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.