Market Variation Emerges In Survey

Those looking to invest in property may often include those who wish to split a portfolio between the UK and abroad. One of the questions they might well ask is about what differences exist between the different markets. nnMultiple answers could be given to such a question. In the first instance, each country has its own laws relating to land ownership, tenancy rights, building and maintenance regulations, contracts, tax and other issues. nnAt the same time, it is worth noting that there are differences of culture, financing method and investment motivation in various countries, issues of significance to UK investors. This has been borne out by a survey published this week by Birmingham Midshires. The Building society compared the private rental market in different European countries, including Britain, Germany and Portugal property. nnSignificant differences include the kind of mortgage used to fund property purchases. For 79 per cent of UK landlords, a specialist buy-to-let mortgage is a must. Portuguese and German landlords would beg to differ, with 80 and 94 per cent respectively taking a different view. nnClosely related to this is the use of intermediaries, with 70 per cent of UK investors using one when getting their mortgage, compared with 26 per cent in Germany and just six per cent in Portugal. Commenting on this differential, the building society's head of specialist lending strategy, Steve Sandiford, said: "While the UK has a clearly defined concept of a Buy-to-Let mortgage - it appears to be something that is unique. European mortgage lenders do not offer specifically underwritten products for landlords in the same way." nnThe survey did find some similarities between the three countries, such as the tendency for landlords to be in it for the long-term, with UK property owners holding on to their assets for 17.5 years on average, almost halfway between the 16.4 years figure for Portugal and the 18.7 years that German landlords retain their stocks. But at the same time, very different social factors emerged, not least the fact that 43 per cent of German tenants do not expect to ever own their homes. nnInvestors in property overseas will always have to take into account the various different aspects of the countries they are seeking to invest in. When looking to take out a mortgage for such properties, whatever kind that may be, the key is to ensure that the borrowing is well funded. nnPaul Owen, chief executive of the Association of International Property Professionals, warned today that this is one major concern in the industry. He advised that some management companies were giving "misleading" information about the potential rental yields available on overseas properties. nnHe said: "There's real, widespread misleading in the market where people are assuming that they can secure a mortgage at, let's say, five and a half or six per cent and get seven or eight percent on rental income and then they actually don't get that rental income and they can't afford the mortgage." nnMr Owen's comments reflected the recent International Property Industry Pavilion report on the issue, which called for a review of sales tactics but also for better education about the buying process for investors. nnPut together, what the different reports show is clear; not only are there real differences between the various European property markets, but those differences are highly significant and require that the investor ensures they have all the very best information to hand before they set about assembling their portfolios.nnnnn