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Buying a retirement property abroad

If you’re planning to eventually retire abroad, buying a house is likely be your first consideration, but is now really the time to do it?

Topic: Property

It’s a tough time for UK retirees to buy a property abroad, thanks to the weak pound, stricter international borders and a growing sense of political unrest in Europe.

For many looking to start a life in a new country, this means sitting tight and waiting for things to improve. Buying a place outside of the UK can often be a minefield of bureaucracy, so periods of uncertainty offer you a great opportunity to get your paperwork and finances in good shape.

To help you get started, we’ve outlined below a list of the top five things to help you get your plan in place, so that when the time is right, there’s nothing stopping you from taking the plunge.

1. Lifestyle costs
As you start shaping your shortlist of possible places to live, you need to be clear about your lifestyle expectations. This doesn’t just mean the cost of eating out or monthly shopping sprees but also essentials like healthcare, taxes and transport.

Exchange rates will always be a key factor in how you budget your move abroad, so if most of your income is going to come from the UK, you will need to factor that in to your living costs.

When it comes to lifestyle, the most cost effective places to live will change year on year (at the moment Mexico, Crete and Vietnam are rated highly) so do your research before making your final choice.

2. Sense of community
Easily overlooked when you have your head in the numbers, but often the primary reason why retirees decide to leave their chosen destination; finding a place that feels like home is often reliant on a number of factors.

Firstly, if you don’t speak the language, are you close to any other expat communities that will help you settle in? Crime and safety can also seriously put a dent in your experience, but there are now a number of online property portals that will give you a full breakdown of the criminal activity in regions across the world.

Finally, don’t forget that securing residency visas in some countries can often be a long drawn out affair, so the earlier you can start that ball rolling, the better.


3. Property costs
So you’ve got a good idea of where you want to retire and you have a clear image of what your life abroad will look like. Maybe you’re sitting on a terrace sipping ice tea or you’re running a stall in a village market. Either way, you’ll need to start thinking about all the fees required to buy your property.

It’s important to speak to an English speaking advisor with no connection to the seller, estate agent or developer as soon as you know where you want to retire.

Most advisors will recommend taking out your mortgage in the same currency that you receive your income, to safeguard you from currency fluctuations.

Legal fees and local taxes can also add as much as 10% to the cost of a purchase, so make sure you have a clear understanding of all the potential costs, including upkeep of communal areas.

If you have more than three years before you move, you may want to consider additional investment opportunities that would help with all the costs. Investment services such as Click & Invest could offer you a great opportunity to gain returns on your money over the long term (but remember the value of your investments can go up as well as down).

4. Pension Arrangements
Before you put any money down, it’s important to assess what the impact could be on your pension. If you decide to draw your pension, you’ll need to look into the potential tax implications, so it’s worth talking to a financial planner first.

In most cases you should be able to claim your pension wherever you end up, but you may lose pension credit or any annual increases. It’s also worth finding out out how your existing assets could be taxed.

5. Be aware of hidden pitfalls!
Be careful to avoid catastrophic bills further down the line by getting as much information up-front about property deeds and planning permission.

If you’re looking to eventually pass the house on to your family, check for any potential challenges that could arise when your descendants inherit the property. If you’re viewing the property primarily as a retirement investment, work out your exit strategy before you put down an offer.

Click & Invest regularly publish insights, thought leadership, tips and guidance for investors and those planning their retirement. Click here to sign up to your newsletter and receive further updates.

All investment carries risk and it is important you fully understand these risks and are willing to accept them. You may get back less than you invested. The information contained in this article does not constitute advice and the information referred to may not be the same for all, therefore we strongly recommend you seek professional guidance from your independent advisor before taking any action.

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