Industry experts list the most popular destinations for those house hunting abroad, and the kind of mortgage deal you can expect to get -article by Alison Steed for telegraph.co.uk
Interest in French property is picking up among Brits, with Paris the seventh most searched-for destination
Property buyers face a number of restrictive new rules coming into force over the next year, affecting both UK and overseas purchases.
From April 2016, the ability to deduct around 10pc of rental income as awear and tear allowance will be removed in the UK. Instead landlords will only be allowed to deduct amounts they have actually spent on the property within that tax year, which could make a big difference to the viability of some landlords’ retaining their UK properties.
Stamp duty is also set to increase by 3pc for second home owners and buy-to-let landlords from April. Thousands of British home owners who have property abroad could be liable for the new stamp duty surcharge under Treasury rules about second homes, as the Telegraph recently reported.
Those are not the only issues facing landlords in the near future. From 2017 the ability to reclaim tax relief on mortgage interest on properties in the UK or abroad will be reduced and landlords will ultimately be restricted to a 20pc tax relief. This will be phased in and will finally reach this level in 2020/2021.
Yet despite this, the appeal of sun, sea and sangria is still strong, giving rise to a desire among Brits based in the UK and existing expats to buy an overseas property to live in permanently, or just part of the year. Various surveys have come out recently telling us which are the top destinations for those looking to buy.
Top of the list of favourite destinations according to TheMoveChannel.comis Italy, with Rome the most searched-for place in the world. Terni in Italy also makes a showing in the top five, with two Portuguese destinations – Ponta Delgada and Ericeira – in second and fourth split only by Lautoka in Fiji.
La Dolce Vita: Rome is the most searched-for place in the world
Dan Johnson, director of TheMoveChannel.com, said: “Italy’s economy underperformed in Q3 2015, with growth reducing from 0.3 per cent to 0.2 per cent, while house price declines are gradually slowing, but the favourable exchange rate has kept the sentiment broadly upbeat among investors. Indeed, the country now accounts for 11 of our top 50 locations, neck and neck with previous champion Portugal.”
However, buyers looking for a mortgage in Italy may find it harder to come by this year than in previous years. Overseas mortgage specialist Simon Conn said: “Italy is still busy, with interest rates remaining low. However, the maximum loan-to-value (LTV) rate is now 60pc, having been at 60-70pc last year.”
Despite the strong showing, Portugal’s appeal has waned somewhat, with searches falling for the first time in Q4 2015. However, according to the World Golf Awards, Portugal is the world’s best golf destination, and golf tourism is also boosting luxury property sales in Portugal, according to Ideal Homes Portugal.
Mr Conn said: “Like Spain, Portugal has also seen an increase in the number of agents operating. There are higher LTV mortgages available, up to 80pc LTV. People have recognised the quality of the build, the lower density of properties in the surrounding area and the potential value for money.”
Spain has eight locations in the top 50 identified by TheMoveChannel.com, up one from last year, but Cyprus and Greece have both fallen out of the top 10 most popular destinations, which is likely to be due at least in part to the unstable nature of their economies.
Mr Conn said: “Spain is a very popular holiday destination and when people are staying there, they often think about purchasing, instead of renting or staying in a local hotel. LTV rates are now up to 70pc.”
France is making a comeback for Brits buying abroad according to TheMoveChannel.com, with Lyon becoming the sixth most searched for property venue and Paris placing seventh. While property prices in both Spain and France are still depressed to some extent from the credit crunch, it is the draw of the weak euro that has encouraged buyers from the UK and USA particularly to head to the Continent and snap up a bargain.
Mr Conn said: “Buyers in France are taking advantage of very low interest rates and mortgages are still available up to 80-85pc LTV. Before the recession, only the more expensive areas were popular, but currently all regions are now of interest.”