Thousands of Britons dream of having that perfect holiday or retirement home in the warmer climes of western Europe , Spain, France and Italy in particular have all seen dramatic increases in the amount of properties bought by British foreign nationals.

But for many people this dream home idea can turn into a nightmare as they were unprepared for exactly what awaited them upon arrival in their new home.

Like any investment it pays to scout ahead, and many UK residents are quite savvy when it comes to the UK markets and conditions, spending the time needed to make sure that their investment is a sound one, yet horror stories often prevail from Europe where, for one reason or another all the bases have not been adequately covered.

Firstly, the arguably most important point is to consider the strain an extra property will put on your finances.

If you have the cash, pay this way, it will make the entire process infinitely simpler. Most people will need to take out a mortgage, either as a new one or as an extension of their existing one. Bear in mind that most lenders on a remortgage deal will only release 75% of the original homes value. It also helps to remember to that should you default on your payments, you will lose both homes.

Also be wary of exchange rates, should you be either taking out a foreign currency mortgage or earning money abroad as currency value swings could drastically increase you monthly overheads.

It is also wise to take the amount you think you will spend and add at least 10% to the value for costs, then another 10% for the ‘unexpected costs factor’. While this is wise for any transaction it is especially relevant when entering unknown markets that, even with professional aid, could present nasty surprises.
Next, investigate your locale, there are now many helpful websites that will give you direct information or put you in contact with a local agent, there are also newspapers and magazines that can help; Homes Overseas, Foreign Property News and Exchange & Mart are good examples for finding that dream buy.

To finalise, the phrase “When in Rome…” is pertinent. You may still be a British citizen but when living abroad you are most likely subject to all the laws, rules and regulations that apply to a local; saying “I didn’t know I had to pay that tax” is not going to wash with the authorities and heavy fines and penalties could be enforced. Make sure you get legal advice, particularly if staying in your home abroad for more than a few months a year. While it’s not likely you will pay two sets of taxes as many countries have reciprocal agreements with the UK, there may be some stings in the tail you were not expecting.