Buying property overseas is becoming increasingly popular, aided by the strength of sterling and buoyant property prices in the United Kingdom. You can still buy a modest chateau in parts of France for the price of a cottage in the Home Counties, but don't forget that conveyancing, and the cost it entails, does not end at Dover. "Last year, 150,000 British people bought houses in France or Spain, that's the equivalent of the population of Blackpool," claimed Denise Ballard, managing director of Legal Marketing Services (LMS), the UK's largest independent network of solicitors. LMS, which includes 500 solicitors across Britain, is launching a product designed to reduce the legal bills for buying foreign property. Before settling down to browse through the marketing brochures of agents selling properties in Umbria and the Dordogne, potential investors should consider a number of factors. The first is how to fund a purchase, from cash, possibly drawing equity from a UK property, or via a mortgage in local currency, secured on the property. The second is the various investment risk factors - should assets be matched against liabilities in the same currency? Only after considering these and related questions should potential investors consider how to effect a purchase. David Wells, Lille based managing director of Abbey National France, reports demand for French property "up 80pc on last year". He explained: "The value-for money factor is behind it. lf you look at comparable properties in the Dordogne and, say, Hampshire, you´ll find the French property costs a third or a quarter of the price. "Then there's the lifestyle to consider and the French lifestyle is very attractive." Abbey National France will arrange for purchase using equity release remortgaging a UK property and applying the capital to an outright purchase of a foreign property or using a, euro-denominated loan. "The plus point of using a euro-denominated mortgage is that the value of the asset should rise or fall in line with the loan. "The downside is, if your asset rises in value because the euro appreciates against sterling, your interest payments on a euro-denominated loan will also become more expensive if you are funding them in sterling." Simon Tyler, managing director of Mayfair-based specialist mortgage brokers Chase De Vere Mortgage Management, has noted healthy demand for remortgaging to finance foreign property purchase. He said: "There's always interest in financing overseas purchases through mortgaging UK properties; more so since the erosion of the differential between UK and euroland interest rates. "But a spokesman for the Council of Mortgage Lenders underlines the point that affordability is something that could change in future. Interest rates may be broadly in line now, but where will they be in two years' time? "There is always some uncertainty when purchasing a property abroad, the currency of the loan is certainly one of them. Investors need to be aware of and take professional advice on the possible currency risks." Mr Wells of Abbey National makes the point that if affordability is a key issue, purchasers should think carefully before proceeding: "We are catering for wealthier, often slightly older clients in their forties or fifties. These are often luxury purchases that are relatively easily affordable." However, the market is expanding to a younger class of purchaser, according to Ms Ballard; she said recent Council of Mortgage Lenders' figures show that half the Britons buying property in Continental Europe are aged between 30 and 50. She claims that legal costs in Spain can be reduced from 1-5pc of the value of a property to 0-5pc: "The local lawyers have agreed to do this because of the volume of business we will be able to put their way," she explained. The LMS offering in France operates on a fixed scale scheme, between £650 and £1,150. Ms Ballard says this represents a significant saving in most cases. Both French and Spanish offerings provide documentation in English. "All the investor has to do is make one call. We will take care of the rest of the process. The progress of the transaction can also be monitored, 24 hours a day, on a dedicated website. "However, Mr Wells reckons that investors in French property should expect to pay 12pc on top of the price of a French property in taxes, notary lees and legal bills. He adds: "Most of these costs are more or less regulated by the state." LMS plans to go into the Italian market next. Ms Ballard expects "ferocious opposition" from the local lawyers, but she seems confident that market forces will be on her side. Simon Tyler of mortgage brokers Chase de Vere said: "For people who have weighed up the pros and cons of making a foreign property purchase, the LMS scheme sounds interesting. "lf it reduces hassle, provides documentation in English and reduces costs, then it is well worth some serious consideration."

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