QI’M

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

con­sid­er­ing buy­ing an in­vest­ment prop­erty in Poland. I’ve been sent a brochure about apart­ments which are up for sale there and they seem in­cred­i­bly cheap. How­ever, when I showed the brochure to a Pol­ish friend of mine, she ad­vised that the apart­ments were over­priced. She said most Poles wouldn’t be able to af­ford to buy such a prop­erty or to pay the rent which the brochure claims could be earned on the prop­erty. Should I pro­ceed with this? And if I de­cide not to go ahead with this prop­erty — but to look for an­other over­seas in­vest­ment, how should I go about it? Tom, Clontarf, Dublin WHETHER you are buy­ing in Poland or any­where else, you should in­struct an in­de­pen­dent val­uer to ad­vise you on any pur­chase of an over­seas prop­erty. In par­tic­u­lar, you need in­de­pen­dent con­fir­ma­tion as to the year-round ren­tal lev­els. You should also visit the re­gion and as­sess the area your­self. Some hol­i­day des­ti­na­tions are only rentable for six weeks of the year.

You should also seek the ser­vices of an ex­pert lawyer: Ir­ish em­bassies can usu­ally pro­vide you with a panel of rep­utable firms in what­ever coun­try you are in­ter­ested in in­vest­ing.

Apart from the ba­sic com­mer­cial­ity of buy­ing any over­seas prop­erty, you also need to as­sess the tax im­pli­ca­tions and the costs of tax com­pli­ance.

You should gen­er­ally never pay the ask­ing price. You may find some great deals by pur­chas­ing from dis­tressed sell­ers. If you are buy­ing out­side the euro­zone, it might be ad­vis­able to fi­nance the ac­qui­si­tion in the lo­cal cur­rency so as to avoid ad­verse exchange rate fluc­tu­a­tions. 5pc guar­an­teed ren­tal re­turn and a VAT re­bate. How­ever, many prop­er­ties were priced 30pc and more above their ac­tual mar­ket value at the time.

As you are com­ing to the end of your 11-year lease, you should take spe­cial­ist le­gal ad­vice so that the lease is not au­to­mat­i­cally re­newed. You should de­ter­mine if an own­ers’ group has been es­tab­lished for your par­tic­u­lar devel­op­ment as it could pro­vide you with ad­vice on your op­tions.

If you stop pay­ing the mort­gage, the bank is likely to re­pos­sess the prop­erty and sell the prop­erty as a ‘dis­tressed prop­erty’, which would likely in­crease your losses. The bank would then seek to re­cover any resid­ual debt from you. It would first have to ob­tain a judg­ment against you in France. You could de­fend the pro­ceed­ings on pos­si­ble grounds of mis-sell­ing, as many of the loans were or­gan­ised through the de­vel­op­ers. If the bank does ob­tain a judg­ment against you, it could then en­force that judg­ment through the Ir­ish High Court by ob­tain­ing a Euro­pean en­force­ment or­der against you. The bank could ef­fec­tively at­tack the eq­uity in your Ir­ish home.

Whether the bank would en­gage in any debt for­give­ness would de­pend on a num­ber of things, in­clud­ing the mer­its of your de­fence and your own fi­nan­cial cir­cum­stances. If you ask the bank to ex­tend the mort­gage, it will seek de­tails of your fi­nan­cial cir­cum­stances to as­sess your ca­pac­ity to pay. One op­tion to con­sider, par­tic­u­larly, if you also have Ir­ish debt prob­lems, is to see a Per­sonal In­sol­vency Prac­ti­tioner about the pos­si­bil­ity of do­ing a per­sonal in­sol­vency ar­range­ment or a debt set­tle­ment ar­range­ment.

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