Eastern European Property

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denisco_uk

At the Start
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Having actually made it in to one of my entrepreneurship lectures today, our lecturer was banging on about the vast potential in Eastern European property. I wondered what you lot thought.

Prices for everything in the Czech Republic are remarkably cheap, and property is the same. Slovakia is also dirt cheap for property.

According to my entrepreneurship lecturer, due to the EU integration of the next few years, and the UK's inevitable descent into the single economy, it is prudent to snap up any cheap property in certain major European capitals whilst the iron is hot. Prague is already largely saturated, but Bratislava - only 25 miles away from Vienna Airport still represents massive potential.

Having perused the rather small number of online Slovakian properties, i found a 53 bedroom hotel for sale for just over £900,000. Although this is massively over my price range it seems like incredible value.

Has anyone got any foreign properties? Is my lecturer crackers? I'm considering at least having a look when i got round Europe in the summer, i'd just like to know if anyone had any experience in the field.
 
16/1 Roman Ark for the Sun Alliance Hurdle is value though that 900k deal looks good.

Do you think that people will want to visit Bratislava? Never been there but met some girls on holiday from the Slovak Republic who lived there when i was about 10 or 11.

Lecturer's are generally crackers it's a prerequisite i believe to teaching in uni, though that may well crop up in my European Urban and Regional Issues module (the second half of the booze up in Berlin - j/k) so i'll post if it comes up.

Good luck
Martin
 
My nephew who is a consultant nuerologist just bought a second home in SWEDEN he is an outside loving guy likes to walk and climb etc paid for a 3 bedroom house £37 K honest freehold etc etc so am going to talk nice to him and hope he says o/k uncle John you can have it for a month???? :D

p.s. Yes I am very aware its not an eastern block country but was highlighting how cheap they are in SWEDEN too...........
 
So long as you can avoid legal pitfalls and loopholes, but I'd wait until the country joined the European Union and till Ryanair sorted out the flights.
 
Bulgaria is popular too.

What would worry me is the fact that cheap flights might be a passing fashion and environmental concerns will push up prices. If that is the case then a lot of these holiday properties are going to collapse in value. I'd be more inclined to look for less obvious bargains that are closer to home.

You should also look at SIPPs as a means of buying these properties. You can also use them for 'buy to let' properties back home. You buy the properties through a pension scheme, with relief on your investment and a tax free roll-up thereafter. Gordon Brown has dropped a bollock here and he'll be in hot water next year if property prices explode, which they will.
 
A little off topic, butthose anti racism band are also good investments, go on sale for £1.50 but its about £10 on ebay..... ;)
 
I worked on two deals a while ago, one pricing a bundle of real-estate in the former East Germany, the other in the Czech Republic.

One of the main problems with buying property over there to lease is the legal difficulties of removing people from the property if they stop paying rent. Particularly in areas such as Leipzig, there are large unemployment problems, and therefore a lot of people welch on moneys due. Buying to rent is fraught with legal difficulties in the Czech Republic, too.

However, if you are buying to run a hotel or other business, you won't have that problem. There is not a huge amount of money to be made there yet, althought the potential is obviously enormous. Remember though, that if you buy in a place like Prague, you are basically taking a punt on the Czech economy turning round. There are ways to do this with far less capital expenditure, via corporate bonds, equity indices or other financial instruments. Incidentally, I wouldn't under-estimate the difficulties of running a business in Eastern Europe.
 
Bar, I think your last sentence is one of the most valuable to anyone thinking of dealing in countries where they don't speak the native language fluently, don't have some existing trustworthy contacts, and/or don't have the initial help and CONTINUING support of an established UK-based realty company to ease them through the minefields of deeds, rights, liens, banking, taxes, etc., let alone know where the least sly plumbers, builders, electricians or general staff (for a hotel) are to be found.

In the case of having to employ locals to run your business, you need to know (or pay someone who does) the country's employment laws and employees' rights, as well as comply with that country's Health & Safety regulations for business premises, which may differ from those required for licensing compliance here.

You've only to look at a few of the tv programmes where "ooh-isn't-it-cheeeap!" Brits have quit their jobs, sold up lock, stock, and barrel, and then come horribly adrift with half-finished buildings, fallen foul of local planning permissions, or suddenly found that the road to their property actually runs through someone else's land, and they'd now like £1,000 a month, thank you, for them to continue accessing their lovely cheap new home!

I still think there's mileage left in buying small holiday apartments in the less well-trodden costas of Spain, and signing-up a well-established British company to find the clients and arrange the lettings, if you plan to continue to live in the UK. They'll charge a percentage fee, you'll have cleaning and maintenance costs, and every so often you'll need to overhaul or replace electrical goods such as fridges and cookers, and change the mattresses, so it's not without ongoing outlays.

Above all - get a GOOD accountant!
 
Ha ha. The Rooster's got a better chance of winning the next THREE Champion hurdles!

The problem with a lot of people who go out to Spain is that they don't have enough money. They sell up over here, go out with about £50,000 of equity from their house and buy a bar and live in the accommodation that goes with it. They have no money for education so their kids have to struggle in Spanish schools and it can become a complete nightmare.

You need enough dosh for a decent house and education for the kids if you have any.
 
some years ago (1980s) i was advised of the tax benefits of wrapping a personal pension around a small spanish villa i already owed.capital appreciation free from CGT and any income i got from rent went into the scheme too.maybe the thing wasnt administered correctly or there have been retrospective legal changes but i did encounter unforeseen difficulties when i wished to dispose of the asset.now i never rely on advice from just one source.
 
Originally posted by terry@Feb 9 2005, 07:42 PM
The problem with a lot of people who go out to Spain is that they don't have enough money. They sell up over here, go out with about £50,000 of equity from their house and buy a bar and live in the accommodation that goes with it. They have no money for education so their kids have to struggle in Spanish schools and it can become a complete nightmare.

You need enough dosh for a decent house and education for the kids if you have any.
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Absolutely, Terry, that and a total lack of knowledge of Spanish and/or local laws. Actually, talking of money, I love the way that on these programmes about bargain hunting abroad, very few of them make a point of telling people that in Spain you have to pay 11% on top of your purchase price to the government for costs, taxes & the such. What a lot of people also don't realise is that Spain is run much like the USA or Australia in that different laws apply in different provinces so many laws are totally different in different parts of the country. The Guardia are also pretty formidable & it doesn't pay to cross them! They will fine you for pretty much anything they want to, & when it suits them too! They are actually more a form of military police, they also act as customs officials, & they wield a good deal more power than the police equivalent of the UK (their equivalent is the Policia Local). Add to that Krizon's point that many people don't bother to learn the language either & it is quite easy to see where they come unstuck!

The Guardia can also be pretty fussy when it comes to awarding Residencia too (permit of residence) & it is a very slow process, it can take months & months, which considering that by the book you are only allowed to reside in Spain for 3 onths before you have to have a Residencia, can make things a littel tricky if the Guardia want to get shirty. A friend of mine has been waiting for 6 months & more for her Residencia to come through now.
 
Originally posted by terry@Feb 9 2005, 07:51 PM
Was this a Revenue approved scheme???????
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i ran a small self emplyed business and contributed to a pers pen.the advice i got and took was to go limited introducing family members as fellow directors.open a SSAS and enjoy complete tax free growth and income from a spanish villa i already owned.everything met with revenue approval.
 
Rival, I am amazed at that. Did anybody know that this was a holiday villa? I thought that the only way that you could do anything like that was through an employee benefit trust or something like that, which the Revenue didn't like and Brown has now rightfully abolished.

You do mean the 1980's and not the 1880's?? :D

Shadow Leader - is it true that you cannot have a Spanish driving licence without residencia and that a lot of Brits out there don't have residencia but they do have cars?
 
Originally posted by terry@Feb 9 2005, 11:04 PM
Rival, I am amazed at that. Did anybody know that this was a holiday villa? I thought that the only way that you could do anything like that was through an employee benefit trust or something like that, which the Revenue didn't like and Brown has now rightfully abolished.
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the villa was used for "corporate entertainnment" . since the business i ran could be and indeed was run from anywhere in the world i understand the revenue permitted or at least were led to believe the villa was a legit business property.

the problems i later encountered when disposing of the asset were nothing to do with the revenue.in fact i did subsequently purchase a UK 'commercial property' via a SSAP and ultimately sold it without incurring any tax expense or encountering any difficulties.
 
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