Is Buying a Holiday Home Abroad a Good Investment?

In the U.K. we are habituated to the idea that the property which we buy will increase in value, year on year. For those lucky enough to be U.K. property owners, watching the rise in value of one’s property has become something of a national obsession. The problem, as we are all too aware, is that an entire generation is now priced out of the property market.

If you are thinking that by investing in foreign property you will see its value increase with the dramatic rapidity of U.K. real estate, then you need to think again, because it’s unlikely, not impossible, but unlikely. There are, however, plenty of other reasons why buying a holiday home abroad is a good investment.

Foreign property as a source of income

Renting out your foreign property purchase is, potentially, a good source of income, but you need to choose your property with care. Letting out your property for short term holiday lets is probably the most lucrative option, but it is dependent on choosing a property in the right location. Property located in or around a tourist destination is likely to be expensive and you may be tempted by something much cheaper, off the beaten track.

There may be a rental market for your remote rural property, but you need to do your research before you buy. You should also consider your operating costs; regular change overs will require employing trustworthy people to clean and change linen etc. There will also be maintenance costs to the property, for which reason you should avoid property with overly large gardens.

Modern town houses with swimming pool

Foreign property as a route to a second passport or residency rights

U.K. citizens are now limited to a 90 day stay in Europe and this restriction has fuelled renewed interest in Golden Visa schemes, of which there are currently 23 available. Golden Visa schemes are designed to attract foreign investment in a country’s real estate by offering residency rights to the investor and their family, providing their investment is above the required threshold.

Greece has the lowest threshold requirements in Europe, an investment of just 250,000 euros in one or several properties will gain the purchaser, and their family, residency rights in Greece and freedom of travel within the Schengen territories. One of the most successful Golden Visa schemes in Europe has been the one run by the Portuguese government.

The scheme has been so successful that property prices have soared in the south of the country to such an extent that the government is now restricting the scheme to the interior of the country. Despite this constraint, Portugal is still very popular with British buyers because of its proximity, its attractive climate and its low cost of living, and there are still plenty of very attractive investment opportunities to be had.

Foreign property as a change of lifestyle

The pandemic has left many of us re-evaluating our priorities. A foreign holiday home offers the potential for a change of perspective and perhaps a change of lifestyle. Many British citizens have come to prefer the lifestyle which their second home provides and decided to settle abroad permanently.