ABOUT 300,000 Britons already have homes abroad, but by 2025 this may have grown to as many as two million. This indicates a willingness to diversify and think globally, and indeed about half of those with a place overseas say they see it as an investment.
But this attitude is not borne out by the reality, as Mike Warburton and Maurice Fitzpatrick, of Grant Thornton, the financial advisers, argue in a new report. The British might like to suggest that they have assessed currency and market conditions before “investing”. In truth, however, even the most commercially-minded people will make a purchase based on climate, dining and drinking opportunities and the seemingly more relaxed lifestyle. But they will still assume that their place in the sun will appreciate in value.
This presumption that life is somehow simpler elsewhere means that the stern nature of officialdom in sultry climes comes as even more of a shock. France, for example, has a range of rates of wealth tax for homeowners and four taxes equivalent to our council tax. In Spain you need an NIE, a social security number, before you can pay the wealth and other taxes for which you will be liable. Obtaining an NIE can mean joining a queue at the local police station before dawn, an unforgettable experience, preceded by several visits to a notary for the validation of copies of your documents.
Warburton and Fitzpatrick say that, if the British actually want their homes abroad to be an investment, they should be as familiar with tax regimes as with the local vintages. Call them accountant killjoys if you like, but you know they are right.
This sober-minded approach should extend to overseas property hotspot surveys. Knight Frank’s latest global study shows that the current winners are: Latvia, with a price increase of 39.2 per cent, Bulgaria (19 per cent) and Denmark (17.8 per cent). Now there may still be bargains to be had in Bulgaria, as we report on page 35 of this week’s overseas special. But — and there must always be a but in such cases — investing in Bulgaria involves considerable bureaucracy. Moreover, anyone venturing into Black Sea resorts must recognise that the overdevelopment in these towns could mean a glut of apartments. Most locals do not earn enough to rent or buy the homes being built in their towns. This would not be a solid foundation for a property purchase, here or abroad.
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GENEROUS LENDING
Students of Peter Mandelson’s intriguing property-buying career will have noted that the European Commissioner has made another move, to a £2.4 million home close to Regent’s Park in Central London.
The purchase has doubtless been made with funds from other sources, as Mr Mandelson’s £160,000 salary would secure him a mortgage of just £560,000 on the traditional 3.5 times salary basis. However, the increasingly frequent six-times salary model would give him £960,000, making it a little easier to see how he has leapt from the £1.2 million Trafalgar Square penthouse, his former home.
More generous lending multiples, based on borrowers’ overall ability to afford repayments, are one of the factors fuelling the market in the capital and elsewhere. However, there are no figures available on just how many borrowers are taking out these supersized loans, though the numbers must surely be growing fast. The new willingness of individuals earning £50,000 to contemplate owing £300,000 is one of the factors supporting the housing market. With interest rates rising, it would be interesting to know just how many of these highly indebted homeowners there are out there.
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THE CLADDING PLAGUE
Cedar cladding — how developers do love it, and I think we know why. For this increasingly popular finish to new homes in inner cities, suburbs and the countryside is a useful visual shorthand. Attach a few rows of prefabricated soi-disant cedar planks to even the most undistinguished exterior and suddenly it looks a bit Scandinavian (always a good thing), a touch rural and eco-conscious, even if sustainable construction principles were overlooked during the construction.
If you have not yet observed the rise of this phenomenon up the walls and around the doors of our nation, take a closer look at new housing schemes in your area. It may be the feature that unites them all, regardless of whether it matches the architecture or setting. Clumps of cedar cladding inexpertly stuck on to a block of flats by a canal in an East London post-industrial site is the most incongruous use I’ve seen so far.
Cedar cladding is unlikely to become the stone cladding of our age. But it is already fast becoming a visual cliché and we should expect better from developers who have a responsibility to acknowledge a building’s surroundings in its design — and to show some originality.
anne.ashworth@thetimes.co.uk