The ongoing costs of your overseas home
The need to manage property-related costs and make international payments doesn't end when you complete your purchase and collect the keys. There are ongoing costs that require just as much diligence.
Once you’ve navigated the buying costs and secured your perfect property, you must budget for the ongoing expenses that need covering when you’re an overseas homeowner. The overall cost of these outgoings will depend on how you use your property: holiday home, investment property or permanent residence.
For instance, the running costs for a holiday home will remain relatively low as you won’t be there permanently. However, if you intend to let the property out when you’re not using it, you’ll need to budget for those extra costs.
Renovating and furnishing
Is your overseas home move-in ready, or does it need a glow-up first? Who are you going to use to do the work? How much will renovations cost? Does it need furnishing? Answer these questions when planning your overseas property purchase.
If you need help finding reputable local tradespeople to help renovate your home, check your local business directory and ask neighbours or friends in the area for recommendations.
Local taxes
Most European countries have a similar framework in place to the UK council tax, but with fundamental differences. Enquire with the relevant authorities to ensure you’re fully aware of the specifics and the cost so you can budget accordingly.
For instance, in Spain, the local annual property tax (Impuesto Sobre Bienes Inmuebles - IBI), called SUMA in some regions, applies to resident and non-resident owners in Spain. Levied at a rate of between 0.2% and 1.5% of the cadastral value (valor cadastral) – based on things like the property’s age and location – it’s generally cheaper than the market value.
Running costs
Essential utility (gas, electric, and water) costs depend on how often you or your tenants use the property. For instance, water bills in Spain vary by municipality and the amount of water consumed.
It’s a good idea to use a market comparison site to get an idea of their cost.
Contact a currency specialist to discover how they can help you manage these ongoing costs.
Management fees
If you’re planning on letting out your home when you’re not using it for sun-drenched holidays, you might choose to use a management company to manage paying guests. They will take care of the booking process from start to finish and arrange for your property to be cleaned and tidied between guests. They typically charge a monthly fee in the local currency for this service.
Insurance
Content and property insurance is a must whether you’re investing in a property, buying a holiday home, or purchasing a permanent residence. Premiums vary depending on how often you’re there and whether you’re letting the property, so contact an insurance provider to get a free quote.
How to manage these payments
A currency specialist can help you automate ongoing transfers, like property taxes and maintenance, by providing access to a regular payment plan. This simplifies the payment process by allowing you to schedule payments to occur weekly, monthly or at more irregular intervals, saving the effort of making individual transfers.
You can opt to execute your payments at the current exchange rate or a rate you’ve already locked in with a forward contract, shielding the cost of your payments against currency risk.