Opening the door to your dream property

If your situation is even slightly out of the ordinary, you may find it hard to get mortgage finance on a property by approaching the big banks or building societies directly.

Especially if you are self-employed, retired, or not domiciled in the UK.

Unusual properties, or those not in the UK, can also be problematic.

Talk to Henderson Morgan. We can obtain fixed-rate or variable-rate mortgages in the UK or Internationally.

Our service comes complete with assistance to help you overcome any concerns or obstacles, so that you can secure your ideal home.

We work with expert UK IFAs, and for other countries we have specialist brokers who can overcome the language and cultural barriers that you face if you go it alone.

Specific, expert advice is currently offered on buying property in the popular locations: buying abroad can be wonderful but you need to have your eyes open. Here are a few selected points:

Spain

Spain is the most popular European destination for the British when emigrating or seeking a second home abroad.

The legal and financial system is different to that in the UK and it is important to get good advice and expertise when buying there.

Capital gains tax is normally payable when you sell your property and inheritance tax is payable by a spouse or partner on your death: these factors can be mitigated if you structure your affairs in the most effective way.

France

Conveyancing is different to the English or Scottish systems and the role of the ‘notaire’ in acting as an independent person conducting the searches should be understood.

As in Spain and elsewhere, breaking the contract involves a loss of the deposit on the part of the buyer, so it is important not to rush into a deal without having conducted all your checks and any survey before you commit to buy.

Portugal

It is essential to get a good lawyer who speaks English and will ensure that all searches are carried out correctly before you commit.

As in Europe generally, there are options of having a mortgage tied to the Eurozone rate, or in sterling; and if you own a UK home outright or with a large amount of equity you may choose to remortgage that and become a cash buyer abroad.

Italy

There is the option in Italy of taking out a Reservation Contract to get the property taken off the market while you carry out your survey and searches.

This is particularly beneficial because when it becomes time to pay the full Preliminary Contract you could be liable to pay up to 30% of the purchase price: and it is not refundable if you withdraw.

You will have to pay the estate agents’ fees, and you should budget for 15% on top of the purchase price for your added buying costs.

Florida

Buying in Florida can be less onerous than in Europe. Deposits are small and the process is relatively painless.

However, if you need a dollar mortgage you should get good advice on whether to go fixed-rate or variable, and how much you can obtain.

If you plan to rent the property, there are complex laws and restrictions in Florida so get the practicalities checked out before you buy.


For mortgages or all your financial needs, including current accounts, savings, money transfer and trading stocks, consult ,Henderson Morgan

Do you want to buy a ski chalet?

Skiing is a passion with many Brits – 1 million of us jet, drive or train it over to the slopes each year

Some will stay in a hotel but for most the option is an apartment or a bedroom in a chalet. The ski chalet, assuming you choose well, can be a gorgeous way to send your week, with good food from the chalet maid, mulled wine around a crackling fire and (if you are lucky) skiing from your doorway.

Of course this kindles in many of us the desire to own a chalet. How realistic is that ambition?

Firstly, that depends on the country. Of the favourite ski areas in Europe, Austria rules itself out because of a draconian law virtually banning foreign ownership. Which leaves us with the two most popular destinations. France and Switzerland.

La Vie en Ski

France is easily the favourite choice for Britons, with 500,000 of us skiing there. No surprise that it is overwhelmingly the main choice for chalet purchase.

What dictates the relative chalet prices around the resorts? Apart from the usual factors of size and condition, the two big issues are snow – the more of it there reliably is, the more expensive the property: and fashion – the more chi-chi the resort, the more astronomic the price.

The French Alps is the classic ski region. Individual resorts have been swallowed up into mega-ski zones like the Troi Vallees, or the Porte du Soleil which with 650km of pistes is one of the largest complexes in the world. High altitude slopes mean a longer season, which can further inflate the price.

So starting from the top of the tree, the classic resorts of Val d’Isere, Chamonix, Courchevel or Tignes are going to be very expensive. But you can argue that they will always be in demand so you are unlikely to lose out in the long term. Chalets in these resorts go very quickly when they do come on sale.

If cutting-edge après-ski and hanging out with the rich and famous is not for you, then there are secondary locations even near these places which may be away from the villages or the pistes but may have perfectly good transport to get you there, and lower prices to (ski) boot.

Or choose somewhere less fashionable like the older resorts of Megeve or Morcine. The Grand Massif is a traditionally quiet zone that is becoming better-known, which presents opportunities for capital growth. Samoens is one of the loveliest villages in this area.

It will come as a surprise to many British skiers, but there are several huge skiing resort areas other than the Alps in France. Hardly any appear on the package operators’ radar.

The Pyrenees, on the border with Spain, is a massively long chain of mountains that is very welcoming to snowboarders, beginners (due to its generally gentler slopes) and cross-country skiers. Potential chalet owners should be aware that the snow is less reliable here: conversely it is a genuine year-round resort area with many summer visitors.

Andorra is an independent province in the Pyrenees and is worth mentioning not only because of its 5 ski resorts, the best generally reckoned to be Ordino-Arcalis: but also because it is a tax haven. This obviously adds to the attraction as many high net worth individuals choose to buy a home there.

The Jura region contains the Monts-Jura range, near the Swiss border. This is another under-recognised skiing area, with Les Rousses being notable among the resorts because when the snowfall is poor it has plenty of snow guns to keep skiers on the piste.

The Vosges in St. Lorraine has 1000 km of wooded pistes, a refreshing change from the treeless High Alps. At Gerarcher and La Bresse you can get more skiing from your weekly pass because they have floodlit slopes.

The Massif Central, finally, is probably the least known to non-nationals, and the French like to keep it to themselves. In this part of the Auvergne you can ski 1300km of pistes down dormant volcanoes, which is pretty rare anywhere. Check out Le Mont-Dore or Besse-Superbesse.

But how do you buy?

Well having decided whether you are going to try and find an undervalued wreck or a secondary location in a prime resort, or look for a bargain amongst the undiscovered gems, you need to know at least briefly what the process of buying involves.

Many French people buy through a notary (notaire) but a lot of Brits work through estate agents (immobiliers) if only because they are more likely to speak English. There are also property-finding services, if you fancy someone doing the legwork for you. Before you get into a purchase with an agent, check they belong to an official body, just as a safeguard.

As ever there are fees involved: an agent’s fee of 4-10% (normally included in their quoted price) and a notary’s fee of 8% on a cheap property, falling to 2% on the most expensive (normally not included, so check).

What you won’t find is a surveyor comparable to the British kind, so to get a survey done you would need to use one of the British surveyors who plug this gap in the market, or if you are going to be doing work, take along a French builder for an opinion and costings. In lieu of many of the points that a surveyor might check, the French make the vendor supply a DDT, a technical file of reports showing that the electrics, plumbing etc. have been tested and are OK.

Legally-speaking, the notary acts for you and the seller, but that should not stop you getting your own look at the ‘catastral plans’ that show any planned developments on or near your proposed plot.

There are two stages to the actual purchase: the Compromis de Vente is the initial contract where you commit to buy- and at this stage make sure you insert any caveats like ‘subject to survey’, ‘subject to the granting of a mortgage’ etc. into the contract because you will be signing a binding document that will lose you the 10% deposit if you fail to complete for any other reason.

The final stage is the signing at the notary’s office of the Acte Authentique, the main contract when you pay the balance.

And when to buy?

The market in France has been hit by the recession but not as badly as in the UK and elsewhere. The French tend to buy for a lifetime and do not think as much in speculative terms. Prices across the country dropped by 3% in 2008 and 5% in 2009: but then they rose by 1.5% in 2010. Sales are expected to reach 800,000 in 2011 from a low of 600,000 in 2009.

In skiing areas business was flat in 2010 but what interest there was from the UK was focused on the Alps and Pyrenees. And most buyers were looking for places that they could rent out. Looking ahead it is expected that high-end luxury chalets will do well.

So in terms of the economic cycle, now is a potentially good time to get into the market. Do not expect a lot from capital growth in the short term, but ensure that your rental income, across the likely rental weeks in the year, plus an allowance for repairs, is returning an acceptable percentage on your purchase price.

One key advantage to buyers in France is the Leaseback Scheme. Set up by the government to increase tourist beds, it allows you to rent out your home directly to a holiday company. You have to commit to this for at least 9 years, but in that time you get an agreed number of weeks per year when you get to use it. And they do the routine maintenance and look after the place.

Within the year, the prime skiing season is not a busy one for sales – people do not tend to divert themselves from their holidays. That could make it a good time for the determined bargain-hunter. Spring and Autumn are the busy months, and predictably, everyone wants to be in by the start of the season.


Switzerland

The classic skiing destination would, you might think, be a prime choice for chalet buyers. But not so. The pent-up demand is huge, but the supply is meagre, for one specific reason:

The Lex Koller ruling was made many years ago to protect Swiss holiday home property from rampant speculation and inflation. Fair enough, you might think, except that it has not stopped 183,000 Swiss from having ‘vacation homes’ or 238,000 from having second homes, and property has boomed regardless.

A report recommended repealing this rule, but it is now the subject of frantic political debate and is not likely to go away any time soon. The result is that if you are an EU citizen you have to fight to get one of the 1440 permits per year (yes, that is the total for the whole country) for foreigner purchases of second homes. These are all focused on prime ski areas and on high-value real estate.

The most popular Vaud canton (region) will let you resell immediately but most will not, within 5 to 10 years.

How can you possibly buy, then?

The simple answer is – become a Swiss resident. This may be an excellent thing, depending on your tax situation. It is no problem if you have other properties elsewhere, so long as the new Swiss one is considered your primary residence. One in five inhabitants is not Swiss so you will be in good company.

Most foreign buyers tend to favour the French cantons. The most chic resorts include Verbier (where property prices doubled during the boom), Davos and Klosters. In recent years the prices have been reined in by the restrictions, but the levels in these resorts are in the multi-millions for any luxury chalet. The strength of the Swiss Franc makes the market look even more pricey than it already is.

For those looking for better value, the German cantons are often reckoned to be better-run and they contain many under-valued resorts. Flims, an easy ride from Zurich airport, is one such.

If you do find your chalet, the buying process is pretty straightforward. There is a purchase tax of 3-5% and you may have to pay the notary a fee of 1.5% on any mortgage loan. As in France, you have to commit a deposit that you will lose if you do not proceed without a contractually-agreed reason.

Renting out in Switzerland will normally happen over a season of around 24 weeks, and you cannot sign a long-term tenancy for more than 11 months because you are expected to use your property for at least 3 weeks in the year. As in France, rental agencies charge around 20% for a full-service letting deal. But your rental income is not taxed within Switzerland.

How do you get a mortgage and where do you go for advice?

Whether in France or Switzerland, if you are buying a chalet you need to get good independent financial advice.

First home or holiday home, or a pure business transaction, they all have differing tax implications and if you need finance, they require different mortgage solutions.

Henderson Morgan is a specialist in providing advice to buyers abroad, and can arrange mortgages with UK or local banks.

They also have excellent services for offshore clients, which may be of particular interest to those who have links to Andorra or Switzerland.

And furthermore they are licensed to supply offshore banking services in a range of currencies, including money transfers at excellent rates.

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