He said it could be easily avoided
Brits buying property overseas are repeatedly making the same mistake, an expert has warned, whether they’re buying a small bolthole in Spain or a flashy rental flat in Florida. It’s a mistake, the financial expert said, that is costing people thousands, or even tens of thousands of pounds on just the one simple transaction – and the worst bit is that it’s easily avoided.
He said the mistake was proving especially expensive at present, as currency markets were more volatile than usual due to the war in the Middle East. He also said more Brits than ever are falling foul of it, as UK landlords, fed up with the fiscal onslaught, were increasingly looking to buy overseas properties as holiday rentals.
“I’ve been helping people with their currency transfers for years and I’ve not been this busy for a long time,” said Tony Redondo, founder at Newquay-based Cosmos Currency Exchange. “It’s fairly well-known that many UK landlords are exiting the sector en masse, as the numbers just don’t stack up any more and the legislation being introduced by the Renters Reform Act is piling on even more financial and administrative pressure.
“But what’s less well-known is the sheer number of landlords who are selling up and then reinvesting their cash in rental properties overseas, where they feel they can get better returns. And while Spain, France and Portugal always prove popular, a growing number of Brits are being even bolder and looking to the US, with Florida becoming a hotspot for UK investors over the past year or two.”
Tony said the mistake people make was failing to secure a competitive rate well ahead of their purchase, something known as ‘hedging’, as if the currency markets move against them a few days before the transaction is due to take place, they can suddenly end up paying thousands of pounds more.
He said: “By way of example, on January 29, the Pound to US Dollar exchange rate rose to its highest level since September 2021.
“A client of ours was looking to purchase two property rental units in Florida at the time to add to his portfolio and we suggested that, with the Pound so strong, he should consider locking into that exchange rate as it may not last for long.
“With the use of a flexible forward contract, I secured my client the rate with a small upfront deposit that would be refunded when the transaction took place.
“The transaction happened at the beginning of April and, as the Dollar has been very strong of late, saved my client a massive £63,500 had he purchased Dollars then.
“Fail to prepare and, in the forex world, the message is very simple: prepare to fail. Sadly, too many people self-serve through their banks when exchanging currency and end up paying through the nose.”
