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From relocation to the cost-of-living crisis, there are plenty of reasons you might be thinking about selling your property abroad.
But what do you need to do when you decide to sell? How do you navigate the process of bringing your valuable cash home without losing a significant chunk of it to fees and unfavourable exchange rates?
What is the process?
In this article, we will explore the stages you go through and what to look out for when selling a property abroad.
1. Make sure you are prepared
As with selling a property in the UK, a lot of groundwork needs to go into selling a property abroad.
Start by figuring out the finances. These range from fees for a solicitor, estate agent and other conveyancing and legal charges to tax implications, visas and currency exchange costs. All of that involves a lot of money crossing borders, which can increase costs. The key is looking beyond the price of the property you are selling – and factoring in the other expenses that will affect the final amount you receive.
Next, you need to consider the professional support you will need to sell your property. From estate agents and lawyers to financial advisers and foreign exchange specialists, it’s always best to have the professionals on your side. Working with a local estate agent who understands the requirements of selling to the local market and foreign buyers will also help you set your expectations about prices and the market.
Finally, consider how you want to prepare the property for the sale. Does it need a lick of paint? Are there any significant issues you need to address? Or any external factors – such as a quiet market – that you need to think about? Once all that is done, invest in some good-quality photos and get ready to go.
2. Get a trusted valuation
The next thing to think about is the valuation. It can be helpful to look at similar properties in the location to get an idea of prices and help you feel confident about your estate agent’s valuation. Otherwise, it’s easy to let your emotions get in the way and tempting to set the sale price too high when you have a connection to a property. If you’re in doubt about a valuation, think about getting a second opinion from another estate agent.
3. Put your property on the market
Once you’ve got a valuation, it’s time to put your property on the market. Estate agents abroad are less likely to be connected to a national or regional network, so you might want to consider putting it on the market with more than one agent. This is particularly important when selling in a competitive market or an area where supply exceeds demand.
Alternatively, many online property listings services also have overseas property search functions, which could help foreign buyers find your property more efficiently. Some sellers have also found success marketing their property by building a website and leveraging social media.
4. Find a buyer
Finding a buyer can take time and effort from you as the seller, especially if your property is likely to be attractive to another expat. If you’re both managing the purchase from another country, the logistics of viewings can present a challenge in itself.
You might find that your estate agent is hands-on enough to manage the process for you, or you could think about finding someone to manage the sale for you from abroad – especially if your property is listed with more than one estate agent.
Once you have found a potential buyer, you can begin negotiations. This process means reaching a mutual agreement on the sale price, payment terms, the transfer of ownership, the anticipated completion date, plus other terms and conditions such as requests for repairs or upgrades.
5. Go through the legalities
A good solicitor is invaluable when selling a property abroad. It’s advisable to enlist the services of a proficient, English-speaking solicitor specialising in property law.
In many countries, the legal system uses the ‘notarial system’. A notary is an individual authorised to perform specific legal formalities, such as drafting or certifying contracts, deeds and other documents for use in different jurisdictions. In Spain, a notary is known as an escritura, while in France, they are referred to as a notaire.
If you cannot personally oversee the sale of your property, your lawyer should step in. Typically, sellers grant power of attorney to their lawyer – or sometimes their estate agent – who can manage the transaction and sign the deed on their behalf. However, it is possible to sign the relevant paperwork in the presence of a notary in the UK.
6. Completion
The sale can be finalised once the necessary legal paperwork has been completed and signed. This typically means transferring property ownership to the buyer and receiving the agreed payment.
It’s worth considering that the completion process can differ depending on your property’s location. In certain regions, it might be necessary for the buyer and seller to meet in person to sign the final legal documents, but in other places, the completion can be done remotely, with electronic signatures finalising the legal paperwork.
What are the costs of selling property abroad?
As mentioned, it’s crucial to consider all the costs when selling your property. Estate agent fees can vary widely, ranging from less than 1 per cent to as much as 3.5 per cent of the selling price plus VAT. Additionally, you will need to pay a solicitor or licensed conveyancer to manage the legal aspects of your property sale.
There are other expenses such as currency conversion costs, legal fees and taxes that will affect the final amount you will ultimately receive.
Understanding the impact of these costs beforehand is essential so that you avoid any nasty surprises. For example, by opening an account via the Telegraph Media Group’s International Money Transfer service, provided by Moneycorp, you can receive expert support to help you plan how to bring your money home before starting the process.
Moneycorp’s pool of 16 liquidity providers includes high-street banks, international banks and specialist financial institutions, enabling it to source the most competitive exchange rates and ensure that you get value for your money when transferring it back to the UK.
What other financial implications are there?
As a UK resident, you must pay Capital Gains Tax (CGT) when you sell an overseas property. The rate of CGT you are required to pay depends on your total taxable gains.
There are two bands of CGT:
- Above the basic rate limit is 28 per cent
- Below the basic rate limit is 18 per cent
However, you may be exempt from CGT if your overseas property was your primary or sole residence for the entire ownership period. You could also have tax obligations in the country where you are selling the property. If you are in any doubt about your tax responsibilities, you should consult a tax professional to ensure you thoroughly understand your liabilities and obligations before you start the process of selling your overseas property.
Sending your money home
Once you have sold your property, repatriating your funds is likely to be your next priority.
It is essential to understand your options before you transfer, as your bank often won’t be the most cost-effective way to bring your money home. Specialist currency services such as the one offered by the Telegraph Media Group’s International Money Transfer service provided by Moneycorp can give you better value as they often don’t charge additional fees and can source competitive exchange rates.
Currency specialists also have expert knowledge of the currency market and offer a range of tools and products to help you manage your funds effectively. These include:
Forward contract*
Forward contracts are an agreement to buy an amount of currency on or before an agreed date, and they allow you to secure an exchange rate for future transactions. They can help to protect you from unfavourable market movements and allow you greater control and visibility of your budget and cash flow without worrying about FX volatility.
Spot contract
This is the most straightforward contract for foreign currency trading. The price is quoted and booked for immediate delivery. This method is often used to make a one-off smaller payment or when you have a limited time frame to make the payment. Spot contracts are the most common and traditional form of currency exchange, and typically the trade will be settled within two days so that it can protect you against short-term market fluctuations.
Market orders
These allow you to set up a target rate at which you are willing to complete a transaction, making them a great tool when you are optimistic that the exchange rate might improve. They can be used with stop-loss orders, which help protect your transaction from going below a specific rate if the market moves against you.
A currency specialist can help you protect yourself against exchange-rate volatility with risk-management tools that offer value for money, convenience and peace of mind for the future.
Telegraph Media Group International Money Transfers are provided by Moneycorp who ensure you benefit from no additional fees and competitive rates in more than 120 currencies, as well as dedicated currency exchange experts who can personally guide you through the process.
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*Forward contracts may require a deposit
Be aware of currency risk.
None of the information contained in this article constitutes, nor should be construed as financial advice. TTT Moneycorp Limited (company number 738837) is registered in England. Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ. Moneycorp is a trading name of TTT Moneycorp Limited which is authorised and regulated by the Financial Conduct Authority for the provision of payment services (firm reference number 308919). Date of approval 22/02/2024
