First-time buyers look abroad to get on the property ladder

DUBBED the “jet-to-let set”, first-time buyers unable to get on to the property ladder in the UK are investing in property abroad, a new study has revealed.

Once dominated by middle-aged “second homers” and retired couples, the overseas market is proving increasingly popular with young people who are looking to rent out a property abroad which can then be sold, and the equity used as a deposit on their first UK home.

The phenomenon has been highlighted by investment group Cretan Life, which has found that in Crete about 40 per cent of UK inquiries for land or property come from first-time buyers, compared to 7 per cent a year ago.

Mortgage experts say the trend has been fuelled by spiralling UK house prices. Ray Boulger, from Charcol Independent Mortgage and Financial Advisers, said: “Getting on the property ladder has always been difficult, but particularly so in the last few years as house prices have risen in excess of earnings.

“The average property in the UK now costs £200,000 while the average first-time buyer shells out around £150,000 for their first home. Young people, particularly those who are not looking to buy with a partner, are now being forced to explore different options, whether buying with friends or strangers or looking to the overseas property market.”

Paul Merchant, the owner of Prestige Properties in Aberdeen, says that he has noticed a significant increase in young people choosing to buy their first property overseas. “Not only are the initial costs more reasonable, but the ongoing costs - things like energy bills and council tax - are often lower than in the UK.

“First-time buyers generally look at spending £85,000-£130,000 which will go much further overseas than in the UK - we have properties in Cyprus for around £55,000, for example. I’ve also noticed that with lower living costs abroad, more young first-time buyers are actually considering a permanent move to their overseas property,” he said.

Andreas Theocharides, of Cretan Life, said: “The combination of cost and complexity is causing first-time buyers to give up on Britain and invest overseas. With no end in sight to spiralling costs and red tape it looks like this trend is set to gather pace.”

However the experts warn that buying abroad brings its own risks and difficulties, including different legal processes and some buyers reporting problems in selling their foreign properties.

Mr Boulger said: “It is potentially a very dangerous option. You need a deposit of at least 20 per cent and the different legal processes can prove very challenging. It’s not always easy to resell an overseas property and those who fail to do so may find it very difficult to get a mortgage for a property in the UK.”

AVERAGE starting prices for property:

Baltic States £8,190 France £16,890 Bulgaria £24,890 Portugal £27,300 Greece £30,400 Spain £38,100 Italy £38,600 Dubai £41,700 Cyprus £47,600 Canary Islands £54,000 Crete £62,500 Balearics £86,280 Caribbean £92,220 UK £151,000

Source: Scotsman