Thinking about investing in the flourishing markets in Europe? Given their economic and regional stability, European countries have always been a hotspot for investment. If you are considering purchasing an investment property in Europe, there are a few major factors to account for.
In this article, we will highlight:
- What to look out for when scouting for property
- Which countries are popular for property investment
- Benefits of purchasing property in certain countries
- Tips on acquiring property in Europe
5 Factors to Consider When Buying Property in Europe
You could probably list a million things to look out for when buying investment property in Europe but we want to highlight the important ones you may have missed. Everyone knows to consider prices, return on investment, and ease of investing, so we are going to tackle factors that you probably still need to consider.
Property Use
If you are looking to buy property in Europe from America or Canada, you are probably doing it as an investment to bring in some passive income. Sounds easy, right? Just find a nice property in a touristy neighborhood and rent it out. While this is a traditional investment method, recent laws in European countries have made the process more complex.
Those buying investment property in Europe for passive income should consider speaking to an investment specialist or doing their own research on trends regarding rental laws and market changes.
An investment property in Europe can also be used as a safe haven for those who live in more unstable regions. Many countries offer residency or citizenship for those who invest enough in property and pay the corresponding fees. Europe is generally seen as a much more peaceful part of the world with less instability, a huge reason property values are rising as many are seeking a backup home in case of an emergency.
Market Demand
Germany, the UK, and France all sound like great places to invest in for appreciating property but when you look into where to acquire property, you will start to notice what is driving investment away. Lots of cities in Germany and France are facing stricter rent controls and price regulations that increase the quality of life for locals but make them a poorer choice as investment property.
Countries that rely more on tourism like in the south of Europe tend to have more lax laws on investment property and generally welcome it. As the tourism sector grows, there is an ever-increasing demand for short-term rentals which pay off big for property investors.
Property Management
If you plan on renting out your investment property in Europe, chances are you will be doing it remotely. In such cases, a third party is needed to manage and maintain the property. While European countries have strong laws in place to protect you, they also have a variety of laws that protect renters and heavy regulation on what is expected of property owners.
While there has been a recent backlash in countries like Spain against large property takeovers by investment companies for short-term rentals, most countries still welcome investment through property. These properties just have to be better managed and comply with local laws to avoid fees and upsetting the local population.
Consider finding a big-name management company that would have all the up-to-date information on local laws and has the resources to ensure all needs are met. This may increase the cost of operations and reduce your income but you will be safer in the long term avoiding excessive fines.
Eligibility for Citizenship or Residency
Sometimes the best thing about an investment property isn’t the passive income it can bring but the opportunities it can open up. Countries like Malta, Greece, and Portugal have residency and citizenship programs that require real estate-related investments in the country.
Purchasing investment property in these countries is a common option for those seeking to acquire EU citizenship or residency along with all the benefits from it.
EU citizenship gives you the ability to freely travel in the Schengen region, access to world-class healthcare, and some of the greatest educational institutions in the world. It also allows you to open a business in the EU and purchase property as a resident which can save you big.
Investing in Property in Europe as a Foreigner
The price you see for property is never the price you pay. Unfortunately, there are a lot of different taxes in Europe, each with its own range. When purchasing an investment property in Europe as an American, Canadian, or other foreigner, it is important to know what extra taxes you are subject to when acquiring property.
You may be subject to certain taxes if you are not a resident of the country you invest in and if you reside for half the year in the country, you may become a tax resident.
Top 4 Countries for Property Investment in Europe
Malta
Why should I invest in property in Malta? This tiny island is in the European Union and has a very attractive residency program which makes its property a hot commodity. Not only is this tourist destination in high demand for short-term rental property, but due to its size, it has an ever-increasing market value.
Malta is one of the few EU countries that allows for residency through investment through the Malta Global Residency program. Depending on what part of the country you purchase property in, you need to acquire property worth more than EUR 220,000-275,000 to qualify. For Malta Citizenship, you need to make an investment of over EUR 750,000 after 12 months of residency or EUR 600,000 after 36 months.
Portugal
With new programs like the Digital Nomad Visa, many remote workers are flocking to Portugal to enjoy the sunny beaches and cheap living by European standards. This opens up some of the best property investment opportunities in Europe thanks to the large demand for short-term housing which can be acquired through property investment.
For just a EUR 350,000 investment into qualifying property, you can receive Portuguese residency which would then allow you to apply for citizenship after a few years.
Spain
Spain has long been known as a top tourist destination. It is no surprise that many foreigners from America to Australia seek to acquire investment property there as foreigners. With a booming tourism industry and lots of small towns and villages that are becoming more popular, there has never been a better time to look at a new bed and breakfast or villa to start making passive income and having property that will increase in value.
If you find a property worth EUR 500,000 or more you can also qualify for Spanish residency for three years, giving you time to enjoy your investment and even bring the whole family along. Spanish residency even gives you the opportunity to apply for Spanish citizenship which can further increase your business opportunities.
Greece
With such a rich history and beautiful beaches, people from all over the world flock to Greece for their destination vacation. With so much diversity in tourism all around the country, there is a large demand for beachside rental property all along the coast and islands. As tourism is a big part of the Greek economy, you can’t go wrong acquiring a nice investment property in Greece as a foreigner.
If you can invest more than EUR 250,000, you can qualify for Greek residency by investment Also known as a Greek Golden Visa, residency allows you to apply for Greek citizenship as well as diversify your investment portfolio in the country with new opportunities. .
5 Tips for Property Buyers in Europe
- Finding the Right Partner
Dealing with governments can be tricky, especially if you do not speak the language. Consider working with an agency like Mirabello Consultancy to help you in acquiring investment property in Europe. With experts by your side, you will get a better understanding of the market and which investment best suits your interests.
- Utilizing Better Tax Options
Sometimes the greatest benefit of an investment property is not the income it brings in, which is still great, but the opportunities it opens up for establishing a tax haven. Many European countries offer competitive tax regimes which your business may benefit from if you become a tax resident in that country.
- Having a Safe Haven
Given the instability in the world, it is always nice to have a second backup home to go to in case of an emergency. Buying an investment property in Europe grants you and your family residency which secures a safe passage in case you have to flee your home country.
- More Investment Opportunities
When you buy property in Europe and become a resident, you also are given more opportunities for investments not available to foreigners. This ensures a more diverse portfolio that isn’t too dependent on rental property from tourists and can lead to greater business opportunities down the line.
- See Your Investment for Yourself
While agencies like Mirabello Consultancy only work with the most reputable real estate brokers in Europe, it still pays to see your future investment yourself. Not only will you have somewhere to vacation but you will get a better idea of where you are putting your funds into.
FAQ
How much does it cost to buy property in Europe as a foreigner?
Depending on what country you aim to buy investment property, more affordable southern European countries have property available as low as EUR 200,000. With many residency by investment options, it is important to consider additional benefits that can come from acquiring qualifying investment property.
Do foreigners have to pay higher taxes when buying property in Europe?
While many European countries do not have an additional tax for acquiring an investment property, you can expect to pay more taxes on the income generated from the property. Consider talking to a professional to get a breakdown of what you can expect to pay for different investment properties across Europe.
Which European Country has the cheapest investment property?
While prices greatly vary from country to country and region to region, some of the cheapest places to buy investment property in Europe are Greece, Portugal, and Malta. With long coastlines, lots of tourism across the entire country, and an openness to foreign investment, these countries are not only the most affordable, but also the most welcoming to business.
