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Typical premiums might be between £200-300 for a two or three-bed property in Europe, and £500 for a three-bed villa in Florida.


If you rent out your property, you’ll need to pay income tax on rental income locally plus there’s Capital Gains Tax (CGT): a tax levied on the gain between the purchase and sale price of your property.


Insurance Holiday homes are often left unoccupied for long periods, or they are rented out to third parties so insurance needs to be factored in. Beware of local peculiarities too: subsidence


cover isn’t available in every European country and in Florida you need a separate fl ood policy if your home is in one of the designated “fl ood zones”; in France there are tight deadlines on claims. Typical premiums might be between £200-300 for a two- or three-bed property in Europe, and £500 for a three-bed villa in Florida. Anyone buying in a community or development should check what their communal insurance includes. It may be included in their community fees yet that probably only covers the communal parts of the development.


Mortgages Borrowing criteria have tightened up since the downturn and frequently we hear of sales falling through at the eleventh hour because buyers cannot secure their fi nancing. Avoid much wasted time all round by doing your research and consulting lenders before you start seriously property hunting.


This will also show agents and vendors that you are a serious buyer and can move fast to complete a sale so will also give you an edge. As a general rule, when choosing your mortgage


AIPP CONSUMER GUIDE 15


always borrow in the same currency as the source of funds you plan to use to cover the repayments. So, if you’re going to be paying with a UK salary, your mortgage should be in sterling, but if you plan to rent out your property in France, you could be better off with a Euro mortgage. It is likely your chosen lender will require proof of deposit from you, including how the funds were accumulated (eg by savings, inheritance or sale of another property).


Banks’ affordability criteria have also got much stricter in the last few years and lending varies considerably between countries. Whatever you might have seen advertised, most


lenders in Spain will typically offer foreign buyers a maximum loan to value (LTV) of 50 per cent, whilst in Portugal and Turkey the fi gure is 75 per cent. In France, there are currently some great long-term


fi xed rate deals available, but the LTV available can vary according to what type of property you’re trying to buy, with old, rural properties being seen as more of a liability by lenders. Be aware, though, of local differences such as the fact that the cost of changing mortgage provider is much higher in France than in the UK (around 2.5 per cent of the mortgage value), hence most French people don’t tend to switch lenders.


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