Portugal is the place to buy in 2018
Simon Conn is an overseas property professional
Here we are at the start of 2018 and since the Brexit result was announced 18 months ago, it does not appear to have had much of an impact on the overseas property market.
People have seen Brexit as an inevitable – it is going to happen, but no one is sure what form it will take. As yet, it has not had a major impact on my business.
A few people have come back to us who paused because they do not want to wait anymore, but others recognise the opportunity to purchase properties at good prices.
With stage one of Brexit complete, more upbeat comments about the future of UK nationals living in Europe has added to a more positive outlook.
Coupled with the historically low interest rates, people have been moved along to make a decision now, especially as rates in some countries are starting to increase.
My predictions for this year’s property hot spots are:
Portugal has always been a popular country with Brits looking to buy abroad and is my number one recommendation for this year.
A lot of people are recognising the good value for money, nice weather and ambience of Portugal when compared to other Mediterranean countries.
It is not as stiflingly hot as some places as it is mostly on the Atlantic coast rather than the Med and there is also the Golden Visa programme and other tax benefits which are available to retired people.
Mortgages are available up to 80% loan-to-value, although better lending terms are available for loans of 70% or less. The most popular areas include the Algarve and the Silver Coast north of Lisbon, but there has been more interest for Madeira and even the odd enquiry for The Azores.
Interest rates are currently available from approximately 1.75%-2.00% above 12 month EURIBOR (the interest rate at which some European banks lend funds to one another, where the loans have a maturity of 12 months).
Spain continues to be popular with its great weather, Mediterranean coast and laid back lifestyle. Holiday home and investment purchases seem to be increasing. Mortgages are available up to 70% loan-to-value (better lending terms are available for loans of 60% or less).
Interest rates are currently available from approximately 1.50%-2.00% above 12 month EURIBOR.
I predict that increasing interest will be shown in Ireland this year, although it can still be quite difficult to get a mortgage and the lending criteria is strict.
The maximum loan-to-value for holiday homes and investment properties is 60%, and interest rates are from 4.60% variable.
As usual, France will remain in the list of top countries.
Transport links from the UK are excellent so it is easy to get to, and it offers a more relaxed lifestyle with fewer people and better weather.
Mortgages are available up to 80%-85% loan-to-value (better lending terms are available for loans of 70% or less). Interest rates are currently available from approximately 1.50%-2.00% above 12 month EURIBOR.
Interest in the USA has waned a bit since the Brexit vote and the exchange rate between the US dollar and the pound has led to a reduction in the number of potential purchasers.
Popular areas include Boston, Fort Lauderdale, Miami, Orlando, Tampa, New York and other parts of the East Coast.
West Coast destinations are always of interest, including San Francisco, Los Angeles and Seattle.
Maximum loan-to-value rates are 70% (up to 75% in Florida) and interest rates are from approximately 4.50% fixed for 3 years, or 4.875% fixed for 5 years.
Other popular countries include Canada, Germany, Holland, Italy, Malta and parts of the Caribbean. All are sought after by holiday home owners and as potential retirement homes.
The Canary Islands and the Balearics are becoming more popular, with loan-to-value rates similar to those of mainland Spain.
The economic climate means that finance packages for Greece are very difficult, unless the property is valued at €2m or above.
The market in Cyprus is a bit more buoyant and loan-to-value rates are 60-70% with a minimum loan of €50,000. Be vigilant about local legal and title issues.
There does seem to be a growing interest in more exotic destinations – not seen since the last world economic crash, including places such as Argentina, Brazil, Cape Verde, Ghana, Morocco, Tunisia and even Sao Tome, off the coast of Angola.
However, with the majority of these countries, mortgages for non-locally based nationals are very difficult, or not even currently available, plus it is imperative you take the necessary independent legal and valuation advice before signing any sale contracts.
If you are looking to buy abroad for investment purposes, note that rental income is not usually taken into account. Mortgages are normally based on a client’s ability to repay the mortgage, overall personal financial profile and the valuation of the property.