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How to Buy Property in Albania

posted 21 Jan 2012, 20:08 by Arian Dara   [ updated 21 Jan 2012, 20:16 ]

Consider why it is worthwhile buying property in Albania. Albania is not yet the finished article for overseas property investment by any means, but it is often in this kind of country that the best offers are to be found. In fact, studies have shown that prices in Albania are among the cheapest in Europe – which also means yield has remained stubbornly low. However, as the global economic slowdown hit, the property market in Albania had not developed to such a point where property was overvalued, or excessive development had caused a glut of supply. Therefore, there are those who feel that Albania could be extremely well-placed when the overseas property markets begin to pick up again


Look for the popular buying locations in Albania. As Albania is clearly still an emerging market for the overseas property industry, for the vast majority of people who buy there in the next couple of years there will be at least some element of investment to their purchase. As property buyers will be looking for the tourist market to make up most of the rentals, and then towards the local market as the economy continues to develop, rentability will be a key factor in deciding both what type of property and where they purchase.
  • There are a number of options available for property in Albania, focusing mainly on two types – city apartments and beach properties. City apartments will, for the moment at least, be limited to the capital of Albania, Tirana. As well as being centrally located geographically, Tirana is the commercial and cultural hub of Albania. It is also home to around one in five of the Albanian population, therefore having good potential for rentals as the country develops and the population look for more luxurious property in which to live.
  • Tirana is also growing and developing its infrastructure as its free market economy begins to mature. Tirana international airport has been recently renovated at a cost of over £40 million, and the current housing stock is of low quality. The demand for new housing is high, and with very low prices per square metre, investment prospects are attractive.
    • On top of this, there is the potential to buy properties to let to students in the future. Tirana is also an educational centre, with eight universities in the capital itself. Outside of the capital, the best places to invest are along the coastline, which leads from the Adriatic Sea in the north to the Ionian Sea in the south. Albania is already something of an established tourist destination in the local region with many visitors from Italy, Greece, Germany and Italy, particularly during the high season from June to August. As a result, there are already a number of well-established coastal resorts in Albania which could easily present some great investment opportunities in the medium- to long term.
  • Durrës is the former capital city of Albania, and now an important trading and port city, having become the primary external commercial outpost of the country. Durrës is also the favoured destination for Albanians living and working in Tirana to escape for the weekends, and many of the more well-off inhabitants of Tirana have second homes in the city. Travel from Tirana to Durrës takes just 35 minutes by car, the same as it does from the international airport.
    • Property is primarily apartments near the centre, and with the tourist season running throughout the whole of June, July and August, and the fact that accommodation is so hard to come by during this period, there are good opportunities to rent property out. Prices are slightly higher here than in Tirana, but rental yields of up to eight per cent should be realistically achievable.
    • Outside of the main season, the climate in Durrës is pleasant enough to make it and ideal holiday home destination. Capital appreciation is also impressive, with property prices rising by 15 per cent per year for the past two years, though forecasts for the future will be somewhat below this if growth does continue. Further south, Vlora is the second port in Albania, and marks the confluence of the Adriatic and Ionian seas. It is an important trading city for Albania’s exports, but is by no means an industrial blot on the landscape.
    • The city, the base for a booming tourist trade along the coastal reaches, has a rocky coastline extending in both directions away from it with sandy beaches dotted throughout. Behind the city, the landscape is framed by nearby mountains. Vlora itself is a pretty and colourful city, with wide boulevards and a relaxed pace of life. The palm trees that decorate the place give it a real Mediterranean feel, while the Llogora National Forest is just half an hour away. The drive from Tirana currently takes around three hours, but the local military airport is under tender for commercial conversion, which would no doubt spur on the growth of the property market. Capital appreciation is estimated to be at around 20 per cent per year.
  • Finally, the gateway to the south of Albania, Saranda, is also an important tourist and trading town, located as it is just a thirty minute ferry journey from the Greek island of Corfu. This is the part of Albania with the warmest, most Mediterranean climate, and commonly known as the most attractive town on the Albanian Riviera. Attractions for tourists, aside from the warm seas, include the ruins of the World Heritage Site at Butrint.

The tourism market in Saranda is booming due to a high number of honeymooners visiting the town, and attracted by the proximity to Corfu. Property prices are around €650 per square metre, though capital growth is unlikely to continue at the rate of 20 per cent per annum seen in the past couple of years.


Know the legal issues. There are currently no restrictions on UK citizens owning and buying property in Albania, but there are certain issues to make sure you are aware of, and that you have all contracts and official documents checked but an independent lawyer to ensure you know what you are signing. You will also need to have a notary public engaged in order to register the purchase and act for both sides during the property purchasing process. In particular, it is important to make sure the title deeds of the property are thoroughly checked to make sure you are buying from the true owners and they have the right to sell to you. Since the end of Communism in the early 1990s, properties in Albania were handed back to the people from the state. It is estimated that some 85 per cent of property has now been checked to have correct title deeds, but the remaining 15 per cent is mostly in Tirana and on the coast, so making sure your lawyer checks this is imperative.
  • Linked to this is the concept of building permission – the concept of property development is quite new, so permissions were not always sought or granted to construction companies. This situation has now improved vastly, but it is worth checking into this as well. There is a strong history of corruption in Albania at all levels of society since the country emerged from Communism into the free market in the early 1990s, and anyone investing in the country would be well-advised to take this into account at all times. The Transparency International web site (www.transparency.org) gives Albania a rating of 2.6 out of 10, lower than the 3.1 of Romania or the 4 given to Bulgaria.
  • The new government which came to power in 2004 has made fighting corruption one of its top priorities, introducing new laws and setting up an anti-corruption task force. As the country hopes to enter the EU in 2014, these efforts will continue and are likely to be extended, so the situation in this respect should improve. The 1990s also saw a series of disastrous pyramid schemes collapse in Albania, bringing chaos to the country and rioting as people lost their savings. The schemes were set up as an alternative to banking in the new free economy, with early investors getting their payout from those who came in later on. However, they were badly managed and badly run, and collapsed resulting in the loss of huge sums of money and a government that struggled to govern. Despite this, investors are expected to receive at least part of their money back from the liquidation of the companies in the future, and the economy has bounced back.


Buy a property. The property buying process in Albania is quite simple and well-established. Once you have signed a reservation form and provided certified identification along with your reservation fee, you should always look to engage an independent lawyer that you have sourced yourself, in order to make sure the transaction is being carried out in accordance with the law and that you know for what you are signing.
  • You should also always make sure that you have copies of all contracts in English so that you can refer back to them at any time you need to.
  • Some two to three weeks after your reservation, you should receive the pre-sales contract, which is when the initial deposit is paid. This contract will set out the terms of the agreement, the schedule of building for off-plan purchases, and the date of completion.
  • Upon completion, the final transfer of deeds is carried out. You do not necessarily have to be present at this part of the deal if you are happy to sign over power of attorney to your legal representative.

Finance your Albanian property. Despite the fledgling free market economy in Albania, and the huge failure of the pyramid schemes in the latter part of the 20th Century, there is a wide and competitive range of products available in the mortgage market. Also, many of the larger western banks have entered into the market, making products comparable to the standards we are used to in the most developed economies. Terms are similar to other European finance products as well, with loans of up to 80 per cent of the value of the property and 15 – 25 years. Unlike many emerging markets, interest only mortgages are also available, though the recent economic woes of the major global powers have meant that credit across the world is much harder to find than it was previously. You also have the option to finance your property in Albania through raising finance on a property you own in the UK. You may find a more advantageous interest rate financing this way, and should you not have the 20 per cent deposit ready and available in cash it may give you the option to raise it through a part-mortgage on your UK home. The services of an independent financial adviser at this stage can save you significant amounts of money in the long term.


Be ready to pay the Albanian property fees and taxes. Transaction costs for buying a property in Albania are very low. There is no purchase tax, and property transfer costs amount to three per cent of the purchase price. Legal costs, including a public notary and your own representation should come to no more than €2,500. Once you have bought in Albania, running costs of property are also low. Municipal tax rates vary from location to location, but are typically €0.25 per square metre per year in the coastal areas. Income tax is just ten per cent, as is capital gains tax, which has only been in force since January 2008.

Get the appropriate visas, residency and work permits. Upon entering the country with a valid EU passport, you have the right to stay for up to 90 days without applying for a further extension of your visa. For stays of more than 90 days, and up to five years, you are able to apply for a residency permit at the nearest police station to your property. There are a number of documents that you need to have in order to gain this permit, some of which must be notarized, and some of which must be obtained from the courts and police services in your country of residence stating that you are not currently under investigation or subject to any criminal processes (the so-called ‘good boy letter’). Once again, with Albania pushing for EU entry in 2014, these restrictions will have to be relaxed to allow freer movement to other EU citizens, and the ability to cross borders and reside freely will need to be addressed.


From Wiki How . com

Financing Your Overseas Property Investments

posted 5 Oct 2010, 08:21 by Arian Dara   [ updated 21 Jan 2012, 20:15 ]


 
 
Buying a property abroad may seem like a great way to make money out of the property market and, in many cases, it is. However, working out the best way to finance this investment can cause more than a few headaches and getting it wrong could cost you dearly.

Mortgages abroad

More and more Britons are looking to purchase properties abroad, either as holiday homes, or more commonly, as a way of investing in potential growth areas. With European Union rules allowing its citizens to purchase property freely within other countries of the Union, it is little wonder that the demand for foreign property has soared recently.

When it comes to financing a potential purchase, there are several things that a potential purchaser needs to consider carefully if they are to obtain the most cost-effective option for themselves as individuals.

Raising Equity from a Current Property

House prices in Britain have risen substantially, in recent years, meaning that most homeowners have the option of re-mortgaging to raise finance for a foreign purchase. According to the large banking institutions, this remains the most popular option for overseas investors. Anyone considering this option should be careful to consider all of the issues involved in re-mortgaging. Any finance that is received in this way is secured on the UK property, which, in most cases, is likely to be the primary place of residence. If for any reason, the repayments are not made, then the property in danger of repossession is the main residence and not the property abroad.

One of the benefits of this type of financing option is when an off-plan property is being purchased. With off-plan schemes, it is common practice for the developer to require stage payments before the building is complete. At this stage, it would be virtually impossible to obtain any financing using the partly built property as security for the loan. If the funding is being received from releasing equity in another property, these stage payments can be met with relative ease, as the incomplete state of the overseas property will not concern the bank or building society.

International Mortgage

If the thought of securing your overseas investment on your UK home seems to be a little too much to bear, then an international lender may be a better option. International lenders, as the name suggests, deal with a variety of countries and generally have local expertise enabling them to deal with all the negotiations as well as the legal processes and any necessary paperwork. This is a wonderful hassle-free option for an investor, however, their fees tend to be considerably higher than a local lender because of the range of services that they offer.

Some UK high street banks offer international mortgages, for example, HSBC offers French mortgages and Lloyds TSB offers Spanish mortgages.

Using a Local Mortgage Provider

Using a local lender may seem like a good idea if you do not want the extra costs of an international lender and you also do not want to use your UK residence as security.

A local lender can act quickly and can ensure that the property is worth what you are paying for it, in a similar way to how a mortgage provider in the UK would behave. They complete all of the necessary searches, surveys and paperwork. Another advantage is that you will be borrowing in the local currency, so there will be no additional incurred costs from transferring cash from the UK to the country in which you are purchasing the property.

Having said this, fees and interest rates may not be as favourable as those in the UK and you may find that the monthly cost on a similar sized mortgage could be substantially more. As you would be borrowing in the local currency you are, in effect, gambling on two separate markets, the property market and the currency exchange market, so you could gain or lose from fluctuations in either. Another potential issue can be that it is difficult to prove income to the satisfaction of a foreign lender and, therefore, you may find that you are limited in the amount that you can borrow by way of a foreign mortgage.

If you consider raising equity on your current British property, you must accept that the additional sum that you add to your mortgage will incur interest, it will have to be repaid over the term or at the end of the term of your mortgage and that the whole loan is secured on your UK home.

Anyone considering their options for financing an overseas property should consult an independent advisor or broker so that they can take into account your individual circumstances, in terms of both the property you are purchasing and the financing options available to you.

Article Source: http://EzineArticles.com/?expert=Rod_Thomas

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