Buying a property abroad: factors to consider

We reveal what you need to consider when buying an international property. Budget, location and formalities: we explain everything! 

In Canada, many people would like to invest in real estate abroad. Whether you’re looking for a second home or a change of lifestyle, there are many advantages to investing abroad. 

However, carrying out a real estate transaction abroad requires a certain amount of legal and financial expertise too. This often requires the expertise of professionals to avoid the various pitfalls. Nevertheless, investing internationally implies the ability to expose oneself to all kinds of risks. The most important thing is to consider all aspects of your investment. 

Establishing a budget for your property purchase

As with any real estate investment, you need to determine your budget by establishing a price range. This includes property taxes, monthly repayments and home insurance. In the case of a loan, Canadian banks are rather reluctant to finance a project abroad. Each country has its own real estate market and prices. 

However, it is still possible to obtain credit in Canada by taking out a mortgage on a property that has already been paid off with a Canadian bank. It is therefore advisable to apply for credit in the country where you wish to invest. However, this requires a substantial down payment of between 30% and 90% of the property price. Some Canadian banks also have foreign subsidiaries. In this context, it is necessary to open a bank account in the country concerned to be able to convert it into foreign currency. 

Choosing the ideal location

Location is the cornerstone of any real estate investment. So it has to fit your needs. In other words, location has a considerable impact on your investment project. If it’s a rental yield investment, the property can be located in city centers or high-growth markets. 

Tourist numbers and economic dynamics also have an impact on your rental property. In general, these factors are likely to attract more tenants. For a residential property, you can choose a location close to an airport or the city for easy access. 

In addition, certain countries have rules for non-residents. In Hong Kong, for example, non-residents are subject to a surtax of up to 15% on property purchases.

Handle administrative, legal and tax formalities

Investing in real estate is always complex, especially when it comes to the administrative side. But before you start your move, you’ll need to complete a number of administrative formalities, such as changing your address with the local authorities. Each country has its own formalities, such as the signing of a preliminary contract. 

In Portugal, for example, it can take from three to four weeks to acquire a property. In the UK, the signing of a pre-contract does not include a right of withdrawal or a cooling-off period. Tax costs can vary from country to country. 

So it’s important to find out what the rules are, so as to anticipate any potential blockages. You need to find out which tax treaties have been signed between France and the country you wish to invest in to protect you from double taxation. In principle, you are subject to taxation on your property income if the country you choose has a tax agreement with European countries. On the other hand, you need to find out about property rights. In Thailand, for example, foreigners must sign a 30-year emphyteutic lease to purchase a plot of land.

Surround yourself with qualified professionals

Everywhere, as in Canada, there are qualified professionals to help you with your investment project. You can ask your notary to refer you to his specialist colleagues abroad. They can advise you on market prices, for example. If you can’t find a notary, search online real estate agencies. 

A real estate agent has the necessary expertise to provide you with the essential price information by presenting you with comparative offers. On the legal front, a notary is your best ally for mastering the country’s local procedures. He’ll also be able to introduce you to his professional networks to help you with your project: contractors, insurers, bankers or even an asset manager. 

If you wish to settle in a country where a foreign language is spoken, you can be accompanied by an interpreter. This is important when signing your lease.