My Tips on Purchasing Caribbean Property

I thought it would be good to get feedback for those investing overseas. I have purchased in The Marquis In St Lucia but my tips would apply equally to any other investment in any development in the Caribbean or elsewhere:

- never be rushed into making an investment. Many companies and agents will suggest buying quickly due to imminent price rises and units selling fast. Do not succumb to this sales patter, it is likely to be just that - particularly in the current market where the credit crunch is making it difficult for UK investors to raise funds to invest overseas.

- check the status of the investment's planning. Does it have full planning permission? If it does not, how long will it be before the planning permission is received?

- if the development does not have full planning permission insist on only making a minimal 'reservation' deposit and pay the rest of the deposit once full planning permission is obtained.
- if the agent/developer wants a full deposit, insist it is held in a UK solicitor's client account until full planning permission is granted.

- check the accuracy of any statements made by the agent/developer. If the properties are being sold at a supposed discount to market value ask them to prove this by reference to existing comparable properties (not just their own price lists).

- check what you are getting. Ideally visit the development and see what is going on, but if you cannot do so, get a full specification of what you are getting for your money. What view does it have? Is the view unobstructed? what is the building quality? What is the quality of fixtures and fittings? What amenities will there be and who will be the operator? etc.

- ask for a cash flow forecast showing when you will have to make the payments to the developer.

- find out what your obligations will be once you own the property - is there a sinking fund? How much is your contribution? How much will management charges be? What other costs will you incur?

- If there is a rental guarantee, bear in mind that this is built into the price you are paying for your unit - developers do not give away profit! Check whether the rental guarantee will be enough to cover your outgoings.

- If the agent/developer is offering what seem to be attractive finance options and minimal deposits, bear in mind that currently no Caribbean bank I'm aware of would lend more than 70% of the property value and they will not allow a mortgage to be drawn down until the property is completed. This means either the developer will be funding the balance (and charging you interest) or you will have to borrow the deposit from other sources. Some developers offer to pay your instalments until completion, but bear in mind that there will be a cost to this and this cost will escalate if completion is delayed.

- If the developer is overseas do not part with any money until you are happy that it is being protected e.g. held on a solicitor's client account and will only be paid to the developer once the project has got full planning permission and is about to commence. Only make subsequent payments on progress certificates issued by a competent architect.

- get a solicitor experienced with overseas property purchases to review the documents and explain the risks involved.

- bear in mind that there could be currency exchange risks - the investment could cost you more if sterling goes down in value and you are paying stage payments or mortgage payments.

- check the tax position on rental income and capital gains in the country you are investing. Also, check if there are any annual 'wealth', 'asset' or 'property' taxes payable. Remember that if you are resident in the UK you will almost certainly be subject to UK taxes on overseas property income and gains - make sure you can deduct the taxes paid overseas against the UK income and capital gains tax liabilities. Also, you may be enticed by countries offering 'zero' tax, but you will still normally pay tax in the UK on any income/gains.