Preventing holiday home hell – is investing abroad right for you?
It emerged a few weeks ago that TV stars Ant & Dec and Phillip Schofield are set to lose around £8 million in deposits following the collapse of a villa resort in the Algarve.
According to reports in the national press, This Morning presenter Schofield is down £2 million while popular duo Ant & Dec – who started out on kids TV show Byker Grove and are now ITV’s most bankable stars, as joint hosts of I’m a Celebrity and Saturday Night Takeaway – have suffered a loss of £3.1 million each after the investment was sold to Brazilian financial firm, SRESPX.
The personal finance experts at money.co.uk say the ongoing battle between the two parties serves as a timely reminder to any potential investors of the ‘high risk associated with overseas investment’.
The advice website says any Brits considering investing in a holiday home must look at both the benefits and the potential drawbacks of such a purchase, as well as being honest with themselves about the primary purpose of the investment.
“When buying a property abroad, it’s easy to get caught up in the potential commercial value of your holiday home, even if you initially made the purchase for personal use,” James Andrews, personal finance expert at money.co.uk, commented.
“Many buyers are sucked in by the attraction of purchasing a low-value property with a high potential rental value, but that doesn’t mean it’s going to make you profit in the long run.”
He added: “Thanks to a combination of management fees, fluctuations in the exchange rate, and random repair and upkeep, there’s no guarantee that your rental income will cover the mortgage payments, even if you have a regular supply of tenants.”
He argues that, if people do decide to buy property abroad, they need to ask themselves if they’re doing it primarily for their own use or for commercial gain
“Both could work out well for you, but if you plan to make serious money renting your property out, you need to do the job properly – it’s not something you can take a half-hearted approach to,” Andrews advised.
Published propertyinvestortoday.co.uk 10 May 20210