You’re on holiday, strolling through a delightful little market town and peering into the estate agents’ windows at charming old houses or gorgeous villas with pools, all seemingly going for a song. Then you start thinking you’d like to own a home abroad rather than simply spending thousands every year on just renting for a couple of weeks. A home from home. An investment for the future. Or something to enjoy and pass onto your children and grandchildren.
Buying a property abroad continues to be a popular option with us Brits. It’s estimated roughly 1.5 million of us own a property overseas, with Spain and France being the two most popular hot spots.
In this article, Charles Stanley client, Nathalie, shares her experiences of buying properties abroad. She has purchased a few properties in France – most recently in 2021.
How did you find the process of buying a home abroad?
Nathalie said, “I’ve bought a few properties in the south of France over the past decade, and it’s been great fun. Not without a few bumps and surprises, but I’d say the process is easier than in the UK.”
She also added, “Properties are sold with comprehensive homebuyer’s reports so you can progress the sale without waiting for extensive searches and surveys. I managed to buy the whole house and contents in one go with a press of my thumb on my smart phone using an e-banking app. No foreign currency commission, no transfer fees, no stress of monies being suspended between solicitors”.
“There’s probably more room for negotiation in France than in the UK, and there are also more properties on private sales websites such as leboncoin.fr , which is where I found the last property I bought. It was going for €59,000. I realised it was a good deal as soon as I saw it, so I offered the full asking price on the second visit. In France, the vendor is obliged to accept and take the property off the market if the full asking price is offered.”
Do you pay stamp duty when buying a property abroad?
Nathalie said, “In France, a notaire (solicitor) can act for both parties, which makes the process cheaper and faster. Stamp duty is incorporated in the notaire’s fees, and normally this is around 11% of the agreed sale price.”
Stamp duty rules can vary depending on your circumstances. There are different rules for those buying a second home – the threshold for paying stamp duty is lower, and the rate charged is higher.
Even if the home you are buying is overseas, you’ll still need to pay stamp duty when buying a second home abroad. So, if you own a family property in England, but you buy a holiday home in Spain, you’ll still have to pay the tax.
How do foreign taxes compare to the UK?
Nathalie said, “France has a variety of taxes: Taxes foncières are the basic taxes that you must pay as property owner, (even if the place is still a building site). Taxes d’habitation is payable once you’re living there, and taxes ordures are for rubbish collections.”
She went on to say, “But all in all, my annual running costs only come to around 1,200 euros per annum. Not bad for a four-bedroom house in a national park and only 45 minutes from the Mediterranean.”
How is property income taxed abroad?
Tax treaties have been created to avoid a situation where the same income in taxed twice in different countries. For example, there is a tax treaty in place between the UK and France which was effective from January 2010. In the case for France, if you are a non-resident, rental income is normally taxable in France.
It’s not always the case that two countries will have a tax treaty in place, so you could end up being taxed on the same income twice. We recommend speaking to a tax expert before renting out or buying a property abroad.
How has Brexit impacting buying a property abroad?
Nathalie said, “As far as buying pre or post Brexit, there were no added complications. Post-Brexit would be an issue if I wanted to stay for more than 90 days within a 180-day period.”
Since Brexit, new rules mean you can only spend 90 days of a rolling 180-day period inside the EU without a visa. In other words, you’ll need to split your time 50/50 between EU and non-EU countries. If the intention is to move permanently to a country in the EU, you’ll need to apply for a visa. Residency rules and how to apply can vary between EU countries.
She added, “There was a lot of talk about Brexit at the time, but talk has now moved onto other concerns like fuel tax and problems facing the agricultural sector. The latest thing is that the farmers and viticulturists have been turning the village signs upside-down as a form of protest. It all adds to the charm”.
How does healthcare work abroad?
Access to healthcare will depend on your residency status. As non-resident, the UK Global Health Insurance Card (formerly the European Health Insurance Card) lets you access state healthcare across EU countries as if you were a resident of that country. Depending on the treatment, it may be free, or you may have to pay; but it will be the same amount a local resident would pay.
If you apply and receive approval to become resident in another country, you must register for health care. This process will vary between countries. In France, for example, you must register for healthcare as a resident in France at the local Caisse Primaire D’Assurance Maladie office (or CPAM). Many services and treatments are only partially covered by social security, and you will need to pay an additional charge.
It's worth noting, you cannot use a UK-issued European or Global Health Insurance Card (EHIC or GHIC) in France if you live and work on a French employment contract.
Nathalie’s top tips for buying a home abroad
- Location, location, location - be sure to find the right area. If you’re buying a holiday home, make sure the journey is easy, affordable, and pleasant enough for you want to do it regularly. Flights might seem cheap, but you’ll have to hire a car, too, and you might be a long way from the airport.
- Don’t buy in rural locations - being in the middle of nowhere might look beautiful, with uninterrupted views. But having neighbours can be reassuring and helpful, especially if you want to let the property out when you’re not there and you need someone to keep an eye on it. Isolated properties are more likely to be targeted by burglars.
- Get to know the locals – integrating into the community can be part of the joy of owning abroad. It also makes it easier to find recommended trades. Nathalie advocates learning the language: even a bit with a terrible accent is better than nothing.
- Do your research on prices – when certain areas suddenly become popular with foreigners, the locals might want to cash in on the trend and over-inflate prices. Nathalie said, “One estate agent told me, she was asked by a potential vendor if they could “trouver un pigeon”, which translates as “find a sitting duck”.
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Explore our range of engaging, emotional and practical stories of how we have helped our clients start conversations about their finances.
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