Homeowners have been warned about the need to do their research and exercise caution when buying holiday property abroad.
A second home in France, Spain or Italy is a dream for many people, but many middle-income families who achieved this dream are now facing serious problems. An investigation by the Daily Telegraph has revealed that plummeting holiday home values have caused many holiday homes to become millstones in divorce cases; instead of fighting over who gets the property, separating spouses are battling not to have to take it on.
It must be said that the main problem comes from the fact that these homes were bought before the financial downturn, resulting in huge loss of value – but it’s highly unlikely the scale of the drop will be see again, as prices will have to rise again first. However, it does draw attention to the need for careful homework on house prices, taxes and other pertinent issues taking place overseas.
The Telegraph reports on one couple, for example, who have a property in Cyprus which is now in negative value to the tune of £53,000, following loss of value, currency exchange changes and steep increase in payable land taxes. Being aware of potential pitfalls could prevent situations like this occurring.
Louise Halford of Pannone Solicitors explained: “The majority of the people who’ve got these second homes in places like France and Spain are not the super-rich, they are just normal middle class families who have managed to purchase a holiday home.”
Alternatively, it may be worth considering holiday property in Britain, where at least the tax situation will be clearer, and extra income can be made through renting the home out to holidaymakers.