By Roshan L. D’Silva · Smart Buy
The purchase price is the number everyone models. The annual cost is the number that decides whether you still want the house in year seven, and it is the one almost nobody writes down before buying.
This article is the list. Go through it for the specific property you are considering, in the market you are considering, and get local figures. Anyone who gives you a single global percentage is guessing — the real number moves enormously with market, property type, whether there is a pool, whether there is a garden, and whether anyone is paid to hold the keys.
The charges that arrive whether or not you visit
- Local property tax or rates. Annual, and in some countries higher for non-residents or second homes than for primary residences. Ask specifically about the second-home rate.
- Community or service charges for an apartment or managed development. Get the figure for the last five years, not this year — the trend tells you more than the number.
- Insurance. Buildings and contents, and note that most policies restrict cover on a property left unoccupied beyond a stated period. If you let it, you need a policy that permits letting; a standard second-home policy usually does not.
- Utilities standing charges. Electricity, water, gas and internet mostly cost something even at zero consumption.
- Waste, sewerage and any local tourist or licensing fee.
The maintenance that does not pause when you leave
This is the category buyers underestimate, because at home these are jobs you do on a Saturday. At three thousand miles they are invoices.
- Pool. Weekly servicing all year in warm climates, plus chemicals, pump and filter repairs, and periodic resurfacing.
- Garden. Grows fastest in the season you are least likely to be there. A large garden is the most consistently underestimated cost of holiday ownership.
- Air conditioning servicing, annually, or it fails in the first heatwave.
- Boiler, water heater and pumps — annual service, and in many places a legal safety certificate if you let.
- Pest and damp control. Termites, ants, rodents and mould all prefer an empty house.
- Gutters, roof and exterior paint — not annual, but predictable. A coastal property repaints far more often than an inland one.
Somebody has to be there
Even if you never let the house, an empty property needs a person: airing it, checking after a storm, letting the plumber in, noticing the leak in week three rather than week twelve.
That is either a caretaker, a neighbour you compensate properly, or a management company. It is a real annual cost and it is the one most likely to be left out of a spreadsheet. Our guide to hiring a caretaker in Spain and Portugal covers the employment side, which is more regulated than most owners expect.
The sinking fund nobody sets up
Roofs, boilers, pool pumps, air conditioning units and white goods all fail, on a schedule you cannot control but can predict in aggregate.
Set aside a fixed sum every year in a separate account from the day you buy. Owners who do this treat a failed boiler as an event. Owners who do not treat it as a crisis, and a crisis at distance is expensive — you accept the first quote because you are not there to get a second.
If you let it, add these
- Platform commission, or agency commission, or both
- Changeover cleaning and laundry — the largest variable cost by far
- Replacement of linen, towels, crockery and glassware, continuously
- Licence or registration fees, and any tourist tax you must collect and remit
- Income tax in the country where the property sits, which is almost always due there regardless of where you are resident
- An accountant in that country, because the filing is rarely something you want to attempt yourself
How to get a real number
Ask the seller for twelve months of actual bills. Ask a local management company what they charge to run a property like this, all in. Ask two owners nearby what theirs costs. Then add a margin, because every list of this kind is missing something.
The test from the first article in this series applies here too: not “can I afford this?”, but “if my income fell by a third, would this house become a problem I have to solve in a hurry?”
Nothing here is tax or financial advice, and figures vary far too much between markets for anything in this article to substitute for a local quote.