When to buy a house in Spain / France or...

[EuroTrotters]

Hi,

A friend of mine has asked my advice. I have asked on Spanish property forums but had little reply (mostly non UK members).

Friends of ours in the UK. They want to buy a house in France or Spain, live in the motorhome and rent the Spanish / French holiday home out in the summer.

One wants to sell their UK house to fund it, the other wants to keep it just in-case. So, they are thinking of changing their house in the Uk to a buy-to-let instead to release capital.

The burning question is?..........

Should they do it now?
Or see what happens with "Brexit"?

One of the problems they have, just like any buyer that is from a non €uro country is the exchange rate. 5th May this year was almost €1.18 to the £. Today sees just €1.13 or less.

I know we all have different opinions, budgets and Ideas, but!, What would you do?.

TM

 

[The Wino]

I would be very cautious of what renting out a property in France or Spain will produce in income. We rent out a couple of holiday lets in Whitby the rentals are good with good occupancy throughout the year but after cleaning repairs renewals etc we are realising about 3% if that, just about to turn one into a residential let which will help as we will get small business rates relief again on the other one. Its hard enough in your own language in your own country!!!!!

 

[mikebeaches]

If I'd decided to buy abroad I'd do it sooner rather than later, and wouldn't wait for Brexit to be sorted. I am reasonably confident things will be OK, whatever the eventual outcome.

Personally, however, I'd also keep a foothold in the UK.

The volatile exchange rate is an issue, but to me finding the right property is more important than worrying about a few percentage points change to how much it is going to cost to purchase.

 

[Lenny HB]

I think I would wait for Brexit providing it happens by October, we might see a bit more stability.

 

[Augusta08]

I bought my house in France in 2003, when the pound got you €1.56, but I don't let it out. My pal bought in Spain at the same time and does let his out. He suffered a big price crash in 2007 but it has now largely recovered. In France values haven't moved so dramatically. I paid €146,000 for my newbuild 3 bed detatched with garage, so around £90,000 I've been chased by would be buyers (French) who think Brexit may force me to sell, but I'm not so sure. They are offering around €170,000 so I'd make a good profit selling.

I know my pal is taxed by the Spanish authorities for his rental income, and France does the same. You can't get away with it if they spot the house on a web site or AirBnB they tax you for what they regard as your income regardless of your actual rental income. So if you only rent it out for a weekend they tax you for a YEAR!!!!!!!! They are not interested in getting into any kind of discussion of when, or how often, or for how much. As far as they are concerned It's a rental property therefore it's taxable, if you only manage to rent it for only one week that's your fault for being a bad businessman.

So my advice would be don't get into rental property on "part time" basis, unless you make a proper business out of it, and have a business plan and work at it. Model the finances and understand the costs and tax laws.

You can't play at it, unless you've got a Gite at the end of the garden which brings a little beer money in, fiends and family etc,

I would guess a minimum of 6-10 units would be needed to get any real income, then it's a full time job.

HTH

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[The Wino]

I bought my house in France in 2003, when the pound got you €1.56, but I don't let it out. My pal bought in Spain at the same time and does let his out. He suffered a big price crash in 2007 but it has now largely recovered. In France values haven't moved so dramatically. I paid €146,000 for my newbuild 3 bed detatched with garage, so around £90,000 I've been chased by would be buyers (French) who think Brexit may force me to sell, but I'm not so sure. They are offering around €170,000 so I'd make a good profit selling.

I know my pal is taxed by the Spanish authorities for his rental income, and France does the same. You can't get away with it if they spot the house on a web site or AirBnB they tax you for what they regard as your income regardless of your actual rental income. So if you only rent it out for a weekend they tax you for a YEAR!!!!!!!! They are not interested in getting into any kind of discussion of when, or how often, or for how much. As far as they are concerned It's a rental property therefore it's taxable, if you only manage to rent it for only one week that's your fault for being a bad businessman.

So my advice would be don't get into rental property on "part time" basis, unless you make a proper business out of it, and have a business plan and work at it. Model the finances and understand the costs and tax laws.

You can't play at it, unless you've got a Gite at the end of the garden which brings a little beer money in, fiends and family etc,

I would guess a minimum of 6-10 units would be needed to get any real income, then it's a full time job.

HTH

Just shows the effects of the weedy pound!!. If exchange rates had stayed the same your increase in value assuming the figures you quoted are realised with no tax or expenses to pay is 16.5% in euros but 65% in pounds!!. Of course with the benefit of hindsight you could have gambled the lot on the footsie and it would now be worth £199,000 rather than about £150,000! but you have had the benefit of 16 years use (but of course with expenses). I think viewing property as an investment has pros and cons theres little risk of losing the lot but little chance of a really drastic gain either.

 

[Clickem]

We had a holiday home in Spain for about 13 years and managed to turn a small profit on the sale, purely down to the changes in currency, we bought at 1.64 Euros to the pound

I would always recommend anyone to keep a foothold in the UK. Seen so many people being forced to sell up abroad and return home, either as a result of death of partner, illness or just missing the grandkids

We were told that if you wanted to leave Spain with a million, you needed to arrive with two million - still loved it though

 

[Augusta08]

We had a holiday home in Spain for about 13 years and managed to turn a small profit on the sale, purely down to the changes in currency, we bought at 1.64 Euros to the pound

I would always recommend anyone to keep a foothold in the UK. Seen so many people being forced to sell up abroad and return home, either as a result of death of partner, illness or just missing the grandkids

We were told that if you wanted to leave Spain with a million, you needed to arrive with two million - still loved it though

Good advice we've kept our UK house so we've got foothold for our dotage.

 

[Grianan]

We always said we would buy a house in France if we could afford a second house, but when we were in a position to do so we bought in Wester Ross (NW Scotland). I’ve never once regretted the decision. We’re both still working full time but we get up about 5/6 times a year and it’s always relaxing. We don’t rent it out.
Things might change when we retire ... I think we could make that our uk base ...

 

[rrusty]

We bought an apartment in Spain in September last year and the rate at time of exchange was 1.12 and a few weeks ago nearly 1.18, if doing it now I would have transferred the sterling into my Spanish bank or currencies direct if no Spanish bank at a favourable rate and sit on it until the transaction date.
Did not bother me about Brexit and I have kept the family house in the UK.

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[Allanm]

If you are thinking of renting out a house in France, will it be a holiday let or something more permanent? Holiday lets and gites in France are not as popular as they once were. People are looking for something more than just a quaint old cottage in the country.
If it’s more permanent, you would need to let it out long term, people generally like a long let of 6 months or more.
Then there’s the tax.......

I don’t see any reason why Brexit should affect buying in France. There are lots of places for sale, many expats are returning to the U.K. leaving lots of bargains around. The exchange rate will fluctuate, but you just have to accept that.
For the price of a modest semi in the UK, you could buy a large detached house with pool and a few acres of land, but then, the prices stay low, people don’t buy a house in France as an investment, it’s there to live in.

We bought our house here 5 years ago as a renovation project and moved in permenantly last year. We find the cost of living much cheaper in France.

We much prefer the way of life here and have no intention of returning to the UK, we might even move further south, or east......

 

[Offagain]

We find the cost of living much cheaper in France.

Really?
We have several friends who've made the move and all tell us quite the opposite.
They all say property is cheaper to buy initially but it's more expensive to actually live there than in the UK.

 

[Allanm]

Really?
We have several friends who've made the move and all tell us quite the opposite.
They all say property is cheaper to buy initially but it's more expensive to actually live there than in the UK.

Well, I can’t comment on their lifestyle or where they live or where they are comparing it to.

I’m just commenting on my findings, not theirs.

Some things are dearer but you have to shop around and be selective where you buy, same as in the UK
Vehicle insurance can be more expensive but includes breakdown cover and cover for any family member to drive with your permission
DIY stuff is generally more expensive.

But, we have found that....
Houses are cheaper, so is house insurance.
Our equivalent to council tax is half what we paid in the UK for a much bigger house with land.
Electricity is cheaper but heating oil is dearer
We have a pellet stove. Pellets are cheaper here.
Water rates are cheaper (half our UK charges)
Diesel is cheaper( just)
We find food a similar price but often cheaper in local markets.
Our new motorhome was considerably cheaper than the UK equivalent, as was our car and trailer.
Eating out can be similar in price to the UK but local restaurants are often very cheap for a good quality 3 course menu

But, we didn’t move here for a cheap lifestyle it’s just that we find our money goes further here.

 

[EuroTrotters]

Thanks for all the very informative replies.

In response to @The Wino

If you buy the right property in Spain, you can make it work. Maybe even returning a profit after TAX.