So Montenegro divorced Serbia on June 2006 and has, on the whole, kept a low profile on the World Stage. So what of this small idyllic country, after all didn’t it want to be part of the EU?

This small nation with a big coastline, experienced robust growth of about 8% up until 2008, but the credit crunch was felt and a contraction in economic activity took place. For 2012 its growth is forecast to be pretty flat according to the International Monetary Fund (IMF), but then in the current climate in Europe, that seems pretty good!

Montenegro Property -what are the prospects for this divorcee of Serbia and neighbor of Croatia?

The sharp deterioration on the World stage post October 2008 triggered a contraction in Montenegro’s economy. While Foreign Direct Investment (FDI) held up, with the global-asset-bubble-burst late 2008, it quickly affected Montenegrin assets and overflowed into the banking system.

Historically, Foreign Direct Investment focused on the tourism and financial sectors, triggering a cycle of wealth effects. As property became more valuable, so it was used as an asset against which to secure loans, which in turn funded Montenegro property building activities. Sound familiar?

In turn, rapid credit growth compromised the quality of banks’ portfolios; property (real estate) prices soared beyond fundamentals, private sector debt swelled and Montenegro’s current account deficit grew. A story not too unfamiliar around the world.

Many of Montenegro’s domestic banks, which lacked foreign parent support, suffered more. But recent analysis by the (IMF) indicates that Montenegro seems to have got its bank re-capitalisation programme at just the right level, unlike some of its European neighbours. Montenegro has gone through three years of banks balancing their books better. Banks have refocused on getting deposits into the banking system and off-loading problem loans, re-aligning their lending with their domestic deposit base.

Montenegro Property – Future prospects

Getting a mortgage to buy Montenegro property is likely to remain challenging in the short term as banks re-balance themselves and their risk appetite remains wary.

There is still strong growth in tourism-supported, real economic growth, which was 2½ percent in 2011, bringing the country back to its pre-crisis level of 2008. The  projected downturn in the euro area is likely to hamper growth in 2012.

The Government continues to establish a business and investor-friendly, open economy with low taxes and minimal state interference. Montenegro does not issue its own currency, but has been using the euro as legal tender since 2002. Montenegro applied for EU candidate status in December 2008 and was confirmed as candidate 2 years later, in December 2010.

Candidate status has boosted Montenegro’s bid and the EU plans to open the country’s accession talks inMid 2012.

Montenegro has shown there is life as a divorcee. Having been through difficult times, it is dusting itself down and is showing it “can keep its head” in Europe, “when all about” them “are losing theirs” (as Rudyard Kipling might say). In fact it is racing its former  partner now, into the EU. Montenegro’s Prime Minister, Milo Djukanovic, has said he hopes his country will succeed in joining the EU before neighbouring Serbia or Macedonia.

Property Venture® is an independent, European property expert who helps people buy holiday homes and investment property overseas, more easily and safely than they can on their own, because they offer grounded common-sense advice and usually at no extra cost.

Their focus is mainly in Europe: Spain property, Turkey property , Poland property, Montenegro property, Morocco property, Cyprus property, Bulgaria property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

Spanish Homes, Spanish Property Pre-purchase stage

Spanish Property-Valuation value

This is the value assessed by a bank for mortgage approval purposes.

Spanish Property-Market value

Depending on the market, a real estate agent or property valuer will give an estimate of a property’s current market value.

Spanish Home-Fiscal value

This is the value assessed by the tax authorities and is the minimum value that should be declared on the Title Deed when a sale takes place. When a buyer is purchasing a resale, the fiscal value must be obtained from the “oficina liquidadora”. A copy of the Title Deed and last IBI receipt (Property Tax- annual Municipal Tax based on the “Valor Catastral” or rateable Value) should be taken into account.

Spanish Home-Declared Value and Sales price

The declared value is the sales price of the property. All the costs and taxes are based on the sales price.

In the past, many buyers have not always declared the full sales price officially, in order to reduce taxes they pay at the time of buying. This is why it is tricky to trully know what Spanish property prices are doing because the official data is not always that accurate, given some of these types of transactions. Some of the price difference was paid in cash to the seller, so they got the price they wanted and this has been dubbed the „black market“ It meant the buyer paid less transfer tax (ITP) and the seller had a smaller capital gains tax liability.

The Spanish authorities have been tightening up in this area and are waking up to penalising Spanish Home Buyers for doing this. What’s more the tax authorities can claim higher tax, at a later date, sometimes up to 4 years  after the transaction has occurred, if they consider the buyers bought significantly below market pricing at the time of purchase. It is referred to as the Complementary Tax. It is in effect claiming back the difference the tax man may consider was owed, according to their valuation (a Minimum Market Value or MMV) versus what was actually declared.

The minimum Spanish Property value provided must at least equate to value showing in the Title Deeds and never lower, otherwise the buyer will receive a Complementary Tax notification.

There is always the possibility of appeal against this and of course a Spanish Home Buyer has a much stronger argument if they have a paper trail to prove the declared value of the property in Spain is the same as the official purchase price on Title Deeds. But it is wise to budget accordingly and act swiftly if this situation arises.

The minimum value provided will be the value to be on the Deeds and never lower, otherwise the Spanish Home Buyer are more likely to receive a Complementary Tax notification.

Spanish Homes, Spanish Property Post sales

Catastral value,  “Valor Catastral“

The “Catastro” office registers property in Spain, but it deals more with the exact location, physical description and boundaries; unlike the Spanish Property Registry which deals more with ownership and Title.

The “catastro” office is also the source of the “valor catastral” the rateable value, the assessed value of the property used in the calculation of local rates.

The figure is normally considerably lower than the real market value. If you are purchasing a new property in Spain, it will not have been assigned a “Valor Catastral”, it therefore becomes the buyer’s responsibility to register the property in Spain at the “catastro” office for this tax.

An existing Spanish property should already have its own “Valor Catastral”. The annual real estate tax- IBI, charged by the municipality, will be calculated based on the “Valor Catastral”.

Your property agent and independent lawyer can help check all these things are in place for you, to make the process safer for you to buy your dream home abroad, in Spain.

Co-written by Louise Reynolds of Property Venture® and Raquel Perez of Perez Legal Group

Property Venture® is an independent, Spanish property expert who helps people buy holiday homes and investment property overseas, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Spanish Homes, Turkey property, Poland property, Morocco property, Cyprus property, Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

We hear that 2 million Polish people have gone to work abroad, many in the UK. However this is only a small part of the story. Incentives were offered to get manual workers back to Poland, to upgrade the sports stadia and infrastructure, ahead of 2012 UEFA championships taking place in June 2012.

Who is buying Krakow Property and Warsaw Property?

There is strong interest in investing back in Poland and Krakow in particular, among people who have either visited and fallen in love with the place, or met and fallen in love with a Pole from Krakow or elsewhere in Poland.

What’s more, recent anecdotal evidence from the British Polish Chamber of Commerce reveals that some middle-class Britons, fed up with the recession in the UK, are ironically turning migrants, and heading to Poland and Kraków  (known as Cracow by British people), for a better life.

Why are they buying or renting Krakow Apartments or Warsaw Apartments?

Krakow Property

Kraków is the second city in Poland (after Warsaw) and is a top destination, particularly as a city centre break, for foreigners. According to the World Investment Report 2011 by the UN Conference for Trade and Development (UNCTAD), Kraków is also a significant, emerging, city location for investment in global BPO projects (Business Process Outsourcing) in the world. Poland now ranks as the 6^th most attractive country for Foreign Direct Investment (FDI) in the world. Up from 12^th last year and puts Poland ahead of all other European Union countries.

The Economist was tipping Poland a while back “Poland has never been more secure, richer or better-run.” And now the Financial Times is featuring positive investment stories about Poland and its growing influence as a dynamic, outsourcing and shared services centre for the World’s biggest companies

“Poland’s medieval capital is well known as a tourist magnet, but away from the market square, royal castle and gothic churches, the office parks of suburban Kraków are home to one of the most dynamic shared services markets in the world. The sector provides more than 25,000 jobs and companies such as Lufthansa, Shell, Google and HSBC have set up back-office operations in the city.”

Much rented accommodation has been snapped up by workers for the likes of Capgemini, the consultancy and Motorola, the US electronics group. Computer workers in new office parks are becoming a driver of the local real estate market in Kraków. Office stock in the city has reached 517,000 sq m, according to DTZ, the property company. That’s not to mention the England Football team basing itself in Krakow for the UEFA Football Championships.

Warsaw Property

Kraków, whilst dynamic in the BPO sector, is second to Warsaw in the Polish office market. The capital, Warsaw, attracts a wider range of clients and is starting to become expensive, due to higher labour costs (labour accounts for about 80 per cent of the operational costs of a BPO investment), low unemployment and office costs that are close to €20 per sq m in the centre of the city, compared with about €13 in Kraków. Host to UEFA Football matches in 2012, the profile of this City will be raised.

What are the drivers of success of the Polish Property Market?

Poland’s private sector has generated several billion-dollar fortunes in banking, telecoms, beer and auto parts. The European Commission forecasts that Poland, Europe’s 6^th largest economy by purchasing power, is set to grow quicker than Germany in 2012, +2.5% versus Germany’s 0.6%

Property investors, seeking stable, capital growth and promising rental prospects turn to Kraków  where yields can be 5%+. As international employers seek to bring subsidiaries to Poland and recruit more people in city centres and special economic zones, demand for property rises.

Whilst Poland is in the EU, it has not yet adopted the Euro and Sterling has strengthened against its local currency the Polish Zloty. Sterling is now back to around five Polish Zloty to the pound, up by more than 25% on the preceding 12-18 months. This means property can be 25% or more, cheaper.

Polish Property Agent, Property Venture® has centrally located Krakow apartments available starting from  PLN 387,514 or c.£77,500 for 43 sqm 1 bed apartments.

Property Venture® an independent, Krakow property expert, who helps people buy holiday homes and investment property in greater  Europe and the Mediterranean, more easily and safely than they can on their own. Their focus is mainly: Poland property, Spain property, Turkey property, Morocco property, Cyprus property, Bulgaria property Montenegro property. They are overseas members of the professional body: National Association of Estate Agents, the NAEA. This means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

1. “If you don’t understand it, don’t do it” – is the same for international property as for other investments

Most people understand Bricks & Mortar, which is why many people are attracted to it as an investment category. However, buy to let property abroad or buying a holiday home in Spain, or a property in Turkey, is not the same as buying in the UK, so if you are not sure what’s involved in finding a property overseas, speak to a knowledgeable agent.

2. “Market timing” – is also important for overseas property investment

“There are two types of people, those who can’t do it & those who don’t know, they can’t do it”

Market timing is tricky to second call. Few call the property market peaks & troughs perfectly. It is far better to know local market pricing and know if you are buying at a decent price. If you buy at an inflated price, it can be tricky to make money if you sell in the short term. There is a saying that, you make your money when you buy, not when you sell.

3. “Minimise fees” – keep costs down when buying property abroad

Minimising fees paid out is wise in many situations. However, it should not be to the detriment of getting good advice from an agent (which often does not cost any more money than buying directly), or cutting corners by not getting independent legal advice or conducting a survey.

4. “Deal infrequently “

Frequency of buying & selling properties depends on the personal investment strategy adopted. Buying to add value & sell on is a valid strategy, although this might be less well suited to buying a property in Poland for example.

There was a period in time when lots of people bought off-plan property, with a view to “flipping” (selling on before the property was built) in a rising market, but came unstuck when property prices faltered. This is an example of not over-relying on fast turnover of property or overfrequent dealing.

5. “Don’t over-diversify “ – is good advice in buying overseas property too

Here the gist is that with lots of diversification, comes higher chances of holding a poor investment.

This can hold true in international property too. What’s more, if you are buying property in Poland, a holiday home in Spain, or property in Turkey property,  as well as other non- European property, you will have different; buying processes to deal with, sets of legislation and sets of contacts to manage the properties abroad, all potentially building in extra cost. So a degree of focus makes sense.

6. “Never invest to avoid tax” – when it comes to finding a property overseas this also rings true

The focus given to tax avoidance, may distort the mind as to what constitutes a good investment. You may end up buying a really good tax-efficient property, but it is not actually a great investment.

7. “Never invest in poor quality companies” – or for that matter buying overseas property which is poor quality

A poor quality asset can drain you of resources, not enhance them. The same for property, buy good value property, which may not always be the cheapest. Just because a house in Bulgaria is £25,000 doesn’t make it better value than an apartment in Krakow, Poland for £55,000. One might be highly rentable, the other not.

8. “Always invest in a Business that can be run by an idiot”

The idea here is that at some stage the business might end up being run by an “idiot”.  In property, you might run your property-related affairs or have a team in place, or delegate to someone else. Either way the easier the strategy and operations are to understand, the more successful it is likely to be.

9. “Don’t engage in the ‘greater fool’ theory”

Trying to outwit the market is a challenging one that not many people succeed at. If the returns are high, there is likely to be a high risk, or worse it might be too good to be true. If you go down this route, make sure you are comfortable with the level of risk involved and that you can afford to lose if it came to it. Investing in Russia for example is not for the faint-hearted, but a  country with better Corporate Governance in Europe, like Poland, or Spain, or Turkey might be less risky.

10. “If you don’t like what is happening, turn the computer screen off”

If you can’t stomach the risk or the investment ride, maybe you should not get into it in the first place, or just be prepared to take a step back to keep your sanity.

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes abroad and investment property in Europe, more easily and safely than they can on their own. Independence means freedom to choose  developers to work with and clients buy more safely, because grounded, common-sense advice is offered and guidance through the buying process.

We help people buy holiday homes and investment property abroad, mainly in Europe: Holiday Homes in Spain, properties in Turkey , Poland property, Morocco property, property in Cyprus, Bulgaria property and Montenegro property. Overseas members of the professional body: National Association of Estate Agents, the NAEA. This means Property Venture®,  has been subjected to the membership criteria and has signed up to follow the professional Code of Conduct established to help potential buyers or investors, buy overseas property with confidence

Featured or Mentioned in: Sunday Times, Times Online, Daily Mail, Mail on Sunday, Independent on Sunday, Homes Magazine, HSBC Liquid Magazine, Easyjet Magazine, London Homes & Property, A Place in the Sun, The Telegraph

So you have found THE villa or apartment of your dreams, done all the research and you now need to sign a reservation agreement, to get it taken off the market.

Spain property buying process stages

This initial reservation agreement or contract, much like in the UK, should stipulate the basic terms of the purchase, i.e. the price, details of the vendor and buyer, details of the property, when the Private Purchase Contract should be signed. A reservation payment of about €3,000 or €6,000 is paid at the same time. This tends to be paid to the local agent.

The next stage, the signing of the Private Purchase Contract, usually happens 20-30 days later, which allows time for legal due diligence to be carried out. A deposit, usually 10% for a re-sale / secondary market property, is paid on signing the Private Purchase Contract, which details the completion date, balance of monies due and other terms and conditions of the sale. The reservation payment (€3,000 or €6,000) should be offset against this, so it would be 10% minus monies already paid.

This will then give the buyer time either to obtain a mortgage,  or get together the money required to complete the balance. Should the buyer fail to complete the sale by the final date, the buyer would lose the deposit. On the other hand, should the seller decide to pull out of the sale, or find another buyer with a higher offer, then the original buyer has the right to claim back twice the amount of the deposit.

The subsequent third and final stage of the Spanish buying process, is the signing of the Title Deed before the Notary Public. This transfers and confers ownership.

Role of a Notary in the Buying Process in Spain

The Notary Public is an official of the state, and his duty is to certify that the property Private Purchase Contract has been signed, monies paid over, and that the buyer and vendor have been advised of their tax obligations. In the UK this is not part of the process, a lawyer or paralegal does all of this as part of the „property conveyancing“. In fact it is not a legal stipulation that a lawyer is used as part of the buying process in Spain (as in the UK), but it isn’t advisable that a lawyer’s services are dispensed with because a Notary is involved. A Notary is not available to help negotiate a contract, or do the due diligence prior to contract signing, or prepare the legal contract and Title Deed. They are there to officially witness the sale and rubber stamp the process

Legal Due Diligence

A lawyer would check the legalities of the property: land ownership, the correct land classification, building licence for off-plan, or habitation licence in the case of a ready-built or re-sale, to ensure the property is legal. The existence of a habitation licence means that a property is legal and has been built according to land use and building licence granted. A lawyer can also check that all running costs and local tax payments are up to date with the local town hall, so no debt, or other charges are inherited. Debts are attached to the property, so if they are not cleared, the new owner takes on the responsibility for this debt.

Title Deeds and Registration

The “Escritura Publica” or “Title Deed” is the final document of the sale and is signed between the buyer and vendor when the final balance due on the property is paid. The signing takes place in the presence of a Notary Public, which makes the document legally binding.

In Spain, the Notary Public keeps the original of the document and the purchaser is issued with a second authorised copy, which is then entered in the property registry (against the payment of the stamp duty or transfer tax). This means that if the buyer loses the buyer’s copy, then the Notary Public can always issue another copy.

In the UK there is a centralised Land Registry which has a record of all legal property transactions. It is electronic and can be interrogated by members of the public, with basic levels of information, like historical price paid for the property, available for free or very little.

Spain is divided into over 8,000 municipalities (basic level of Spanish Local Government), which form provinces and in turn the 17 autonomous communities. And this is where things can get a bit fragmented. The detail of a property transaction is held locally, by the Notary, in the municipality. It is possible to apply for a Land Registry report online, a Certificate of Registration (Nota Simple) to check the property is free of charges, but the service is in Spanish and accessible by lawyers, not members of the public and contains minimal information.

Your property agent and independent lawyer can help check all these things are in place for you, to make the process safer for you to buy your dream holiday home abroad, in Spain.

Co-written by Raquel Perez of Perez Legal Group and Louise Reynolds of Property Venture®

Property Venture® is an independent, European property expert who helps people buy holiday homes and investment property overseas, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Holiday Homes in Spain,  Properties in Turkey ,  Poland Property, Morocco Property, Property in Cyprus,  Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

The European Football Confederation has come a long way since it was founded in 1954, likewise, Poland, as a former Eastern bloc country has come a huge distance since shedding communism in 1990, over 20 years ago, to become a powerhouse within Europe. If you needed convincing, ponder this fact, Germany is considered the powerful economy of Europe, yet the European Commission forecasts that Poland, Europe’s 6^th largest economy, is set to grow quicker than Germany in 2012, +2.5% versus Germany’s 0.6%

But don’t just believe one source, others sing Poland’s praises as a great investment opportunity.

Savills Poland, says: “Economic growth in the country remains relatively high and we anticipate similar levels of investment this year…..  We may also see an increase in UK buyers on the market in 2012.”

PWC say Warsaw, Istanbul, Munich are the new hotspots for property investors in Europe.

The International Monetary Fund’s CEE representative says: “Poland is in some ways more like a large emerging market, a version of Turkey or Brazil or possibly China. In the four years since the crisis began, the Polish economy grew by 15 percent… So the performance has been extremely strong….And finally, the banking system itself is well capitalized and highly profitable, and in rather better shape than in many other countries.”

The Polish property market, according to REAS a leading property analyst, experienced higher total sales levels in the past four quarters in the majority of cities: Warsaw, Krakow, Lodz, Tri-City, Poznan, Wroclaw, than the long-term average, when the demand was strongly stimulated by loans denominated in Swiss Franc. This comparison clearly illustrates that regarding the number of transactions, this result should be seen as a success.

Property price appreciation has tended to be higher in these popular cities than other parts of the country, so are proven, stable cities for property investors. There is also a strong local market in major cities like Krakow, so there is a more assured exit plan should you need to sell, as the local middle class increasingly buy their own homes.

Poland is a great place to look for investment property. Whilst it is in the EU, it has not yet adopted the Euro and Sterling has strengthened against its local currency the Polish Zloty. Sterling is now back to around five Polish Zloty to the pound, up by more than 25% on the preceding 12-18 months. This means property can be 25% or more, cheaper.

Now is a great time to consider investing in a major city in Poland, which is increasingly flexing its European muscle. Property Venture® has a city-centre development in an unrivalled location in Krakow. 43 sqm, 1 bed apartments start at PLN 387,514 or c. £77,500. Limited availability at these prices, for this location. Expect yields of 5% and significant capital growth.

Property Venture® is offering a free Guide, download it now by clicking here “Overseas City Property Buying Guide”

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Holiday Homes in Spain,  Properties in Turkey ,  Poland Property, Morocco Property, Property in Cyprus,  Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

Definition of Escrow in overseas property

Something of value, such as a deposit of money, that is put into the custody of a neutral, third party by a buyer, to be retained until the performance of a condition or specific conditions have been fulfilled by the seller.

It is a means of addressing the issue of trust, when handing over money to someone you may have only just met, or might not meet, and is helpful in off-plan property purchases. It usually involves drawing up a tri-partite agreement (contract) between buyer, seller (developer) and “trusted” 3^rd person (usually a legal representative), prior to signing a purchase contract. After the Escrow agreement has been entered into, the terms for holding and releasing the money, or deposit, cannot be altered in the absence of an agreement by all the parties.

By way of example, if you want to buy a €200,000 property from a developer via Escrow, you and the developer might select an Escrow agent, (sometimes a developer might already have this set up) often a lawyer or bank. The Escrow account’s conditions might stipulate that when all the title checks and building permission checks have been successfully completed and verified as satisfactory, the €60,000 deposit may be released to the developer.

The Escrow account ensures the buyer knows that no payment will be made unless the right paperwork is in place, or the relevant stage of building work has been completed. The developer knows that cleared funds exist and that he can access these by providing the necessary paperwork or adhering to the building schedule.

Let’s take a look at a couple of European countries.

Spain

It is the legal responsibility of banks, to ensure deposit amounts need to be placed in special accounts, separate from any other kind of funds belonging to the developer or promoter. It is in effect a developer´s Escrow account, controlled by the Bank. It is designed to protect against the situation where construction is not started, or not finished, by the agreed deadline.

Poland

Poland is one of just a few EU countries where much of the onus of risk, related to the buying and building of property, is on buyers. Currently use of an Escrow account is not a legal requirement, but a Bill is going through Parliament in 2012, which prescribes that funds for the purchase of the property will not be transferred directly to the developer’s account – they will be paid into an Escrow account (a third party independent account) and transferred to the developer only upon the project completion.

Conclusion

Although property-buying abroad using an escrow is a low risk option, the use of an escrow account may be used less regularly in international trading because local laws differ and it is more challenging to find an escrow agent who is known and trusted by both parties, across borders.

Pros and cons

Not all developers, however, offer Escrow accounts. Even if they don’t it is theoretically possible that a client can initiate one with the agreement of the developer. If a developer doesn’t want to and a client is insistent on an Escrow, they might lose their desired property. Just because a seller doesn’t offer Escrow doesn’t mean they are dodgy. Laws in some countries don’t require developer Escrow accounts, so they might not offer something that adds cost to the process. In a sellers’ market there is less scope for negotiation, but in a buyers’ market there may be scope for negotiating an Escrow.

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Holiday Homes in Spain,  Properties in Turkey ,  Poland Property, Morocco Property, Property in Cyprus,  Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

Quite often the incumbent agent has got the property on their database and possibly syndicated it (if they collaborate with other agents), maybe got it on relevant portals and they may even have generated some viewings, but perhaps the agent has not been sending e-mails to the client or telephoned them regularly, which has disgruntled them and evidently the property has not sold.

Now I grant you, not all property agents are great at nurturing relationships with clients, building databases and proactively marketing property for sale. However there are challenges in the market that cannot be blamed on an agent and it helps to be realistic about what is not in an agent’s control, for example

• Global recession
• A downturn in property market prices
• Lack of mortgage finance, either because banks are tightening lending criteria or because governments are imposing stricter capital adequacy requirements e.g. Spain
• Squeezed disposable income, affected by inflation, oil prices and taxation increases
• Unrealistic buyer expectations, fuelled by stories of 50%-70% discounts, believing their ideal property is now achievable, with the maximum possible market discount.

What’s more there are lots of sellers caught with mortgage debt they want to cover, which is driving many to “cost plus” price their property, so they can cover meet their debts, rather than “market-price” their property, based on what a buyer is likely to pay.

So how can a seller tell if it is the economy, in other the words the state of the market, as opposed to their agent’s lack of proactivity? Or something else?

• Have you priced the property realistically?
• Are you paying a fair commission level to the agent? Resales are generally not as profitable for agents as new sales, so whilst you might think you have negotiated a great deal on commission, if it is out of kilter with other sellers, or demotivating the agent, that isn’t going to help you sell your property. In a re-sale situation, commissions can be between 3% and 5%. In some countries, it is normal practice to charge a buyer and seller commission, e.g. countries like Poland, Turkey, Bulgaria, in Spain it is the buyer who pays commission
• How long have they been an agent? Some enter the market when it is on the up and so may not have as much experience or knowledge as a more established agent, or a database of clients they have nurtured a relationship with.
• Have they got any professional qualifications or are they a member of a professional body? Whilst this is not the “be-all-and-end-all”, it indicates if a company is open to continual learning and improvement and seeks to have a degree of knowledge in their market. In many markets the sale of property is not regulated, so it is helpful to find an agent that is prepared to submit themselves to an independent appeals process, through an independent or professional body such as the National Association of Estate Agents (NAEA).

Don’t assume selling abroad is the same as selling in the UK, unless you are familiar with the process, you are likely to need some help or guidance.

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Holiday Homes in Spain,  Properties in Turkey ,  Poland Property, Morocco Property, Property in Cyprus,  Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

But it never used to play a role, so why is it important now?

Well we tend to consider a range of factors as part of an investment decision and among these are the stability and risk of a given country. Is the country prospering, growing, attracting industry and got a sound balance sheet to increase its wealth on the world stage?

Social and Political stability

We have seen civil unrest in countries in Europe where austerity measures have been implemented most harshly due to sovereign over-indebtedness, adding to the unemployment burden. Greece, Spain, France and Italy, deemed at risk of late, have all suffered. And the UK has seen its fair share of unrest (although it depends whether you consider the 2011 riots to have been as part of the backlash against austerity, or society or the police). McKinsey reckon that 40 million jobs are needed in the developed economies to ease the jobs crisis.

This unrest in itself causes a level of instability, which not many investors actively seek out, as part of their investment criteria. Social unrest coupled with market pressure, led to the political change experienced by the likes of Silvio Berlusconi in Italy and George Papandreou in Greece

Economic stability

A country’s ability to honour its debt and function as a nation is important. The country’s wealth is a contributor on a number of levels, to employment rates, how well maintained the country’s infrastructure is, attractiveness as a base for multi-national corporations which provide employment, boosting parts of the economy.

A nation’s poor ability to pay, or poor prospects of paying, is reflected in the interest rates charged for sovereign debt. The higher that goes the more difficult it is to pay off that debt and a nation can enter a downward vicious spiral of financial uncertainty and domestic unrest.

Domestic Banks

We have seen how sovereign debt is important. When it comes to bank debt, banks have become intertwined with cross-border assets, liabilities and interests. Banks lend to governments as well as businesses and individuals. Likewise when banks have come under pressure, governments have been obliged to offer a financial helping hand, witness RBS’ £425bn government bailout, Lloyds’ merger with HBOS ultimately requiring £17bn taxpayer’s money and the nationalisation of Northern Rock.

Banks, like governments, are being required to rebalance their Balance Sheets. There are 2 ways of doing this, by raising capital or limiting the amount of lending to house buyers, among others. (It turns out some banks might have discovered a 3^rd way by recalculating risk-weightings, the likelihood of default of assigned loans, which allows banks to boost capital ratios without cutting lending). The point is that if people can’t get mortgages, or they are in strict supply, that prevents many people buying, impedes the liquidity of the property market, so making it harder to buy or sell a property.

When it comes to property investment, it is not only social, political and economic stability that count, but also access to finance. If banks are in a poor position to lend, property buyers cannot get secured loans easily to fulfil their investment aspirations.

Currency exchange

Fears over sovereign debt not being paid, unsettle financial markets. As financial investors seek to put their money in “safe haven” countries which offer stability and decent returns, this in turn contributes to strengthening that country’s currency. This currency dynamic impacts investors who hold property or other assets across national borders, as well as expatriates drawing UK pensions or savings, not to mention companies and governments.

Sovereign debt is a linked web of connections

Would you want to be investing in a country that can’t pay its debts, which in turn fosters social unrest which might affect your property investment? Some people have a stronger appetite for risk and are willing to take that punt, on the basis that in the long term their investments will have appreciated. Not many though have the stomach for that level of risk. Most people want to minimise the risk of and protect their hard earned cash.

How to mitigate these risks?

• If you are risk-averse, you might be more comfortable buying closer to home, in countries that have not suffered a severe downturn
• Have a  number of options for raising finance, so that you are not left high and dry, if you find a property you want to buy, but finance falls through
• Talk things through with an someone else with experience on overseas property buying to establish how enduring such risks might be

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Holiday Homes in Spain,  Properties in Turkey ,  Poland Property, Morocco Property, Property in Cyprus,  Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.

At around 2.9 Turkish Lira to the pound, the buying power of the British property investor has strengthened by around 20% since last year Summer. This makes buying property  in Turkey even cheaper, which already represents great value-for-money. It is possible to buy a lovely 3 bed villa by the sea for not much more than £100,000, or a 2 bed apartment by the sea for just over £50,000.

Sterling has strengthened against the Polish Zloty. It has recovered a lot of ground and is back to over 5 Polish Zloty to the pound, up by more than 25% on say 12-18 months ago. This means property in Poland can be 25% or more, cheaper.

But beware of taking too many risks or exposing your mortgage. Other countries in Europe haven’t fared so well. For example , Hungary has been hit by high levels of mortgage debt in foreign currencies. Many overseas buyers preferred the lower Swiss Franc mortgage rates (as opposed to the Forint) and opted for these, at the time of purchase. According to Hungary’s Financial Supervisory Authority, about 70 per cent of all bank loans are denominated in currencies other than the forint and 95 per cent of that is in Swiss francs.

This is a problem because the cost of foreign loans went up when the global financial crisis hit, as local currencies depreciated against the Swiss Franc, at a time when the value of property has declined in some of these markets.

There are many options for financing the purchase of a property, including buying in Swiss Francs. The reason this has been popular in the past is that the interest rate has been significantly lower than for other currency-denominated mortgages. However with the past few years’ global economic uncertainty and fluctuating exchange rates as well as interest rates, this is not always the best option. The cost of foreign loans went up when the global financial crisis hit, as local currencies depreciated against the Swiss Franc.

The good news is that European property has never been such great value for money, with property prices historically low and currency fluctuations in favour of sterling, now is a great time to buy European property.

Property Venture®, is an independent, UK-based agent for overseas property who helps people buy holiday homes and investment property in Europe, more easily and safely than they can on their own, because they offer grounded common-sense advice.

Their focus is mainly in Europe: Holiday Homes in Spain,  Properties in Turkey ,  Poland Property, Morocco Property, Property in Cyprus,  Bulgaria property and Montenegro property. As overseas members of the professional body: National Association of Estate Agents, the NAEA, this means they have been subjected to the membership criteria and have signed up to the professional code of conduct, established to help potential buyers or investors, buy overseas property with confidence.