Maintaining a holiday home can cost more than property investors expect in terms of unexpected costs, currency charges and local taxes, according to new research.
Some 40% of overseas home owners have had to fork out for unexpected maintenance costs, currency transfer charges can cost owners £510 annually and gardeners are particularly expensive in France, according to a report from Post Office International Payments.
Many owners have not budgeted for these extra costs. The top cost is council tax, followed by shared maintenance fees for the upkeep of communal areas, central heating, air conditioning, gardening and cleaning.
Despite recent fluctuations in the euro, France is the number one destination for owning a property abroad at 41% followed by Spain at 38%, and Portugal at 5%. Expats in France are most likely to have bought a farmhouse, 66%, or a cottage, 28% compared to expats in Spain who are most likely to have a flat, 68%, or villa, 57%.
Another major hidden cost is transferring money to pay for everything. Estimates suggest that some 1.2 million people in Britain own a property abroad and 97% of them transfer money from the UK for the maintenance of their home overseas.
However, with fluctuating exchange rates and excessive transfer fees charged by banks, overseas property owners could unknowingly be paying over the odds for their council tax, heating and gardeners, and even more for maintenance costs they didn’t budget for.
With two thirds, 65%, of overseas property owners transferring money occasionally from sterling into local currency and a further 26% transferring money regularly to maintain their home abroad, holiday home owners using banks are being repeatedly hit by transfer charges.
Some banks charge as much as £42.50 per transaction, which over a year of monthly payments adds up to an extra £510. Urgent and unplanned transactions can sometimes result in even higher charges.
In France the most expensive cost is council tax followed by central heating, gardening, shared maintenance costs, heating a swimming pool, cleaning and air conditioning. While in Spain the biggest cost is shared maintenance, followed by council tax, air conditioning, central heating, swimming pool, cleaning and gardening.
‘Just like buying a home in the UK, buying an overseas property comes with a variety of costs, other than just the initial purchase price. While local services can initially appear cheaper than the equivalent in the UK, overseas property owners can be stung with higher bills due to being charged fees for transferring money abroad,’ said Sarah Munro, head of international payments at the Post Office .