Reducing the cost of overseas property ownership

Four fifths (85 per cent) of overseas property owners say the cost of maintaining their property has gone up over the last 12 months, and more than a fifth (21 per cent) are struggling to meet the increased costs, according to recent research from currency specialists HiFX.

Over a million Brits currently own a home overseas, with France and Spain being the most popular destinations. However, HiFX says that the global economic slowdown has hit homeowners not only in the UK, but also abroad as the cost of maintaining a property has increased. While overseas mortgage rates may be very low at the moment, the overall cost of owning a property (local taxes, utility bills, maintenance) has continued to grow, and the current strength of the euro has increased the cost of monthly mortgage repayments.

The currency specialist says that there are a number of ways property owners can reduce costs. With further falls in the value of sterling predicted if the general election leads to a hung parliament, Brits who make regular currency transfers and cannot afford to see it fall any further are advised to lock into an exchange rate for up to 12 months ahead, so they know exactly how much is being transferred every month, and to reduce their commission and transfer costs.

Property owners are also advised to take advantage of rental opportunities. According to the research, almost 70 per cent of holiday home owners are missing out on vital income by not renting out their overseas property. And almost half of those who do rent it out only do so to family and friends who tend to pay less than other tenants.

Clare Nessling, Conti's Operations Director, says:

"This is all good advice. Renting out your holiday home could provide a valuable new source of income, and help with mortgage repayments or maintenance costs. If you do this, however, it may be worth sticking with a euro-denominated mortgage, as the rental income is likely to be in euros and this will avoid any exchange rate issues when making your monthly repayments.

"It's also worth considering remortgaging your overseas property as a way of reducing costs. Rates are at an historic low across many European destinations, so if you're on a higher rate at the moment, you could make a substantial reduction on the size of your monthly repayments. However, you need to make sure that the potential savings outweigh any fees incurred in the process.

"It's also important to remember that in some countries, if you're remortgaging a property, a percentage of the rental income received can be taken into account by the lender when calculating how much they're willing to lend."