Overseas Buyers Urged to Watch for ‘Hidden’ Fees

posted by Sarah Brown on December 17, 2007 | More articles about: Overseas Property News

With the news that higher numbers of us than ever before are seriously thinking of purchasing property abroad, it seems that too many of us are neglecting to do our homework and are, as a result, being crippled by unplanned-for punitive fees.

Registration, legal fees and various taxes are rarely the first thing on a buyer’s mind it seems, the equation of asking price + days of sunshine per year being far more pertinent. The research gathered by research publication Global Property Guide puts South Korea at the top of the list, its fees totalling a whopping 22% of the asking price and, while South Korea may not be your first choice when considering your perfect holiday hotspot, it is Italy in second place that might cause you to raise your eyebrows, its fees being of 17% of the asking price. Agents are being criticized for not being more open about the additional charges which simply cannot be avoided, such as basic fees, local taxes and legal costs. It is strongly advised that overseas buyers add at least a further 10-12% to the purchase price in order to cover them.

Research by the Global Property Guide found that countries based on the French legal system – including Belgium, Italy and Spain – impose more taxes and regulation, with costs averaging 14.2% of the property value. Scandinavian countries, including Iceland and Denmark, were among those with the lowest fees. If buying in Denmark, total fees only amount to 2% of the purchase price. Countries have a highly individual attitude to these fees and the cultural attitude to property ownership tends to govern the fees rule: where property ownership is seen as a luxury, the taxes are skewed towards those less well-off. Higher fees are also used as a way of dampening demand.

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