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Can't Afford to Get on the Property Ladder in the UK? Buy Abroad
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Traditionally, buying property abroad has been the sole territory of wealthy Brits seeking second homes as holiday retreats. But Britain's rising house prices and high mortgage interest rates are forcing young people out of the market and creating a new trend of first time buyers who are purchasing property abroad in order to get their foot on the first rung of the housing ladder.
The recent admission of several central and eastern European nations into the European Union has swept away the much of the former red tape and apprehension associated with foreigners buying property in these countries. This has opened up the market to other members of the EU, making it possible to purchase property in these countries at a fraction of the cost in Britain.
A generation ago, countries like France, Spain and Portugal were the favourite property hotspots for Britons buying abroad, but prices in these counties have risen substantially and this has led to first time buyers looking a little further off the beaten track.
The establishment of low cost airline routes, which now serve most cities in Europe, and the cheaper property prices of former Eastern Bloc countries are now attracting adventurous British buyers who are keen to get on the property ladder, but struggling to do so in the UK. In these countries, property values are expected to rise sharply over the next decade due to their newly found status within the EU and their recent (or expected) adoption of the Euro, but prices are currently still low enough to be affordable to young Brits.
Capital cities, ski resorts and beach locations are generally the most popular places to buy, as these locations offer a good chance of regular rental income, long term value appreciation and the added bonus of a holiday home for the owners. Properties in such countries can be found for as little as £25,000 - a sum that would barely buy a conservatory in the UK.
Bulgaria has seen huge interest from British buyers, fuelled by the availably of cheap off plan apartments in up and coming ski resorts such as Bansko. Romania, Estonia, Poland and Slovakia are also places which are attracting a lot of British interest.
Funding a foreign purchase can either be done using cash, or via fixed rate or flexible mortgages, just as in the UK. Some buyers opt for a mortgage in Britain or, depending on the country of purchase, it may be possible to secure a mortgage abroad. Many of the requirements are the same as those that apply to buy within the UK, but additional considerations to take into account include the differences in local law, potential fluctuations in currency, as well as the economic stability of the country.
As the price of houses in Britain continues to spiral upwards, it's likely that more and more young British buyers seeking to get a foothold in the property market will head abroad for their first time buy.
Author - Paul McIndoe - Finance advisor in London
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