Buying a Holiday Home

Summer of 2022 is here, and with that holiday homes will once again take the centre stage of the real estate market. For many, purchasing a holiday home is a dream goal and we wanted to help by creating a list of things worth thinking about when considering this purchase. For the purpose of this article we will assume that most people use their holiday homes in two ways – for their own holiday stay as well as for rental.

We have divided the article into three parts:

Country specific rules
Must haves when buying a holiday home
Additional considerations

Country specific rules

Different countries will likely have different rules when it comes to buying a holiday home. Two main things to check at first are:

Are international buyers allowed to purchase property? Most countries in Europe are quite relaxed when it comes to international buyers buying property. However there are exceptions (in Switzerland, for example, purchasing as an international buyer is allowed only in certain areas of the country). To make things even more tricky, countries might have different rules depending on the passport that you hold.
What are the residency rights? When buying the property you of course want to make sure that you can use the property for as long as you want. So it’s important to check whether there are any residency restrictions when visiting the country. That will also depend on a passport you hold. The good news is that a lot of countries now offer visas which you can obtain when buying the property.
Another thing to consider would be taxation. Your dream purchase might come with multiple tax items such as acquisition tax (payable when buying the property), inheritance tax or income tax (if you decide to rent the property). Tax matters involving more than one country can become very complicated and we advise to always seek the counsel of a tax specialist – some of our close partners are able to assist so please do get in touch if that is of interest.

Must-haves

When buying property abroad there are few things that we class as “must haves”. These are items that you would need regardless of the location of the property. They will make acquisition easier as well as allow you to better manage the property.

A local bank account

A local bank account will make management of the property easier as you will be able to pay all local suppliers quickly and in local currency. A local bank account is also usually required when applying for a mortgage to purchase the property.

A local notary

Most countries in Europe require a local notary to be involved in a real estate acquisition – their role is crucial as they have expertise to navigate the legal process of purchasing the property. They will be able to represent you in front of the seller and assist with completing required documentation (which typically comes in local language).

A real estate agent

Finally, you will also need an experienced real estate agent. They will be able to help with sourcing the property and with ongoing maintenance of the property.

In addition to the above, we want to also mention a professional real estate survey. A survey is a process of inspecting the property by a local property surveyor who can advise on items such as market valuation of the property, potential for rental income, as well as the general state of the property. Crucially, they will also advise whether the property requires any up front renovations – you certainly want to be aware of this before you sign the contract to purchase.

Additional considerations

Individual circumstances can also affect what other considerations you’d have to pay attention to. These might be:

Purchasing a new build versus property already developed – the former gives you an opportunity to design each aspect of the property from scratch and make it truly unique. The latter is of course much quicker to close on and allows you to visit the actual property before committing.
Financing – there are a lot of avenues to obtain financing for a holiday home. Depending on your circumstance you might want to consider applying for a mortgage in the country where you are buying the property. You can also raise funds secured against your existing real estate assets or an investment portfolio.
Holding structure – there is more than one way to hold a property. You might want to consider a limited company structure or a trust. This will also depend on your personal circumstances and we would recommend obtaining expert advice as holding structures may affect your taxation and financing terms.

How can HIC help?

If purchasing a holiday home abroad is something that you are considering then feel free to call us or drop us an email – we will be delighted to help. We can assist by:

Connecting you with a specialist that can advise on the purchasing process in a specific country as well as your residency rights;
Sourcing a dream property for you using our extensive network of real estate professionals;
Assisting with opening a bank account as well as arranging a competitive financing facility;
Finding the most appropriate notary who can work on your behalf to complete the purchase.

We are looking forward to hearing from you on [email protected].