Property in Spain or Portugal

Property in Spain or Portugal

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Jer_1974

Original Poster:

1,497 posts

192 months

Tuesday 14th April 2015
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Mrs keeps going on about buying a holiday flat in Spain or Portugal So yesterday we went to see some in Villamoura up to €300.000. Does anyone on here have a flat, villa or property portfolio they let out as holiday Let's?
Now would seem a good time to buy with a strong £ and prices at rock bottom in areas such as Villamoura and Marbella.

Tresco

516 posts

156 months

Tuesday 14th April 2015
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We go to the Algarve every year and discuss buying a place there every time, usually after a couple of bottles of Lancers..

The conclusion is always that it's so cheap to holiday out there, apart from July and August, why sink €300k into somewhere that we probably wouldn't use more than half a dozen times a year and have all the maintenance worries and holding costs.

Not worth buying a BTL in the UK, let all year round and spend the surplus on holidays?




rdjohn

6,135 posts

194 months

Wednesday 15th April 2015
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The dividend on capital investment from renting in Spain has to be incredibly poor. Supply greatly exceeds demand.

We bought a house in 2000 and sold in 2006 for a very handsome profit, but everything changed after 2008. Friends who sold their house in Marbella in 2013, now rent a much bigger and nicer apartment for €1,000 per month. It's value with a bit of extra TLC would be about €700,000. I understand that outside the Marbella area, it could be even worse.

You need to want to be in Marbella for what else it has to offer rather than make a sensible financial return. The same is probably also true in France, where I live. If you want to make money, invest in the UK, although every political party makes promises, the reality is that the housing stock is about 100,000 new units short every year. That inevitable ensures that demand is much higher than supply.

seaninog

513 posts

188 months

Sunday 26th April 2015
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I like the idea of buying a place in Europe as a currency play as well as an investment.

Where is best to buy with the most prospect of renting it out? I don't mind which country. Has anyone any experience in this?

Patch1875

4,893 posts

131 months

Sunday 26th April 2015
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My outlaws have a chalet in Switzerland and do very well renting it out, it obviously does well through the winter but surprisingly also in the summer with hill walkers and mountain bikers.

Think it's very expensive to buy though.

rdjohn

6,135 posts

194 months

Sunday 26th April 2015
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seaninog said:
I like the idea of buying a place in Europe as a currency play as well as an investment.

Where is best to buy with the most prospect of renting it out? I don't mind which country. Has anyone any experience in this?
Having lived between France, Spain and England for the last 10 years, I would suggest:
If you like nice food, community spirit and great scenery, then buy in France.
If you enjoy a relaxed lifestyle, being arround other Brits and being close to the sea, then buy in Spain.
If you want to make a return on property investment, then buy-to-let, near to where you live.
If you think that you can somehow out-smart fickle currency markets - think again.
Life is not made up of easy choices. Your answer probably lies somewhere on the fringes, or outside, of Europe.

droopsnoot

11,809 posts

241 months

Monday 27th April 2015
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I read a post elsewhere about this - the OP saying that as property is relatively cheap, he has the money sitting in the bank earning nothing, and it might as well be used to buy somewhere in Spain that he could use at the drop of a hat if he fancied a winter break. Most responses were in the negative, on the basis there's little chance of renting it out (due to competition), little chance of selling it in the foreseeable future if the money were needed, and so many places available to rent that it doesn't make any sense.

I get the impression that poster was talking about lower down the market, though they never actually confirmed the budget.

lewisf182

2,084 posts

187 months

Tuesday 28th April 2015
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I think in places lake marbella and spain in general there doesn't really seem to be a point in buying as renting is so cheap and supply greatly out strips demand. for 300,000 euros you could go on a lot of holidays every year for the next 25 years probably. I guess with the property it will be worth something still at the end of those 25 years so it depends what your after, for me holidaying in the same place for the next X years sounds pretty boring.

My mum and dad have the money to do this and often talk about it, but in the end it always comes round to holidays are so cheap in spain, greece, portugal etc there doesn't really see a point to being tied down to one place.

I think the best suggestion is a BTL in england which provides a better return, then use that money to go abroad on holiday somewhere different every year.

seaninog

513 posts

188 months

Tuesday 28th April 2015
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Thanks to everyone for your replies and advice. However, my view is that the UK BTL market is set to pop soon and so I don't want to touch that. Please let's not get into a debate about whether I'm wrong or right about that, I realise everyone has their own view and most are contrary to mine so let's just agree to disagree.

I'm still keen on overseas and buying something in Euroland. Are we then saying there is NO rental yield to be had across Europe at all? Most of the comments here have been quite negative and with the exception of Switzerland - which is not an option for me - I don't think there anyone has yet cited a story of earning a reasonable return in any country.

Can anyone offer any positive experiences from any location?

andy43

9,548 posts

253 months

Tuesday 28th April 2015
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We keep looking at the Algarve, but the numbers just don't stack up, certainly on apartment type stuff we've considered. Spain is cheap to buy, but there is literally so much choice there it's harder to rent out successfully.
Maintenance fees, the cost of a key handover, clean, linen change and inventory check all add up, plus the paperwork and taxes involved don't appear easy to work out if you can't speak portuguese.
Villas would be more expensive - garden care, and pool chemicals and maintenance are silly money - we know someone with a villa in turkey, and their biggest single expediture is the puddle in the garden.
Agents over there are bare faced liars as well - their suggested potential rental returns are blown out of the water with 5 minutes spent on holiday lettings website or similar.
I think with care and a lot of effort on the marketing side to maximise occupancy you could easily cover your costs and maybe make a bit on top, but as already said, you get better returns doing UK BTL and then ownersdirect or holidaylettings when you want some sun.
Now if you're talking retirement out there... cloud9

Phil.

4,755 posts

249 months

Tuesday 28th April 2015
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seaninog said:
Thanks to everyone for your replies and advice. However, my view is that the UK BTL market is set to pop soon and so I don't want to touch that. Please let's not get into a debate about whether I'm wrong or right about that, I realise everyone has their own view and most are contrary to mine so let's just agree to disagree.

I'm still keen on overseas and buying something in Euroland. Are we then saying there is NO rental yield to be had across Europe at all? Most of the comments here have been quite negative and with the exception of Switzerland - which is not an option for me - I don't think there anyone has yet cited a story of earning a reasonable return in any country.

Can anyone offer any positive experiences from any location?
I've had a place in Spain for the past few years. Bought post the price crash. I didn't buy to rent only as a second home. And for that it fits the bill.

Having never had a second property until this one I can't rate the experience more highly if you can comfortably afford it. I doubt there will be much capital gain for many years to come but at least prices are now stable if you buy in the right area.

As for renting, you have a high season of say 10 weeks per year that won't provide significant income once you've taken ALL the associated costs in to account, and I gather Spain has just hiked the taxes on such income to make it even less attractive to let. So buying abroad is great as an experience but not as an investment from my perspective.

Oh and I agree with regard to your UK BTL bubble predictions. Either that or Milliband will mess it up for everyone.

rdjohn

6,135 posts

194 months

Tuesday 28th April 2015
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I have had 3 rentals in France for the last 10 years and the gross return is about 15% return on capital, on new build, over the 6 summer months.

However, I effectively retired here having done a lot of research beforehand. Capital appreciation, even on new-build, is zero, but I was making a lifetime decision, so it is not a problem. The lifestyle, healthcare etc. are what makes our decision still seem sound.

We are fairly comfortable income wise, but when Sterling collapsed to parity against the Euro in 2008, that certainly made us take a great intake of breath as all our income was derived in Sterling and primarily spent in Euros. Taxation on any rental income is significant and there is so such thing as non-Dom status so world-wide wealth is taken into account for income tax. Social taxes are about 45% of profits. On costs of marketing, cleaning, repairs and maintenance also make a significant dent.

It is worth noting that many Brits have been priced out of Europe and have left the Costa del Sol and Dordogne in their droves. This is why so many properties are available at knock-down prices.

In short, if you want to live long term in Europe then make good plans and the properties are available. If you think that you are making a sound financial investment, I am pretty certain that you are wrong.

Property ownership in the UK and particularly the SE, will be a one-way bet as long as supply is way short of demand. That is why I also keep a second home there.



Edited by rdjohn on Tuesday 28th April 16:01

Aquarius909

99 posts

164 months

Saturday 23rd May 2015
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rdjohn said:
Property ownership in the UK and particularly the SE, will be a one-way bet as long as supply is way short of demand. That is why I also keep a second home there.

Edited by rdjohn on Tuesday 28th April 16:01
When I hear comments like this, I think it's time to get out of the market.

KFC

3,687 posts

129 months

Sunday 24th May 2015
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Jer1974 - I emailed you earlier.

I live in that area of Portugal, happy to give some independent advice if you need. Depending on experience you have of the general area (and the agents and so on) it might be worth getting a quick opinion from someone who doesn't have a financial interest in what you're doing.

Take 2nd and 3rd advice on anything an estate agent tells you here... at times its like the wild west (not as bad as spain though!)

CharlesdeGaulle

26,089 posts

179 months

Wednesday 24th July 2019
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Something of a thread re-birth, but a search revealed that my question has been asked before so this seems a good place to start.

I am considering buying a property in Portugal. I work on the Continent and am paid in euros, and after a significant change in personal circumstances have no permanent base in UK, although I retain a rental flat in London. I'm reasonably relaxed about Brexit consequences and my current rented home in Luxembourg offers regular and cheap flights to Portugal, hence part of the appeal.

My search areas at present are around (within one hour) the major airports Lisbon and Faro, and I'd like to be within 20 or so mins from the coast. The style of property I'm considering is house or villa with a pool (or space for one), some garden or grounds, and not too isolated but must be private. I don't really want an apartment in a complex, but don't really know why. Budget is up to around the 300-350k level, largely because that seems to be the going rate for the stuff I like, but clearly the less spent on property leaves more for other things.

Intent is regular weekend and holiday home for me plus family and friends, possible holiday letting (although this isn't a driver and I'd prefer to avoid), and possible retirement home, although that's still 10 years off so much could change. I don't speak Portuguese but have a number of friends and colleagues who do.

Am I mad? Any tips or recommendations, agents or properties? Personal stories would be much appreciated.

dingg

3,974 posts

218 months

Wednesday 24th July 2019
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I'm out there at the minute in rented accommodation,looking for something in your price range, don't believe ANY of the agents, basically they're all crap.

Don't rush in on a 2 week holiday and buy one of the properties you see, you will most likely regret it, many we have met have done that.

If you have a 2 year window buy a plot where you'd like to live and have a house built as it'll be cheaper than a second hand house and will be to your spec. But will take 2 years to completion.

There's lots of dross for sale out here and prices are rising fast, is it sustainable?
must be a pullback at some stage.

You need to be a little away from the coast if going the Lisbon area as it can be quite bleak in the winter and foggy in summer.

A friend has been trying to sell a house he bought for 700k at the top of the market for 400k for the past 3 years, another person we heard built their own house and had it valued and expected approx 400k estate agent reckons they'll get 700k (and they might) but you can see how mad it is right now.

Take care there's plenty sharks in this pond.

JulianPH

9,912 posts

113 months

Wednesday 24th July 2019
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I used to have a villa in Portugal next to Quinta do Lago. Portugal is a lovely country and it is worth trying to learn the language (it is difficult!) as the Portuguese are very friendly and welcoming people and they appreciate you making the effort.

Buying there is not cheap though. You would be wise to budget another 10% of the total purchase cost for fees and taxes.

Running a property there is not cheap either. Electricity and gas is very expensive and you get through a lot of it!

If you want a pool I would buy somewhere that already has one as whilst they are not expensive to build (compared to in the UK) the planning permission can sometimes be a bit of a nightmare.

You need a good solicitor and to ensure the habitation licence is all in order.

As an aside, cars are also very expensive in Portugal when compared to the UK, due to the very high tax place on them when new wish filters down into the second hand market.

If I can add anything else just give me a shout, Enjoy the hunt and view as many as you can. I'm currently looking for a plot for a new build! smile





I 8 a 4RE

339 posts

240 months

Wednesday 24th July 2019
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Jer_1974 said:
Now would seem a good time to buy with a strong £ and prices at rock bottom in areas such as Villamoura and Marbella.
Excuse me? The £ vs the € is at about a 20 year low?

dazmanultra

428 posts

91 months

Wednesday 24th July 2019
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The original post was 4 years ago, pre-brexit vote. Think the GBP vs Euro was in the region of 1.4 Euros to the Pound in July 2015.

FunkyNige

8,859 posts

274 months

Wednesday 24th July 2019
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JulianPH said:
As an aside, cars are also very expensive in Portugal when compared to the UK, due to the very high tax place on them when new wish filters down into the second hand market.
My in-laws have a place in Spain and bought a second hand left hand drive car in the UK then drove it down to Spain (and registered it there) as they found the cars there so expensive.