K buy-to-let investors are 5% tax on rental income and the
being tempted by offers of possibility that the Chinese
guaranteed rents on government could claim the land
property deals around the world, back.
but how good are these deals in
real terms and will there be any Latvia on the other hand presents
rental demand once the guaranteed a lower risk to foreign
period ends? investors, with membership of the
EU and the ability to borrow up
Worldwide opportunities to 90% of the value of the
property making it a more
Investors are looking beyond the appealing choice.
overcrowded UK market for
untapped property hotspots in However, this is not to say that
Eastern Europe, the Middle East an investor can simply buy any
and out to the Far East. property in Latvia and expect to
make easy rental returns. Like
Deciding on the best foreign any foreign market, the risks are
markets to invest in is a case of generally higher than buying in
weighing up the potential for the home market.
growth and rental income against
the risks and costs. Incentive to buy
For example prices of residential To help encourage potential
homes in Beijing rose by 20% in landlords to overseas markets, a
2005 (according to the Beijing number of investment companies
Municipal Construction are offering guaranteed rents for
Committee), however there are anything up to 5 years. Rental
many issues regarding the guarantees, it is argued, provide
transfer of funds out of China, a a reliable safety net for riskier
markets, however many experts to cover the guaranteed rent.
warn they are merely a marketing This can provide a further shock
tool and advise investors to look when the investor tries to sell
very closely at the deal being the property and realises that it
offered. is not worth as much as they
originally paid for it.
Key issues
If you do opt for a guaranteed
One of the biggest issues with rental deal, make sure that it is
guaranteed rentals is a lack of properly underwritten by a bank.
demand for the property once the Otherwise you would be at risk of
period has finished. Guarantees losing the guarantee if the
are often used to market developer were to go out of
properties that otherwise would business.
not sell and many investors are
shocked by the resulting drop in Poor regulation means that it is
income. also worth checking the small
print for any hidden clauses that
In addition to this, it is often enable the developer to avoid
the case that investors end up paying the guaranteed rent and it
footing the rental bill is always a good idea to seek
themselves, when developers expert advice.
inflate the price of the property
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Source: www.isnare.com
