With France in the midst of a major election, Greece, Spain and Portugal swamped with debt and still no apparent resolution to the currency crisis, the Euro is continuing to decline against the Pound and Dollar, making holiday properties on the continent look ever more attractive to investors. Is now the right time to invest in a buy-to-let property in the EU and become an overseas landlord?
The favourable exchange rates mean that property in Europe is, at the moment, relatively cheaper than buying in the UK – you can get more for your Euro than you can for your Pound. It also means that developments are cheaper and, for Brits, the cost of going abroad is cheaper meaning you should be able to fill your property quite comfortably.
On the other hand, the governments in Europe, particularly in France and Spain, are starting to raise taxes on things like airline duty to try and raise money to cover deficits. This is all very well, but to minimise the impact on the already cash-strapped citizens of their own countries, many EU countries are targeting tourists, making it harder to invest abroad.
The biggest enemy at the moment is uncertainty. We just don’t know whether the Euro will outlive the crisis and whether a return to Francs, Lira and the Mark would mean a stronger or weaker Europe and, thus, a better or worse property market. The French election means whatever laws are in place at the moment could easily change and things are most certainly hanging on a tight balance.
Even though the headline rate is declining there are plenty of reasons to think very hard about making an overseas investment. For now, uncertain market conditions mean it might be better to wait to make your overseas property purchase but remember there are always good opportunities so long as you cover yourself with good forecasts, good cashflow management and, of course, a good overseas property insurance policy. Be sure to keep an eye on the blog for the latest updates.