When purchasing property overseas, it’s crucial to account for additional costs that can significantly affect your budget. These expenses are often overlooked by buyers who focus solely on the listed property price. This oversight is a potential pitfall and has seen overseas buyers considerably out of pocket in the past.
They say that when buying a property in Spain, you should expect to pay an additional 10-15% of your property price on various fees. That figure changes depending on where you’re buying though. For example, in France, it’s 8-10% more, in Cyprus, it’s 12-15% more and in Portugal, you should expect to pay an additional 8-10%. However, please note that these are average estimations. If you are seeking further professional services, such as a mortgage advisor, property surveyor or independent financial advisor, you may have to pay more.
To help you understand what you’ll pay in additional fees overseas, we’ve put together a list of common additional costs associated with buying property abroad.
Estate agent fees
If you’re using an agent to find or purchase property, you’ll need to consider their commission, this is one additional cost that is usually included in your property price, but if you’re unsure, it’s worth checking.
Stamp duty
This is a tax imposed on property transactions, which can vary greatly depending on the country and sometimes, the property value or type. This is usually the lowest of additional fees to be paid.
Property transfer tax
Similar to stamp duty, this tax is levied on the transfer of property ownership. The rate is usually a percentage of the property’s value and differs from country to country. In some cases, there are exemptions or reductions available, such as for first-time buyers. For example, this is 5-6.5% in Portugal and 6-10% in Spain.
Legal fees
Engaging an independent lawyer is advisable when dealing with international property transactions to navigate the legal intricacies. Legal fees will vary based on the complexity of the services they provide, but won’t usually be more than 2% of your property price.
Notary fees
In many countries, a notary public must witness the signing of the property transaction documents. Notary fees can be fixed or based on the property price. Notaries are essential to oversee property purchases in France, Portugal and Italy.
Survey fees
Before finalizing a property purchase, getting a survey done is essential to check for any structural issues. Survey costs depend on the property size and the level of detail required in the report. You should estimate to pay up to £3,000 overseas.
Bank fees
When transferring money internationally for a property purchase, your high-street bank or app-only service will likely charge transaction fees or offer less favourable exchange rates, which can add to the overall cost, especially when sending thousands overseas.
Exchange rate fluctuations
The average time between signing an initial contract and your final sales contract can take up to three months. Since the transaction will involve currency exchange, fluctuations in exchange rates can affect the total cost of the property and the price you’re contractually obligated to pay. At Smart Currency, there are no fees on transactions over £3,000, so you won’t be charged to buy a property abroad.
Insurance
Property insurance is another cost to factor in. It’s important to ensure the property is adequately covered, especially in areas prone to natural disasters.
Maintenance and utility connection fees
After purchase, you may incur costs for maintaining the property and connecting utilities, which can vary widely.
Property taxes
Ongoing property taxes are a significant consideration. These annual taxes are based on the property’s value and can be substantial depending on the location. For insight on what you’ll pay, speak to a tax specialist.
In conclusion, when budgeting for an overseas property, it’s essential to research and account for these additional costs. They can add a considerable amount to the overall expense of the property and vary widely between different countries.
Consulting with real estate professionals and legal advisors in the country where you intend to buy can provide more precise figures and help avoid any unexpected costs. Remember, thorough due diligence is key to a successful international property purchase.
You can find a breakdown of the costs you’ll pay on Property Guides for the following countries: Spain, France, Italy, Cyprus, Portugal and Greece.
