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HIDDEN COSTS WHEN BUYING INTERNATIONAL PROPERTIES

Tuesday, 26 Aug 2008

Investors who wish to purchase property in Morocco and various other countries are aware of the additional costs involved in “buying abroad”, but are often caught out by the “hidden” costs involved. Just some things that could catch an investor by surprise are the legal charges, bank charges, and taxes involved; for example, the VAT on Moroccan property just recently increased from 14% to 20% and if not informed of this timeously by the sales agent, then this could cause major problems for investors.

Moneycorp, a specialist in foreign exchange, recently conducted a survey with results showing that 45% of those purchasing property in Morocco and other countries abroad budget in the region of £9,000 to cover unexpected costs – costs that often reach as high as £19,000 – and 24% of the survey participants said that they had incurred costs that could have been avoided if they had been supplied with the relevant information at the time.

Investors wishing to purchase accommodation in Morocco and other countries abroad are strongly advised to do their homework before making the purchase. A good place to start is to ascertain which institution is best able to handle their money at the cheapest rates. For example, Stuart Rogers from Moneycorp says, “Most people haven’t sent money abroad before and aren’t aware that brokers offer far better rates than banks.” Recent figures show that Moneycorp fees are as much as £3,600 lower than banks when buying a property in the region of £78,400. Overseas banks also often charge high amounts to receive money into your bank account, which most banks in the UK don’t do.

Specifically when buying a newly built property in Morocco or elsewhere overseas, investors should be sure to check if the VAT is already included into the property price, as many don’t include this when advertising the property. Regular maintenance fees of the properties in Morocco and abroad should also be taken into account.