To Rent or to Sell ...That is the question!

Many people relocating to Spain or the Costa Tropical in particular are always faced with this dilemma. You will have a 100 questions and more as you balance the pros and cons . Should I keep my property here in my home land , England, Denmark , Germany etc or should I sell it and use the proceeds to start my new life in Spain. There are hundreds of factors to take into consideration when making this decision and I have listed below just some of the questions my clients have asked me and some of the answers which they found useful as well as some of the resources.

What is the state of your homeland property market?

This is a tricky question and there are lots of websites with information about current house price trends. In the UK I would recommend 

home.co.uk for all the information on UK property market e.g selling times, price trends, demand etc

Is it easy to sell your home at present ?

Selling your home is always related to the location , condition , presentation and most importantly the price. If you work on the first 3 points then you will be able to gage the correct selling price from other local properties and property web sites such as rightmove.co.uk

What costs are involved in selling your property? e.g estate agents fees, capital gains tax

This will depend on your country and your particular personal situation. The first person to ask will be your local estate agent, who will have a good all round knowledge in the field. In the Uk average estate agent commission is 1.5% plus VAT. Capital gains is not payable if the property is your main home. If it is not your main home then take advice from an accountant as lots of different situations apply.They may refer you onto an accountant for further detailed advice.

What agents should I use?

I am a member of the National Association of Estate Agents and have been for 25 years. They have strict codes of conduct and make sure their members are professional. You can find out more information and a list of their local agents at their website http://www.naea.co.uk/

Could I sell directly and how much would it cost?

With the advent of the internet this could not be easier. It is a lot more difficult and you have to be aware of the  rules and regulations but there are websites for ordering your own sale board, which is a very important marketing tool, free ads web sites with good traffic such as gumtree.co.uk. If you want faster results then you will have to pay. The number one site in the UK is rightmove.co.uk with over 10 million visitors each month.

Could I sell my property to a professional property buying company?

There are a number of national house buying companies that will buy your house. They can offer a fast offer and fast completion ( with 2 weeks). The catch tends to be they may offer a lower price than you might achieve on the open market. This may not be important if you have bought yourself a bargain property or if you have found a unique property you do not want to lose. buy-myhouse.co.uk is one of those companies with a reputation for reasonable prices and quick decisions.

Does the exchange rate effect my decision?

Rates of exchange are really important. You need to take a look at the current exchange rate compared to historic exchange rates. This could make the difference of up to 20% and may make your decision to wait for rates to improve or whether to grab a good exchange rate whilst they are good. Do not forget you can get forward rates up to 2 years in advance . That means you can put down a 10% deposit now and fix your exchange rate for next year . Check out our exchange rate page for more details.

If I sell my house and pay off my mortgage will I get a mortgage again if we returned home?

This is more important than you think. Chances are if you pay off your mortgage and then leave the country for 5 years your credit file in your home country will be empty. This means with the automated systems they have today and gaps in your employment record you may have problems obtaining a new mortgage if you return.

If I decide to keep my property should I use a rental agent?

If you are out of the country I would say yes. Nowadays it is a very tricky job as it is even if you were living around the corner especially in this compensation culture. Again go for a n agent that has been recommended and who is regulated by one of the large regulatory bodies such as National Association of Estate Agents NAEA or the Association of Regulated Letting Agents ARLA.

Do I have to tell my mortgage company?

Yes you should always declare you are letting your property and get consent before a tenant goes in. Most lenders will accept renting but will charge you an administration fee and will want to check the tenancy agreement. Some lenders will want to charge a slightly higher interest rate. If not you will be breaking the terms of your mortgage. Also if the mortgage company has done the insurance on the property they will want to tell the insurers. If you do not inform your insurers you may not be insured.

Do I have to change my insurance to a Landlords Insurance Policy?

Most insurance companies will accept lettings as a change to your normal residential policy but it will not include particular costs relevant to a landlord like cover against third part liability, eviction costs, loss of rent in the event of extreme damage etc. There are some excellent policies on the market by providers such as Direct Line.

If I rent out my self where do I get the agreements and rules?

It is very important to make sure of exactly what your responsibilities are as failure to do so could land you in prison. For example if a tenant dies due to a faulty boiler and you did not have a gas safety certificate you could be charged for their death let alone be sued financially. A good site is letlink.co.uk for all the information on lettings and all the contracts you need.

What are the negatives to renting property in Spain?

Renting in Spain especially in tourist areas by the coast or areas of interest can be difficult as the landlords want to get the rent for weekly tourist lets especially in June, July and August . They can get the same rent per week as they charge a long term tenant per month. The law is very slow so any recourse or legal involvement regarding rent, deposits, harassment will take years to go through the courts. Conditions and legal responsibility are far different than the UK and other north European countries. If you can get an annual rent it will only be for 11 months and then be renewed as any longer contract implies additional tenant rights which make it difficult for a landlord to through you out. They cannot give you any guarantee to extend the lease other than an unwitnessed verbal promise.

Should I re-mortgage in my home country and take a mortgage in Spain?

This is a slightly riskier strategy in that you will have 2 mortgages in two different countries in two different currencies and you will reliant on rental income coming in to pay the mortgage interest. However it does mean that you will have your foot in both countries financially speaking. This stops the problem of people not being able to afford to return to their country because they cannot afford it as house prices have risen too much compared to Spain. This strategy is based on the fact that average rental return ( in UK is 5.7% pa ) is greater than the interest rate ( variable rates of 4% in UK and 3% in Spain) Thus you have enough income to pay the mortgage. You should get independent advise from a mortgage broker or independent financial adviser.

Where do I go for a mortgage?

Take a look at our mortgage page for some current deals and recommendations. I believe it is better to use a high bank local to the area where you want to buy your Spanish property  and use a mortgage broker for mortgages in the UK