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FACT FILE - Buy to let in Europe
Buy to let – Holiday Homes outside the UK

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How to present your rental property for letting

How not to present your rental property for letting

Estate agents assisting with buying or selling overseas property now subject to Anti-Money Laundering regulations- October 2012

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The Buy to Let market has been growing considerably in the UK since the mid 1990’s and now with the growth of second homes outside the UK there is even a greater market.

Where to begin?  First of all decide on why you are buying – Do you intend to live in the property for holidays or purchase a property purely to let out permanently?

Long term renting: If you are going to buy a property purely to let out, then you should seek the assistance of a professional estate/letting agent in the country that you choose. Most countries have different systems for letting out a property and you could find that you have to commit the letting up to nine years. You should also seek specialist help regarding the location, whether to let it furnished or unfurnished.

Holiday Rentals: If you go down this route it will mean that you have the benefit of an income from the property plus the opportunity to take your holidays there. 

First of all you have to decide on a country - France one of the most popular, Spain still very popular like Portugal and Cyprus. Then there are the less well known destinations - Greece, Turkey and Eastern Europe.

Many people start their research by looking at a country they are familiar with. You then have to decide on the location. If you are aiming to let the property to cover costs and mortgage repayments then you must purchase it in an area that is going to be popular with visitors. You should also take care right from the start not to overstretch your budget. Remember that you will often have to pay a purchase tax on the property, lawyer’s fees and in some countries agent’s fees when you purchase. 

The next decision is your market. Are you aiming solely at the UK and Irish market – this will mean it will have to be located close to airports or are you considering a wider market – Dutch, German & Scandinavia for example?  A wider market will naturally give you more opportunities to let the property, but you also have to promote it in those additional countries. 

You have now decided upon the country and the area within that country. How do you find that property? There are several ways. Companies organize expositions in many countries like the UK and Ireland. Here you go along to a local hotel and collect the information and this is followed up by an inspection flight. You will often find that these properties are just being built or are going to be built. Many of these companies are now offering second hand properties.   

       

There are numerous property and country magazines with pages of ads for new and second hand property that is available and many newspapers advertise similar properties.    

A very popular method is the Internet. If the agent’s site is good you should get several photos of one property and many agents will be happy to email you further pictures. If you are then planning an inspection visit, arrange several appointments so that you get an idea of what various properties are like. Many agents speak your language as well and if in doubt take along a friend who can help. 

If your property is located in a country that is very warm, particularly in the summer and you have the opportunity of buying a place with a pool, this can certainly boost rental income and make it more attractive to rent. There are of course additional maintenance costs involved with a pool. 

Furnishing it – You now have the right property – the next step will be furnishing it. Equip the kitchen well. People on a self catering holiday don’t want to spend a lot of time washing up – provide a dishwasher if possible. A washing machine is an essential and a television is very welcome particularly on a wet autumnal evening. Along with a television you might have to consider a satellite system and which one will depend on your core market.  

Most people have mobile phones, so it is not necessary to provide a telephone. If you do, contact the telephone provider to find out ways of providing one in a holiday home whereby you don’t find you are paying someone else’s phone bill. Even if you have incoming calls, someone can always accept a reverse charge call to your phone!

Remember to take into account safety measures. Install a smoke detector, have your appliances checked (in some countries it is the law) and make sure that the furniture is smart, in a good state of repair and if applicable compliant to local safety regulations. Breakages can occur so provide crockery and glassware that can easily be replaced at the local supermarket or department store. 

Bedding & bed linen. Decide whether you provide this or not. It is an additional cost – not only for the initial (plus replacement purchase) plus the ongoing associated laundry costs. 

Local agent - You will need to consider in your financial planning the costs of employing a local agent. This can be in the form of an agent who finds visitors to rent the property and checks them in and out, arranges maintenance etc, or purely someone who just acts as a key holder and checks your visitors in and out and generally manages the property for you.

Alternatively you can just employ an agent to check the visitors in and out and organise routine maintenance. Some people get to know a neighbour and ask them to do this. If you go down this route, it should be on a business footing.

WARNING - RENTAL SCAMS IN HOLIDAY LETS CLICK HERE FOR DETAILS YOU COULD BE NEXT!

Letting & Marketing – don’t reserve the best letting weeks of the year to yourselves, particularly if you need the rental to pay for the property. Try and visit it off season. It is good to go there at least twice year, to check on its state and condition and also to carry out any repairs or garden tasks that have not been attended to.

The amount of time during the year the property is let will depend on your outgoings; there are several ways to find holiday renters. You can use the Local agent, list it with a holiday company back home or advertise it yourself using a specialist holiday publication (or several of these) or try the national newspapers. Advertising costs can mount up, particularly if you are not getting the enquiries. As more and more people are turning to the Internet, look for a specialist site like www.jmlvillas.com.

the low cost villa advertising service

You simply pay an annual fee of under £12 and the enquiries go straight to you. Many people then decide to have their personal website.

This can provide a lot more additional information about the property, area and if it is well illustrated with photographs, you have then developed your own brochure on line. The costs of building a website can be quite high, so shop around and don’t go for something that is too fancy, has long introductions and large photos\that take a long time to download. People using the web, so get bored and want quick results.

Finally remember – get your rental price attractive to attract renters.

Wills  You should make arrangements whilst you are in the process of purchasing your property to make a will in that country in relation to the overseas property. In some countries like France there can be inheritance problems whereby children automatically benefit rather their mother. The lawyer handling your purchase can be consulted about local formalities

Check List rules for a Buy to Let Property

  • Buy in a country that you know – As you will also be wanting to stay there, make sure that you can get there easily.

  • Research the up and coming areas.

  • Target the market you want your property to appeal to.

  • Don’t make too many restrictions on the letting – You must consider family lets, pets travel all over Europe these days.

  • Get the rental price correct. It is no good setting a high price when people are not interested in renting your place. Check out the prices of the competition.

  • Location of property – is it within easy traveling distance of an airport? How far away is the nearest motorway – town or beach or lakes the property located with regular water supplies and electricity? If the property is on a septic tank remember that the maintenance has to be arranged.

  • Don’t just buy a property that appeals only to you – if you are buying to let you need to consider firstly those who will be paying the costs – your paying guests.

  • Finance – Your rental income has to cover the mortgage – the upkeep of the property – the marketing costs – Paying for a local agent to administer guest transfers – Tax (local property taxes plus income tax in the country the property is located in / or back in your home country)

  • You must think about this as a long term investment – you should also take into account that you might buy when property has had a history of rising in price, however there can always be the possibility of prices falling in your chosen country or region and your property no longer being in a “fashionable” holiday area.

  • Insure the property – Buildings, contents and for your paying guests.

  • Provide your visitors with an Information folder for the property and don’t refer to them as “Tenants”. Many people do not like this term.

  • If you are going to spend your own holidays at the property and want to keep some of your own personal belongings away from your paying guests, try and build, or use a specific cupboard, cellar area etc to keep locked.   

N.B. This information should not be relied on for accuracy and is  presented here without the responsibility of jml Property Service and the website it is being displayed at. ©jml property Services 09-04  

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Fact File - Gas checks on Property for sale in France:

Since 1st November 2007 all properties offered for sale in France with natural - mains gas services installed more than 15 years ago must include a Diagnostic Gaz in the Dossier de Diagnostic Technique (This is rather like the HIP - Home information pack in England and Wales). It costs around  100 -  150 for the test that includes supply pipes, boiler, water heater and radiators. The certificate will be valid for three years and the seller has to organise and pay for this before a compris de vente can be signed.

There are also new rules for surveys from November 2007 all the technicans carrying out these tests must be accredited by COFRAC Comité d’accreditation français (Similar to Corgi in the UK). The new rules could effect around 10 million properties when they go on the sales market. If a property has bottled - cylinder gas (like calor gas) this is not covered by the new test.

SEE ALSO: Diagnostic de Performance Energétique - DPE - France for Rental Property

FACT File - Property Taxes in France

So you are about to purchase that ideal property - If you require finance or don't you still have to take into account the payment of property taxes. In France the tax system is centralised, however the location of the property will ultimately determine how much you pay.

First of all you have to pay the"notaire's" fee. Most of this in fact goes to the government like Stamp Duty in the UK. This will work out around 6% to 8% of the purchase price. There is also a small land registry tax to pay.

The property sale is now complete. You have the"Taxe D'Habitation" which is a local tax. The amount you will pay is determined from the cadastral value of the property. This is based on the size and location -not market value. It is generally thought to be reasonable particularly in rural areas.

It should be noted that if you let your property as a holiday let and go there a few times a year you still pay the"Taxe D'Habitation", but in many areas you will also have to collect a"Taxe de Séjour" from your "paying guests". The authorities see it as you are making money from renting out the property then so you should pay them some revenue as well. This might only be a few cents per person per day, but it still has to be paid and it will depend on your local town hall.

The "Taxe foncière" is also paid annually. This generally quite low. There is also a wealth tax "Impot de solidarité sur la fortune" that is paid by owners of property worth in excess of €732,000.

Inheritance tax:"Impot sur les successions" this usually has to be paid when the owner dies or one of them.

You are also expected to pay tax on any rental income and although France has tax treaties with many countries including the UK it is worthwhile employing an accountant to help you manoeuvre through the French tax minefield.

The above information is given without responsibility of accuracy. ©jml Property Services 09/05

Buying or selling info in France - If you need to check out what property has sold for in France then you need to visit www.immoprix.com . The data is provided by Notaires. You'll find prices and indices for each type of property (house, apartment, land) based on its geographical location (region, department, municipality, district, neighbourhood).

FACT File - Property Taxes in Spain

So you are about to purchase that ideal property - If you require finance or don't you still have to take into account the payment of property taxes. In Spain.

You have to pay an income tax "Impuesto de la renta" and a wealth tax -"Patrrimonio". This is arranged on a sliding scale climbing to 2.5% on properties over €10.7m. The base rate for the tax"Impuesto de la renta" - income tax is 1.1% of the cadastral value of the property. This determined by the size and location. Non residents pay 25% of the tax base.

If you are renting out the property the tax rate you have to pay is 25% of the annual rent. You are not allowed to make deductions for expenditure.

When you sell the property a non-resident is subject to 35% capital gains tax, however you can take off the costs for improvements during ownership.

There is also a local tax"Impuesto sobre bienes inmuebles" This based on the cadastral value of the property.

It is probably worthwhile using an accountant to assist you with these tax returns.

The above information is given without responsibility of accuracy. ©jml Property Services 09/05

SEE ALSO

Renting in Spain

Buying a Property in Spain

How to present your rental property for letting

How not to present your rental property for letting

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