Offer accepted: What happens next?

Having an offer accepted on your dream home is a key milestone in the overseas property buying process – but don’t crack open the champagne just yet. Save the celebrations until the keys are in your possession. There are some essential legal, financial, and practical things to sort out first.

Don’t be daunted. If you’re working with an estate agent who’s experienced at selling property to foreign buyers, they will understand what happens next and will help you organise everything.

Find a lawyer

Once your offer is accepted, the legal wheels will start turning. Now’s the time to find an independent English-speaking lawyer who will look after your interests and only your interests. Don’t assume a notary is sufficient – it’s their job to ensure everything’s legal, not oversee your legal requirements.

You will probably be asked to sign a reservation contract to take the property off the market – this is standard practice in most countries. Your lawyer will check the details before you put pen to paper.

Next, they will conduct the necessary due diligence checks on the property and oversee the drawing up of the sales contract. You might also need to grant them power of attorney if you can’t be in the country during the final stages of your purchase. This allows them to complete the purchase on your behalf by signing the sale contract.

If you’re asked to pay a deposit when signing a reservation contract, speak to a currency specialist to ensure you transfer the funds cost-effectively and on time.

Use a forward contract

Everything is going to plan: you’ve just had an offer accepted which, at the current exchange rate, you can afford – but now your exposure to currency risk kicks in.

Say it’s a €300,000 property and at the current rate of 1.18 it costs £255,000, which is within your carefully planned budget. Once the contracts are drawn up and the due diligence checks are completed, which can take several months, you will pay the €300,000. Suppose the pound euro exchange rate falls to 1.14 in that time, increasing the property price to £263,000 – you will have to find an extra £8,000? Or perhaps it drops even further, and you have to find even more money.

These large currency swings are far from uncommon. This currency risk has the potential to push the cost of your overseas home beyond your budget limit in your own currency – jeopardising your purchase.

Yes, your exchange rate could improve, reducing the cost of your property. However, rather than crossing your fingers and hoping this will happen, it’s advisable to shield the price from currency risk – otherwise, you’re taking a huge gamble.

A currency specialist can help you do just that with a forward contract. This allows you to fix your exchange rate between having an offer accepted and making the final payment.

Obtain a tax identification number

Before you can buy a property, amongst other things, in many European countries, you must apply for a tax identification number:

·       Spain – The NIE (Número de Identificación de Extranjero)

·       Portugal – The NIF (Número de Identificação Fiscal)

·       Italy – The Codice Fiscal

·       France – If you're a resident in France and obligated to declare taxes there, the French tax authorities will issue you with a TIN or SPI (Simplification des Procédures d'Imposition) once you've registered in the tax authority’s database. Your lawyer should arrange this for you.

For more information, speak to your independent lawyer or a financial advisor who understands the country you’re moving to.

Consider a survey

In most countries, property buyers aren’t legally obliged to have a survey conducted. However, if you’re buying with a mortgage, lenders often insist on some form of inspection or valuation before approving the loan.

While a survey might not be mandatory, it’s highly recommended. It will uncover any existing or potential issues that could result in costly repairs in the future. There are two main types: a structural inspection, which looks for defects in things like the roof, walls, or foundations, and a technical inspection, which assesses its utilities, such as electrical systems, plumbing and heating.

You can find impartial and fair chartered surveyors in the country you’re buying through the Royal Institution of Chartered Surveyors (RICS). Ask your lawyer or estate agent if they know any chartered surveyors with experience working with international buyers.

Contact a currency specialist to discover how they can help you insulate your property transactions against currency risk.