Buying Property Abroad

Table of Contents

CHAPTER 1 INTRODUCTION

• Scope and definitions
• Who is the target reader?
• How to use this report

CHAPTER 2 BUYING ABROAD: THE PHENOMENON IN CONTEXT

• Property abroad: a rising trend
  • Industry estimates
  • And research indicates that the buying abroad market is growing significantly
  • The fact that the number of second homes in the UK is falling, further stressed that more and more Britons are looking abroad
  • Hot spots for Britons for buying abroad
  • A high demand in Spain and France has led to increasing house inflation
  • Other popular choices include Florida, Italy, Portugal and Cyprus
  • Customers are buying abroad for different reasons
  • Retirement and holiday purposes are the main reasons for buying an overseas property
  • The French Leaseback scheme: an incentive for buy-to-let
  • The typical customer profile is changing
  • Homeowners of a property abroad are getting younger
• Drivers behind the rise in demand for property abroad
  • Rising house prices in the UK and lower house prices abroad are impacting on demand
  • Holiday spots in the UK have recorded huge increases in prices
  • And the same trend can be observed in residential areas
  • High levels of equity means that buying property abroad is increasingly possible for existing homeowners
  • Other factors fueling demand in overseas properties
  • Increased accessibility through cheaper air flights and new routes is opening the door to new opportunities
  • Datamonitor Retail Banking view
  • Increasing awareness through wide media coverage
• Financing alternatives for buying abroad
  • Buying outright
  • Taking a mortgage for buying abroad
  • Borrowing with a local lender in the overseas market: pros and cons
  • Borrowing with a UK International mortgage lender: pros and cons
  • An important decision for the prospective buyer is whether to borrow in British pounds or in foreign currencies
  • Euro mortgages tend to be cheaper
  • Currency fluctuations are an important issue
  • Borrowing in British pounds involves extra costs in terms of currency conversion
  • Datamonitor Retail Banking view
• Conclusions

CHAPTER 3 STRATEGIC FOCUS

• Players in the overseas mortgage market
  • Only a few UK lenders operate in the overseas mortgage market
  • Offering overseas mortgages through an international subsidiary is the common route for UK lenders
  • Overseas mortgages are not a primary product for lenders
  • UK lenders' coverage of overseas markets is very limited
  • Datamonitor Retail Banking view
  • Lenders in the overseas mortgage market are not aggressive
  • Datamonitor Retail Banking view
  • So, what stops UK lenders from entering the overseas mortgage market?
  • Given that UK lenders are under-represented, it is no wonder that brokers are the major players in the overseas mortgage market
  • Lenders who are not operating in the overseas mortgage market act as referral partners to brokers
  • And referral agreements are common within the broker community too
  • CFS are the leading overseas mortgage broker in the UK
  • Assisting the client from start to the end is the key to success
  • Assisting the lender with their expertise is also part of the value proposition offered by CFS
  • Going forward...
  • Datamonitor Retail Banking view
• Products offering
  • The overseas mortgage market is far from being sophisticated
  • How do UK International lenders compare with local overseas lenders?
  • Datamonitor Retail Banking view

CHAPTER 4 CONCLUSIONS AND RECOMMENDATIONS

• Conclusions
  • As new hot spots are emerging, lenders have the opportunity to introduce new products
  • These new spots open the door to further opportunities
  • Barclays boosts presence in France
  • What business model is likely to work for UK local lenders?
• Recommendations

CHAPTER 5 APPENDIX

• Supplementary data
  • Chapter 2: Buying abroad: the phenomenon in context
• Definitions
• Research methodology
• Future readings
  • Current reports
  • Future Datamonitor publications
• Relevant links
• Datamonitor's custom research capabilities
• SPP writing team

List of Tables

• Table 1: Top ten largest increases recorded in UK seaside towns, 2001-2003
• Table 2: UK international lenders offering overseas mortgages, July 2004
• Table 3: A comparison of a sample of overseas mortgages available for Spanish properties, August 2004
• Table 4: Number of UK households with a second home in England, 1995-2000
• Table 5: Number of UK citizens receiving their state pension abroad, 1999-2003

List of Figures

• Figure 1: Britons were increasingly buying second homes in UK. However, this trend now seems to have reversed, 1995-2000
• Figure 2: An estimated 37 per cent of second homes owned by Britons outside the UK are in Spain, 2003
• Figure 3: 36 per cent of the tourist housing stock in Spain are owned by Britons, 2003
• Figure 4: Britons have replaced the Germans as the main nationality for owners of second homes in Spain, 1998 and 2004
• Figure 5: The number of Britons retiring abroad is increasing, 1999-2003
• Figure 6: 75 per cent of foreign citizens buying a property in Spain do so for retirement purposes , 2003
• Figure 7: Datamonitor's core consulting capabilities