Research from the Global Property Guide shows that some buyers are not aware of high costs associated with buying and selling residential property abroad, which vary from country to country.
Higher numbers of people are buying property outside their own countries, either for themselves or as rental properties. Buyers - from the UK and many other countries - are capitalising on gains made as a result of rising property prices at home and buying in countries such as Bulgaria, Turkey and Morocco.
The Global Property Guide believes that in some OECD (the Organisation for Economic Cooperation and Development) countries, for example South Korea, Belgium and Italy, these transaction costs are unnecessarily high.
It also notes that countries of French legal origin have, on average, significantly higher transaction costs (14.2% of property value) than countries with German (11.5%), English (6.5%) or Scandinavian (5.2%) legal origins.
Senior economist Prince Christian Cruz states that although transaction costs are largely below 10% in OECD countries, certain others have introduced extremely high costs. The housing transaction cost in Seoul, South Korea, is 22% of the property’s value, while costs for Belgium, Italy, France, Luxembourg and Greece all exceed 15% of the property’s value.
The lowest transaction costs were found in Slovakia, Iceland and Denmark, according to the Guide, at around 3% or less. Costs are typically 5%-7% in the UK, Norway, New Zealand, Switzerland, Australia, Japan, Sweden, Poland, Ireland and Canada.
It is also worth noting that several OECD countries, such as Iceland and Denmark, stipulate that only resident foreigners can buy houses and must live in it the property rather than purchasing it as a buy-to-let. Limits have also been imposed in Switzerland, Australia and Budapest.
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