Holiday home romance cools as many forced to sell


INVESTMENTS:Our love affair with foreign property is going sour for some buyers, with many foreced to sell or rent homes abroad. Frances O'Rourkereports

SOME CALLERS are annoyed, some are seriously worried, some are even weeping - and in increasing numbers, they're on the phone to agents trying to offload foreign properties they bought in recent years.

"Yes, we're getting loads of calls from people saying 'we really need to sell our place in Spain or Portugal or wherever'," says Savills HOK director Ronan O'Driscoll, who advises people to go to local agents because Savills doesn't handle once-off sales of properties overseas.

"Some are investors who bought two or three properties, even if they couldn't really afford them - they felt they would double their money. Now they can't complete sales, or they can't get rents."

Dublin solicitor Tom McGrath, who specialises in advising people buying properties abroad, confirms the upsurge in distress calls from people who've run into problems. "My receptionist hasn't got off the phone in the past few months, taking calls."

A lot are from people who've paid deposits of up to 30 per cent to agents or developers and find that when the date comes for signing the deeds, the developer has gone into receivership because of the credit crunch - or has just disappeared.

Such problems aren't new but "there's been a fairly dramatic increase in the number", says McGrath. Sometimes the agent and/or developer are simply inefficient; sometimes, either or both are corrupt.

"I'd like to emphasise that things have worked out fine for many people who've bought abroad," says McGrath. "There are those who've made significant financial gain and thousands who've had enormous enjoyment out of their holiday homes." He adds reprovingly: "They are of course usually the ones who took care at the beginning."

In the late 1990s and early years of the noughties, when foreign property exhibitions became regular weekend entertainment, many of us were easy prey for excitable agents selling properties from Biarritz to Bansko. The mania was fuelled by low air fares to parts of Europe most of us had never heard of, TV shows and yes, property supplements, with spirit-lifting images of cool homes in hot climates for prices that might buy, say, a cowshed at home.

Quantifying the number of buyers now struggling to either hold onto their investments/holiday homes, rent or sell them is nearly as impossible as finding out how many were bought in the first place: many were purchased through foreign agents, and few statistics were compiled over the decade when so many Irish people were buying abroad.

Many distressed buyers are understandably unwilling to tell others about their problems - especially if they haven't solved them. But they do need help - and Athboy-based agent Ann Collins has set up a service to meet it.

It was the growing number of calls she has been getting for the past year that prompted Collins to set up, to match distressed vendors with buyers looking for a bargain online.

She'd been getting requests from people who wanted to sell their foreign properties "either because they borrowed money here against the value of their own home and rates have gone up and they can't pay, or because they want to reel money back in because of the downturn, or they've lost their jobs and can't afford repayments, or they're not getting anticipated rents."

Or it may simply be that they realise that a property they thought would go up in price is falling in value.

She believes that only vendors who absolutely must sell should sell now, and if they do, they must be prepared to sell at a discount of 25 or 30 per cent.

Anyone who can sit out the global financial crisis should, she says - because the value of their property is likely to stabilise when it's over.

She is not planning to auction overseas properties online, but to match vendors with buyers hunting for an overseas bargain. She says she will check out vendors thoroughly as well as purchasers to make sure their offers and bids are genuine before handing over a transaction to the vendor's and buyer's solicitors.

Collins has been surprised by initial reaction to publicity about her service - 35 of 39 e-mails she received were from people hunting for good bargains abroad.

Keith Elliott, overseas manager of, believes that sales in Ireland's core overseas markets - France and Portugal - are stable, with little sign of people trying to make a hasty exit. "But there is a rise in the number of people wanting to rent properties they bought as holiday homes; they find they don't have enough money to sustain repayments, and they need to get a return." In the new year, the myhome website is launching an overseas lettings service to meet this demand.

Exchanges on websites like Property Pin and Askaboutmoney suggest that markets like Dubai and Bulgaria are causing particular concern. Savills's Ronan O'Driscoll says "Bansko (the Bulgarian ski resort) is almost unsaleable", and reckons it would be difficult to sell a second-hand property in Dubai because of continuing new developments there.

Florida is another market where oversupply and a dwindling tourism market post credit-crunch means rents (and of course sales) are hard to get.

Sale and leaseback developments in France that have run into trouble also surface in web exchanges, although perhaps surprisingly, don't figure high amongst queries to agents or solicitor Tom McGrath. But as Jimmy Murphy's story (below) shows, when a management company of one of these schemes runs into trouble, it can be very hard for owners to get out without losing money.

The main thing if you are in any kind of trouble, says Eilís FitzGerald of OverseasCafé.com, is to be proactive and do something about it. "If you have a legal problem, do something," she says. Get everything - the title deeds, the signed contracts, all the paperwork, the financial information - together so that you will be able to sell when the market gets moving again."

She also says it's important that you decide what you must make before you sell it and be in a position to tell possible purchasers whether there are real rental and/or capital appreciation possibilities. "Anyone who's buying in this market is likely to be an astute and informed cash buyer and will know if you are trying to pull a fast one."

And if you are unfortunate enough to be caught in a situation where the agent or developer is not giving you what was promised you must get it rectified: in one case, for example, a management company didn't pay an Irish client rent for a year on a Spanish investment. "Get legal advice, get information - there's a lot of useful information on websites and blogs. Don't despair, repair," she says bracingly.

For example, if you are trapped in a sale and leaseback gone wrong, and haven't (along with the other owners) found a new management company to take over the development, it would be wise, she agrees, to try to rent it yourself.

You could, for example, set up your own website to market it, do a deal with a rental/management agency yourself. "At least you will know what the market to sell or rent is really like," she says.

In the meantime, serious investors are looking out for bargains, heading for the next hotspots abroad. (Knight Frank's website has a useful report about the credit crunch and the international residential market at the moment.)

If you want to join them, learn from others' bitter experience, go slow and get advice first: many websites, like MyHome and Tom McGrath's, have useful tips on buying overseas.