First time buyers become 'Barbies'
Published On 7 March 2007
An increasing amount is being written about first-time buyers (FTB) becoming so-called "barbies", which stands for "buy abroad rent in Britain". Of course. But while the advent of another media-inspired acronym may be annoying, it does highlight an ever-increasing phenomenon.
As the cost of housing in the UK continues to skyrocket, many young people are feeling increasingly like they will never be able to afford to buy a place of their own. Currently the average price of a house in England and Wales stands at an exhorbitant £200,000. This has led to advent of mortgages lasting as long as 50 years. Unsurprisingly, young people aren't keen to still be paying off their mortgage in their 80s.
According to recent research by the insurer Hiscox, up to 40 per cent of young people are considering buying their first property abroad. Furthermore, a full 88 per cent of people say that house prices are the main impediment to buying property in the UK. This figure rises to 97 per cent among the 18-24 age group.
And over 35 per cent think that they will never be able to afford a house in England at any point in their life.
As the housing bubble firmly refuses to burst and interest rates climb ever-higher, things don't look like they'll change any time soon. Moreover property abroad can represent a relatively sound financial investment.
"In the 1980s, yuppies started to push UK property prices up and the signs are that 20 years later young people could do the same for property prices abroad," said Steve Langan of Hiscox.
"More young people than ever before are finding their route into the UK property market blocked and are turning to overseas property investment as a more affordable and potentially lucrative investment option."
The Hiscox data also found that men are much likelier to take the leap abroad than women, with 33 per cent willing to consider it, compared with 22 per cent of women.
Buying abroad is an attractive option and unless you're considering eastern Europe, the weather and lifestyle will almost automatically be better than in the UK. However, it is not a decision to be taken lightly.
Property law abroad is usually more complex than in Britain and can be made more so if you don't speak the local lingo. Therefore laying the groundwork is imperative, as is getting a good intermediary. Of course there are also tax implications which need to be considered carefully.
Money columnist Lorna Bourke writes: "An estimated 75,000 UK pensioners currently live permanently in Spain and Bank of Scotland International is warning them of the inheritance tax implications of living abroad.
"Some will have given up their UK domicile and will be subject to Spanish inheritance tax on all assets. Under Spanish law, if a property is owned in joint names and one partner dies, the surviving spouse would inherit the deceased person's 50 per cent share - as in the UK where a property is held as joint tenants."
