you do not work, live or have any business in Poland.

Get the contracts looked at in fine detail. Make sure anything you do not understand is translated properly ( if need be) and verified as true by your independent source.

Currency Latest

Despite weak data from the US and Europe this week, the Pound has failed to gain any ground against these or any other major currencies – a worry for overseas property buyers. Perhaps the market has seen the recent rally by sterling as a little too much, too soon, and we might struggle to see the elusive €1.20 mark for some time to come.

Next week sees some important data released, including UK production data on Tuesday, and the Bank of England’s monthly interest rate decision and accompanying statement on Thursday.

Currency exchange plays a big part in foreign property, make sure you get the best deal, or the whole thing could cost you even more dearly than you expect at the outset.