Overseas Property Community Charges may affect your resale potential

In addition to the buying costs of a property abroad, a common expense overlooked by many people buying a long-term investment property, is the ongoing ‘community’ or service charge. As many pre construction apartments and condos projects share common areas, inevitably there are shared expenses which arise. This itself is not a problem but as developers vie to create newsworthy international real estate resorts, shared amenities such as an onsite gym, spa or even a pitch and putt ultimately result in excessive long-term running costs being passed onto property owners. A shared pool and gardens is fine but as the extra features mount up so too do the community charges.

Having experienced this first hand with a property in Spain, my community fees remain excessively high (3264€ a year) as a result of a number of factors:
Corruption – ongoing service contracts such as gardening may not be awarded on competitiveness
Conflicting interests – as a result of failing to sell units, the developer holds a voting majority and can affect key items such as the way community charges are calculated, who are awarded service contracts and may even pass certain unrelated costs onto the community and ultimately owners.
Poor community participation – many owners with property abroad are kept ill informed about community issues by lack of use of basic technology such as a community website and email list or worse fail to take an interest in community issues meaning problems and excessive charges can remain unresolved for months even years possibly affect your ability to sell your property.

Being part of a community means decision making is significantly longer and is usually subject to a voting process requiring an often bureaucratic administrative process to contact all owners. Resort communities often experience the greatest problems during the transfer and set-up from developer to owners. The initial set-up can significantly affect the amount you are charged, usually it is based on the square meterage of the property however communities have been known to share costs equally among property owners or according to share of your block of apartments disproportionately affecting certain properties charges. It is often that only once a few key owners (usually living permanently onsite) have taken steps to rectify community issues that it starts to run efficiently however there are still stories of power hungry presidents taking on community management often for their own personal gain.

So beware - before you are wooed by numerous luxury onsite amenities, think about how much it is going to cost you long-term, ask for an estimate of future service charges – a good developer should be able to provide this and remember a property investment is not just for the summer so get involved.