Questions to answer before looking at property in another country

Looking at property listings in another country is easy and often enjoyable. Deciding what you are actually looking for is harder, and it is the step most often skipped. Buyers who start viewing before they have answered a few basic questions tend to be steered by whatever they see first, and discover important constraints only after they have become attached to a particular property.

This article sets out the questions a first-time overseas buyer can work through before searching. None of them has a universal answer. The aim is to understand your own position, to see which points must be checked in the country where the property is, and to turn the result into a short brief you can share with the people who help you.

Why answer questions before searching

A question answered at the kitchen table costs little. The same question answered after you have made an offer, signed something or sent money can be expensive and stressful. Working through the basics first also keeps you in control of the process rather than reacting to it.

Answering early helps in practical ways:

• you compare properties against your own criteria rather than against each other;
• you recognise sooner when a property, a location or an arrangement does not fit;
• the professionals you involve receive a clear picture instead of piecing it together from scattered conversations;
• gaps in your knowledge become visible while there is still room to fill them.

Purpose and time horizon

Everything else depends on why you are buying and for what period you expect to keep the property. Before anything else, try to answer:

• What is the main purpose — a home, family use, a second home, business use, long-term holding?
• Who will actually use the property, and how often?
• Is letting part of the plan, and if so, is it central or occasional?
• Over what period do you expect to own it, and what events could change that?
• If part of your thinking is a future move, have you noted that buying property does not by itself create any residence or visa right, and that any link to a specific programme must be verified separately under that programme's own rules?

These questions are explored in more depth in clarifying the purpose of a property abroad.

Budget, including costs beyond the price

The purchase price is only one part of what a property abroad costs. A realistic budget looks at the whole life of ownership, grouped into categories:

• Buying. Professional fees for legal work, surveys or valuation, any charges and taxes connected with the purchase and registration, and translation of documents.
• Moving money. Currency conversion and bank transfer charges, which can add up across several payments.
• Preparing. Furnishing, repairs, appliances and anything needed before the property can be used or let.
• Holding. Maintenance, building or service charges, insurance, local taxes on ownership, utilities and management.
• Leaving. Costs that may arise on an eventual sale or transfer.

Which of these apply, and at what level, can only be confirmed in the country where the property is. At this stage the useful questions are: what total amount you are comfortable setting aside, what reserve you keep for the unexpected, and which categories you have not yet investigated. A fuller list is in categories of cost when buying abroad.

Where the money comes from and how it will move

Banks, lawyers and others involved in a property transaction commonly ask where the purchase money comes from. Being ready for that question avoids delays and awkward gaps later.

Questions to work through:

• Which money will be used — savings, the sale of another asset, a family contribution, business income, or a mix?
• Can you show how that money was accumulated, with documents rather than explanations alone?
• How will the money move from your home country to the country where the property is: through which accounts, with which currency conversions, and in what sequence?
• Do any rules in your home country on sending money abroad need to be checked with a bank or adviser?
• Is the person providing the money the same person who will own the property, and if not, how will that be documented?

Keep a clear trail: account statements, sale agreements for assets sold, letters confirming family gifts, and records of tax filings where relevant. For any payments made before completion, ask your own lawyer to whom they are paid, on what terms and what protection exists if the purchase does not go ahead.

Financing: will you borrow at all?

The first financing question is whether borrowing will be considered at all. Some buyers plan to pay entirely from their own funds; others hope to borrow either in their home country or in the country where the property is. Each route raises different questions, and none can be assumed to be available.

If financing is under consideration, expect a lender to ask about matters such as:

• your identity, background and where you live;
• your income, its source and the currency it is earned in;
• existing debts and commitments;
• the property itself and an independent view of its value;
• who will own the property and through what structure;
• documents in a particular language or format.

Questions to put to any lender include which documents they need, what conditions apply, and what happens if your income is in one currency and the borrowing in another. Whether you would qualify, and on what terms, is something only the lender can tell you.

Who will own it

Ownership can be held in different ways in concept: by one person, jointly by a couple, by several family members, or through a company or other structure. Each choice affects control, decision-making, succession, tax and ongoing administration, and not every option may be permitted for every buyer in every country.

Before searching, consider:

• Who should have the right to decide about the property, and who should benefit from it?
• What should happen to it if an owner dies or becomes unable to act?
• Would the chosen form of ownership affect financing, letting or a later sale?
• Is there a reason to involve a company, and has someone qualified checked whether that is possible and sensible?

An introduction to these concepts, without recommending any of them, is in ownership structures for property abroad.

Who will manage it

A property in another country needs someone to look after it when you are not there. That role is easy to underestimate at the start.

Questions to answer:

• Who will hold keys, arrange repairs and deal with emergencies?
• Who will pay bills and keep records, and from which account?
• If the property is let, who finds tenants, handles their questions and checks the condition of the property?
• How will you oversee whoever manages it, and what reports will you expect?
• What happens if that person or company stops providing the service?

Your own tax connections

Owning property abroad may have tax consequences both in the country where the property is and in the place where you live. This article does not describe any tax treatment. It suggests questions to put to qualified tax advisers:

• Where do you currently live and file taxes, and could that change during ownership?
• Does owning property abroad create any reporting obligation in your home country?
• If the property is let, how might that income be viewed in each place?
• What questions arise on a sale, a gift to family or an inheritance?
• Would the form of ownership change any of the answers?
• Do advisers in both countries need to talk to each other?

What must be verified locally

Several points can only be answered by qualified professionals in the country where the property is. Treat each one as an item to verify, not as something to assume from what you have heard elsewhere:

• whether there are rules about who may own property there, and how they apply to a buyer in your position — a question to verify for each purchase;
• how ownership is registered and how title is checked before purchase;
• which taxes and charges arise on buying, holding and selling;
• whether letting is permitted for this property, and under what conditions or licences;
• planning, land-use and building rules, including permission for renovation;
• what protection exists for payments made before completion, especially for property not yet built;
• any rules on bringing money into the country or taking it out;
• how property held there passes on death.

Answers should come from advisers who act for you, not from those acting for the seller.

Researching a location without relying on marketing

Marketing shows a location at its best. Independent research shows it as it is. Before deciding on an area:

• visit at different times of day and, if possible, in different seasons;
• walk the streets around the property, not just the property itself;
• talk to people who live or work nearby;
• look at public information on planned construction, transport and services;
• compare similar properties in the area by their features and condition;
• read local news for issues that would not appear in a brochure.

Be cautious with claims that an area is "the next" place to buy or that demand is certain. How to read such material critically is covered in reading overseas property marketing critically.

Turning your answers into a brief

Once you have worked through these questions, gather the answers into a brief of a page or two. It might contain:

• purpose, intended users and time horizon;
• budget range, the cost categories you have identified and a reserve;
• source of funds and how money will move;
• your position on financing;
• intended owner or owners;
• the management plan;
• tax questions for advisers;
• the list of points to verify locally;
• location criteria, must-haves and deal-breakers;
• open questions.

A brief like this gives every professional the same starting point and shows clearly what remains unknown. Wobridge can help you organise the answers, structure the questions for each specialist, identify gaps and coordinate the qualified people who provide the advice.

In short

Before looking at property in another country, answer the basic questions: why you are buying, the full budget, where the money comes from and how it will move, whether you will borrow, who will own and manage the property, and what your tax connections are. Keep a list of what must be verified locally, research the location independently, and turn your answers into a brief.

If you would like help preparing these questions before your search begins, you can talk to Wobridge.