FSA issues foreign property warning

02 June 2006
The Financial Services Authority (FSA) has warned that British investors need to be aware of the risks involved with buying property overseas.

Low interest rates in the eurozone have encouraged more and more Brits to buy abroad as an investment.

However, the government's financial services watchdog has said anyone getting a mortgage for an overseas purchase needed to be aware of the facts.

The FSA only regulates domestic mortgages, meaning that unless someone uses equity from a property in the UK to buy their second home the loan will not be covered.

"If I had a flat in the Docklands and I wanted to use some of that equity to buy a house abroad then it would be covered," an FSA spokesman said.

"However it wouldn't be covered if I took out a completely different mortgage, whether it's a first or a second mortgage, to buy a property in Spain for example. We don't cover that."

Critics have argued that with so many people interested in buying property overseas, the FSA's remit, which is set by the Treasury rather than by the agency itself, should be extended.

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