Be smart when buying abroad and use a currency exchange broker to make big savings on your transactions

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The National Fraud Intelligence Bureau is investigating the significant rise in cyber crime during house moves. They have reported an 85% increase in the number of crimes by this method. Common complaints were in relation to buying into new build developments off plan, alongside investments into individual rooms in a hotel or those that demand a large deposit upfront. So make sure you do your homework first, before you jump in with both feet.

The SRA (Solicitors Regulation Authority) in UK has reported that between January and March 2017, in the UK, £11 million has been scammed out of people. It’s not something that is covered by the banks either. One couple, recently lost out to one such fraud and are still in the process of trying to recover a proportion of their deposit that they paid incorrectly to a fraudster.

They were hoping to complete on a house purchase at the end of the year and were part way through their transaction. Receiving an email requesting payment of funds to be sent to their solicitor, well in advance of exchange of contracts, they took the details of the bank transfer to their local Barclays branch. The request was to send funds to a receiving account at the Royal Bank of Scotland (RBS). The payment details were different to a previous payment request but no-one picked up on this. It wasn’t until they checked in with their solicitor a few weeks later that they realised they had been scammed into sending money to the wrong place. By the time they raised it with both Barclays and RBS, they were only able to recover part of their funds.

It is not clear where the interception happened, whether it was the couples email that had been hacked, or their solicitors. As such banks do not have to reimburse you if you have fallen victim to a bank transfer scam, the onus lies on you to confirm the payment details first. The Payment Systems Regulator is currently proposing a scheme, that would see some refunds being granted in cases under certain conditions, but this still does not mean that all cases will be covered. As it is for the UK only, it will not cover you if you are buying a property abroad.

Be cautious of off-plan investments and check payment requests directly

The advice is similarly to be smart when buying property abroad, with cyber crime on the up prospective property buyers need to be vigilant. In particular, be wary of emails that are giving banking instructions or payments, especially if you don’t recognise the contact or have not dealt with them before. Wait for an official letter or confirm with your solicitor that the details are genuine and if anything looks odd. So much of the process is outwith your control when you are transacting to buy a property abroad, which may also include a language barrier.

There are reports of sales of properties and off-plan investments abroad that are also catching victims out. Don’t be fooled by the fact that someone has used a genuine solicitors company to facilitate the sale. It does not mean that the sale is genuine and in recent cases, solicitor firms have been found guilty of not working hard enough to ensure that a property sale/purchase was free from the risk of fraud. Often because they are being asked to carry out the transaction so quickly that they are overlooking some red flag warnings.

Enlist the help of a currency transfer provider

When you are looking to buy into a property abroad, savvy investors will make their payments through currency providers. Recently, Beyond Borders a Japanese real estate company, that helps its clients to invest in overseas property has teamed up with OFX, in a bid to make buying a house abroad more streamlined. The company runs a real estate property portal called Sekai Property, which promotes high yielding investments across eight countries, including sending money to the USA. OFX is a foreign currency payments provider does not charge fees associated with transferring funds into another currency. The rate that it charges to exchange money into US dollars, for example, is significantly better than the rate that is charged by the banks.

 

One of the other pitfalls when choosing to a buy a property abroad is timing and the risk of exchange rate fluctuations. If you have any experience of the house buying process then you will know that the process is out of your control and that there can be many unexpected holdups along the way. This can prove costly if exchange rates, being as volatile as they can be, start to move out of your favour. Recently Sterling has appreciated due to the Budget and lately on Brexit negotiations news. By using a currency payments provider, you can effectively lock in an exchange rate, with some offering the ability to fix for up to two years, and others that provide risk products to protect against fluctuations such as limit orders or stop loss contracts.

These currency providers can save you a significant amount of money when transferring money overseas as they charge a competitive rate to the banks (often less than 1% over the interbank rate, where banks charge +4%) and many don’t have any fees. If you are interested in making cost effective money transfers when you are buying your home abroad, use our international currency provider quote tool which contains details of the most cost-effective money transfer companies globally to see how much you could save.

 

 


Rachel Doyle
Rachel Doyle
Senior Content Specialist
Rachel has over 10 years’ communications and writing experience, having started her career in financial services where she spent nine years working in various roles. She started out in fund… Read more

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