How to buy a home in France or Spain now and use it to fund your dream retirement in the sun. Read our expert guide

The latest figures on buy-to-let in Britain confirm it is not the nice little earner it once was. Higher lending rates, running costs and a barrage of tax and regulatory changes since 2016 have caused buy-to-let purchases to plunge to a record low, according to estate agent Hamptons.

Landlords bought one in ten homes sold across Britain during the first half of this year – the lowest share since landlord purchase records began in 2010 and considerably less than the 16 per cent in 2015.

But holiday let investments have also been hit with tax rises and increased regulation, and the number of people buying additional residences fell to a record low proportion of purchases too – fewer than one per cent for the first time in 2024, Hamptons reports.

Tony and Natasha Crawley are loving life as a gite owner in the Dordogne’s Castelnaud-la-Chapelle

Their pool is the perfect shape for doing lengths, but there’s nothing better than lounging on a lilo soaking up the sun

The Crawelys’ shaded terrace overlooking the pool. The ideal place for al fresco dining

Some investors are instead looking abroad to find ways of funding their retirement with a ‘buy-to-holiday-let’ investment.

Driven by lower purchase prices, greater tax benefits and often cheaper upkeep, they are also looking for some flexibility to enjoy their overseas property themselves – without the onerous stipulations of long-term lets.

Buying in the right location and taking the right advice is key. Choosing one of the three most visited countries in the world is a good start if you are looking to bank on tourist rentals – so consider France, Spain and the United States – but steer clear of cities taking increasing measures to curtail the spread of short-term lets.

In terms of tax benefits and its pro-tourism mentality, Florida is hard to beat.

The state’s record-breaking visitor numbers and year-round demand can produce occupancy levels hard to top anywhere else.

Zoe Attwood of realtor Homes of America says: ‘Davenport, Kissimmee and Clermont are hot spots for holiday rentals. Typically a four to five-bedroom home goes for $375,000 to $525,000 [£285,000 to £400,000], within half an hour of Disney. Good properties see a return on investment of eight to 10 per cent.’

As an early retiree with the zest for a new project, Diane Mulligan from County Down, Northern Ireland, fits Ms Attwood’s UK buyer profile and after purchasing a villa in Davenport in 2023, she then bought another a year later to help accommodate repeat guests.

The year-round appeal of the area (North American retirees or ‘snowbirds’ rent for a few weeks during the winter, UK families the rest of the year and even cheerleaders competing in local events) means that Diane is already taking bookings for early 2027.

One of Diane Mulligan’s villas in Florida. North American retirees or ‘snowbirds’ rent for a few weeks during the winter, while UK families take up the rest of the year 

Diane’s four-bed property is south facing with a private pool, and has two master suites, three bathrooms and a games room in the converted garage 

The pool at Diane’s Florida property is covered so you can swim even in the rain 

‘Repeat business is especially great so I realised I should try to replicate my villa with a second one nearby,’ says Diane, a former civil servant who has two sons in their 30s.

‘I used to own buy-to-let properties in the 1980s in Bangor, County Down, and property can be such a great investment compared to savings.

‘The advantage of Florida is that there is so much to do, no language barrier and still great value. Buying costs are only five per cent of the purchase price, though interest rates are high on mortgages [8.5 per cent for foreign buyers].’

Property prices are also rising in Orlando – up four per cent in the past year, according to real estate marketplace Zillow.

Diane’s first four bedroom property has two master suites (favoured by two families) three bathrooms, a games room in the converted garage and a pool. It rents for £150 per night (via dianesvillas.com).

Her second four bedroom villa is on a golf resort, Highlands Reserve, in Davenport.

A ‘spreadsheet queen’, she keeps a keen eye on maintenance costs – these tend to be high in Florida, especially insurance.

Diane pays $2,750 per year for each property and says having a new roof lowers the premiums.

On top of a small mortgage, she pays $120 a month for pool cleaning, $80 for wi-fi, $300 to $400 for electricity and $120 for water per villa.

It’s usual in the US for new build communities to have a Homeowner Association (HOA) which takes care of maintenance on the shared areas. Fees are $500 a year for one villa, $2,000 for the other (these vary, according to inclusions) and a $180 per month management fee (per villa).

To own a holiday rental property like Diane, you don’t need a special visa or permissions and she has an ESTA (Electronic System for Travel Authorisation).

Diane says having an accountant who specialises in cross-border tax makes it very easy. There’s a bilateral agreement between the UK and US that prevents the double taxation of income.

Owners have to register with tax authorities and collect lodging taxes, which are added to guest bills, and file tax returns.

Documenting this, according to Diane is the most onerous aspect of being a landlord.

‘Although you must keep extensive records of the collection of tourist taxes from guests, there’s a lot I can offset [against tax] including home improvements, flights and car hire to visit the villas, so I don’t expect to pay much tax,’ she says.

There’s no state income tax in Florida but landlords are subject to federal income tax and pay an annual property tax based on the value of a property – around 0.89 per cent.

Month-long rentals can be a lot less work for owners and in coastal areas of Florida like the Gulf Coast, are more prevalent, says Pat Tan of Coldwell Banker Realty in Sarasota.

‘Owners can earn top dollar in January through March: some snowbirds rent for three months or more. A two-bedroom, two-bath condo is a great fit for a retired couple, with homes in country club communities being popular.’

Like Diane, Pat sees winter visitors rent the same home year after year. ‘Owners see a lot less wear and tear on these rentals than weekly rentals in Orlando. Absentee owners handle these directly from the UK, negating the need to pay a local management company,’ says Pat.

In common with Florida, in Spain demand for month-long rentals has been growing, but also the appetite for golf, since the pandemic.

Paul Digweed and his wife, Jennifer, bought a property in Murcia in Spain, one of the most affordable coastal regions and with room to grow, it’s in demand

Their two-bedroom apartment on the Mar Menor Golf Resort in Murciam in south-east Spain

Keen to tap into Europe’s more popular golfing destination and the scope for year-round rental income, Paul Digweed and his wife Jennifer chose to buy a two-bedroom apartment on the Mar Menor Golf Resort in Murcia, south-east Spain.

Murcia is one of the most affordable coastal regions and with room to grow, it’s in demand: in the first quarter of 2024, along with Barcelona, it was the only Spanish region not to see a fall in foreign buyers, according to the Spanish land registry, and prices have increased by four per cent in the year to now.

‘We are buying it to fund our future retirement in Spain,’ says Paul, 52, a project manager of a construction company in Reading.

‘I’m a golfer and knew that we’d see strong demand outside of the summer, when we will rent to families.’ The resort also has sports facilities and is eight minutes from the beach.

With lads’ golfing trips in mind, they chose a two-bedroom, two-bath apartment with a sofa bed in the lounge – which cost €169,000 in June and is renting out at €500 to €950 per week.

‘I only need to rent it out for 40 per cent of the year to cover all my costs,’ adds Paul, referring to the €120 per month community fees plus bills and annual council tax of around €400.

It’s rented out through the UK estate agency Your Dream Home, which helped them get the touristic licence required for holiday lets. There is no fee for this licence in Murcia but there could be elsewhere in Spain.

Mark Rawlings of Your Dream Home says some owners are getting more than 70 per cent occupancy rates, from a mix of short-term stays in the peak months and longer winter rentals. ‘There’s a lot of demand now for one or two-month rentals – from Northern European retirees, remote workers but also people house-hunting for their own investment,’ he says.

They are encouraged by lower mortgage rates: this week the European Central Bank dropped the interest rate to 3.5 per cent.

Since Brexit, the tax on rental income is 24 per cent and the agency charges 15 per cent of the rental amount, plus laundry and cleaning costs.

For many decades, France was the favourite place for Britons to tap into the country’s lucrative tourism market to boost their retirement pot, often a gite or two in the Dordogne.

Although the number of second homes owned by Britons has fallen from around 90,000 in 2008 to around 60,000, many owners look to rent them out to cover inflation-boosted running costs.

Yet more change is afoot. Although delayed by the dissolution of the French parliament in June, France is introducing more regulation for owners of

furnished holiday lets. It is likely more paperwork for owners will lead to them using a chartered accountant, says Charles Cramailh of Leggett Property Management.

‘These changes might also include your capital gains tax burden when you sell,’ he adds.

Yet the régime réel tax system, for owners with greater than €15,000 per year turnover, means that you can deduct a raft of expenses from renovation costs and upkeep bills to trips to the property to assist guests.

This might include wine-tasting tours and trips to the local chateau, according to Tony Crawley, who with his wife Natasha is loving life as a gite owner in the Dordogne’s Castelnaud-la-Chapelle.

‘We’ve just finished our first summer and after being fully booked and getting glowing reviews I can say it’s the best thing we ever did,’ says Tony, 58, a former company director who adds that whilst it’s not a year-round destination, there is a market throughout the year with walkers and cyclists.

The couple from Essex chose a property in the Dordogne’s ‘golden triangle’ of tourist hot spots so that they could bank on the lucrative summer season with a large and photogenic swimming pool area and modern comforts within a traditional stone property.

After converting a standalone two-bedroom gite first (renting from €1,500 a week) they are renovating the main house to also offer a three-bedroom and a five-bedroom gite, hopefully making €6,000 to €8,000 a week when they are fully established and can sleep 14 guests (latrilogiedor.com).

‘I took a calculated risk and sold a UK commercial property in a SIPP (self-invested personal pension) and decided that I’d get better income from this than a pension,’ adds Tony.

He says that the area was key to their decision, being less seasonal than some other parts of rural France, with lots to do within just 20 minutes. ‘You get so much more for your money than in buy-to-let in the UK,’ he says.

Their large property cost less than €600,000 and they invested in high-spec renovation and have worked hard towards earning a four or five-star classification (they will be inspected soon) that will give them a tax deduction on their income.

This could potentially mean a drop from 22 per cent to as little as 6.5 per cent, reckons Natasha, who says the French government is incentivising owners to upgrade their rental properties. Meanwhile, to save costs Tony does gardening and pool cleaning.

Tony says it’s key to take expert advice ahead of buying. ‘Be aware how holiday rentals are changing and how people want higher quality service and shorter breaks, with more flexibility than booking Saturday to Saturday,’ he says.