From ‘Buy to Let’ to ‘Fly to Let’?...

A new kind of property investor is evolving. They’ve enjoyed the fruits of their labours, creating UK investments in property but are now eager for a post-pandemic challenge.

The words ‘emerging markets’ can often raise an eye-brow, provoking a similar response to an Estate Agent saying “The area is up and coming”. There is, of course, no investment without risk …but could it be time to cast your net of clever investing a little further?

The Buy to Let market in the UK is challenging. A raft of pro Tenant legislation, regulation, obligation and taxation have burdened Landlords over recent years.

Many savvy property people are looking further afield for a new opportunity. If I could bottle the spirit and talent to spot the next emerging market, of course I wouldn’t spill it here. I’d be on a plane, mask in hand, wallet in pocket and full of hope.

The overseas investor has a mindset that has shifted away from the ‘buy, make a quick buck and sell to an unsuspecting holiday home hunter’ to something much broader.

On the Home:Work Property Podcast (www.thehomework.co.uk) I had the pleasure of interviewing Jasmine Harman, presenter of Channel 4’s ‘A Place in the Sun’ on the eighteenth anniversary of her presenting the show. She was transparent about the change in attitudes of the programme’s guests:

“In the early days of A Place in the Sun, people were often talking about emerging markets and being able to go and buy a property and then flip it. Nobody's wanting that anymore because they're being a bit more realistic with the way things are at the moment…. it's definitely moved on from ‘I need to invest. I need to make a return on my money. What's the rental yield.’ To more ‘this is where I want to be and where I want to make memories’…”

But think about it. If you’ve fallen in love with a home overseas, maybe others will too. If you’re driven by desire to buy a place abroad, to call your own but to rent out to others for holidays and many more like you do the same, then you are part of a catalyst that turns an active, post-pandemic international housing market, into a trajectory that could almost become vertical. The higher the demand, the higher the prices, both for buying and renting. The higher the prices, the higher the gain in both income and capital values.

I made that sound so easy, didn’t I?

Judicare Law International is a bespoke law practice based in Hertfordshire. The firm deals only with legal matters in other countries on behalf of their UK clients. They are familiar with buying, selling, borrowing and investing in many international jurisdictions.

Peter Esders is a Solicitor and the Judicare International’s Legal Director; “Most of our Clients have never bought abroad before. Buying for pure investment is rare.”

Peter Esders advises of a simple process to work through for identifying whether an overseas property purchase is the route for you:

What are you trying to do? Own for your own enjoyment and recreation? Seeking a rental yield from either holidays or a more domestic Tenancy, or looking to renovate and develop to rent out or sell on?

The location, style, age, standard of any property you look for in any country will differ depending on the answer.

Where? Many people look in places familiar to them. They’ve holidayed there on several occasions, have a feel for the locality, its popularity, social or crime-related issues. However, beware, holidaying in a place differs hugely from living there.
How are you going to buy? Take advice based on your own circumstances and the specialist knowledge of someone that knows about that country, its taxation laws, inheritance issues and any obstructions to a foreigner owning land or property.

Are there any ‘emerging markets’ and if so, where might they be?

The international property market appears cyclical from the eyes of a UK investor. Again, Judicare International’s Peter Esders’ knowledge comes in handy;

“Originally Spain, France, Portugal and Italy were always popular, then many bargains appeared in locations like Turley and Bulgaria. I had Clients buying in Bulgaria having never actually been there. Following the 2008 crash buyers reverted to the traditional lands of Spain, Italy, France and Portugal again.”

One person who stepped beyond the relative safety net of Europe is Dee Gibson. Kalukanda House (Kalukanda House - Kalukanda House) is a four-bedroom executive villa Dee designed and built on the island of her native Sri Lanka. It rents for anything over £1600 for six nights, a potential income of up to £100,000 a year at full occupancy.

The location is a tropical and spiritual dream location, first-class in flip flops for anyone into surfing, safari and sun.

However, there can be trouble in paradise; Sri Lanka is currently coping with its worst economic crisis since independence in 1948. The i newspaper reports the Sri Lankan Rupee is now the world’s worst-performing currency, lagging behind even the Russian Ruble.

Dee Gibson’s advice: “Go into it with open eyes. Tourists come and go but external world events are out of our control. It is essential to stay in touch with your community of guests and followers and be a mouthpiece for what is going on. There is no point in glossing over things but adding an “on the ground” viewpoint and how it affects a holiday or experience is important.”

As an investor I recall making the most out of property when no one ever thought people could make money out of property…the credit crunch. So there’s the key….if a nation – such as Sri Lanka – with so much charisma and natural beauty, is fiscally struggling, isnt that the exact time to be taking the risk and investing into it? Surely an economy can only go down so far before it bounces back up? And any stock market trader will tell you ‘buy low, sell high’…

Otherwise, the tried, tested and totally typical markets of southern Europe maybe your thing…’John’ (didn’t want to be identified) bought a villa in the village on the Costa del Sol known as having “Mejor Clima de Europa” (the best climate in Europe), the house cost him a little over £200,000. He uses it as much as possible but rents it out via the vrbo.com website to holiday makers. There’s no shortage of sun lovers happy to spend anything from £150 a night for the space.

The advice, however, is clear from every corner of the globe and every corner of the property industry: Do not stop asking questions. Check, check, treble check and go in with your eyes open and fully informed.

Clarify whether the nation you’re looking in allows foreigners to buy, or may have strict criteria should you want to buy.

Whatever the weather, you might arrive at the conclusion you’ll only ever regret the things you don’t do, not the things you do.

* Richard Black presents Home:Work Property Podcast www.thehomework.co.uk, is a brand expert for home interiors on global shopping channel QVC, a property developer, landlord and solicitor. Go to www.richardblack.co.uk for a selection of his completed properties *

Other credits:

Kalukanda House – www.kalukandahouse.com

Vrbo – www.vrbo.com

Judicare International – www.judicaregroup.com

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