Chasing out the Cowboys
April 10th, 2007
Investing in property abroad? Good news – there’s a new watchdog protecting you from the market’s rip-off merchants.
We can spend months planning our summer holiday abroad but, incredibly, few of us spend enough time doing our homework when we are shopping around for a foreign home.
It’s a staggering fact that when we buy overseas – which British investors spent a whopping 20 billion pounds doing last year – we take fewer precautions than we do when purchasing a home in the UK. And yet it is likely that 90 per cent of the problems which result from this lack of judgement could be avoided if people did one simple thing: use independent legal advice on any prospective purchase.
It is this simply safety net – which clarifies issues of ownership – that The Association of International Property Professionals (AIPP), now celebrating its first birthday, has been impressing on consumers over the past year. “We don’t claim to be able to solve everything, but I just want to raise enough awareness to stop people making silly errors when buying overseas property,” says Paul Owen, their chief executive.
The AIPP was launched last March to provide a kite-mark for the overseas property industry. It is a non-profit organisation, now with 184 members (together employing 2,900 staff) who have all voluntarily signed up to a single code of conduct.
By providing accountability and transparency for consumers, it hopes to emulate bodies such as the Association of British Travel Agents (ABTA), which represents more than 80 per cent of UK travel agents and operators.
Owen says: “At the end of our first year, I cannot emphasise enough the following three things: you must get decent legal advice, you must question all promises of profits and rental yields, and you must never buy more than you can afford.
“The last point may sound obvious but it worries me that more and more people are putting all their money into one asset instead of spreading the risk. Find out exactly how much you are realistically going to get rather than take ludicrous promises at face value. If you are told that prices are going up by X per cent a year, ask why? Are promised rises due to economic realities that you can verify or are they just the developer’s hopeful projections?”
Martin Gow, head of International Group Development at Parador, a founder member, echoes this. “We hear all too often of customers complaining about the hard sell sales techniques of other companies. You can shatter people’s dreams by selling them promises you can’t fulfill – and these irresponsible companies are dragging down our industry. “I think all major overseas companies should join up but sadly many big players don’t have the quality controls to live up to the high standards demanded by the AIPP code. It’s a very proactive body, not just an old boys’ network of backslappers.”
Owen reports 35 official complaints in the first year and compensation cases have been launched as a result of many of them. He has also persuaded the first bank to become a member, Nat West. While Nat West doesn’t sell properties, it does provide finance, legal advise and valuations in Spain where it has a network of representatives.
Darren Fretwell, of Nat West’s International Mortgages sector says, “We are proud to be the first bank to join the AIPP. More and more people want to buy properties abroad and dealing with a member of the AIPP makes the process easier, giving investors guidance and confidence when buying their overseas dream home.”
Article by Liz Rowlinson of the Daily Mail.