How many of us have been tempted, coming back season after season to our favourite resorts, to purchase our own little piece of skiing heaven? Having your own ski property not only gives you the luxury of your very own bolthole by the slopes, but can also be a sound investment, with prices remaining relatively stable across many European resorts. However, the purchase does require careful financial planning on your side. So, if you’re dreaming of that Alpine chalet, find out the costs of buying a ski home – including the hidden pitfalls, and how to protect against them.
What are the main costs of buying a ski home?
Of course, the obvious major cost is that of the house itself. In exclusive resorts like St-Moritz or Courchevel, you’re looking at above €31,000 per m2. The more affordable end of the market, in places like Austria’s Bad Gastein, hovers at around €6,000 per m2. Remember that this cost can be split into a number of instalments: you may well have a reservation deposit, and then a full deposit, and then mortgage payments.
In addition, you have the buyer’s costs, which will vary from country to country. In most European countries, one of the important costs of buying a ski home – or any property – is the notary’s fees. In France, this varies for different bands of the total price, like tax, from 3.945% to 0.814% of the property price. Likewise, in Spain, it goes from around 0.4% to 0.1%. In Italy and Austria, you’re looking at around 2-3% and around 2-5% in Switzerland.
Take into account to your property taxes. You may need to pay stamp duty, VAT and other associated taxes in the upcoming year, like the taxe foncière and tax d’habitation in France.
Are there any hidden costs of buying a ski home to be aware of?
In a word, yes. But the good news is that they are entirely controllable.
If you’re buying a ski home from abroad, then you may well be purchasing in a different currency to that of your home country. This means that your savings are completely exposed to the vagaries of the international exchange markets. Exchange rates constantly change, every day, hour and minute, and anything as small as a thumbs-up from a politician heading into a meeting can cause a spike or a drop.
Imagine, for example, that you’re a British buyer purchasing a chalet in Chamonix. That €900,000 property, to you, isn’t actually worth €900,000 – it has a constantly changing value in pounds, and you have absolutely no way of predicting where it’s going to go. Take January 2019, for instance. If you looked at that price in sterling on 11th and the 26th January – just over two weeks – there would have been a £30,000 difference.
These are big risks to be up against, but you can completely control them.
How can you control the risks of the foreign exchange market?
The problem might be complex, but the solution is simple.
A bank may just send your money with the rate on the day – no matter what harm that does to your funds – but a specialist currency broker, like Smart Currency Exchange, will help safeguard your capital.
A ‘forward contract’ is a popular option among overseas buyers of ski homes. It simply means that, on payment of a deposit, you secure a fixed exchange rate for up to twelve months. Even if Brexit, Trump, the Italian budget crisis or the hundreds of other factors pushing and pulling at the markets cause the rates to crash, you won’t be affected. You’ll know exactly how much you’ll pay.
Learn more about controlling the risks of changing exchange rates in the free & Property Buyer’s Guide to Currency.
This goes for regular payments, too. If you’re buying with a mortgage, using a forward contract means that you can budget for the same amount in your own currency every month. Equally, if you’re buying off-plan, you’ll pay in stages – and fixing the exchange rate means you can realistically plan there, too.
Just a short amount of time spent planning for the costs of buying a ski home means your dream of the perfect home by the slopes is well within reach for years of enjoyment!
For anyone buying a ski home, like this beautiful eight-bedroom property, planning currency transfers should be done as early as possible.
If you’re buying off-plan and will be making several staged payments, protecting your money is crucial.
Protecting your budget will make purchasing that perfect ski home, like this apartment in Bolzano, safe and hassle-free.