Buying Property Abroad: Managing the Months Between Offer and Completion
Buying a property overseas involves a long list of decisions — location, lawyer, structure, financing, tax.
The exchange rate rarely makes the list. It should, because on a purchase of any size it's frequently the largest single variable between the price agreed and the amount that actually leaves your account.
The exposure, stated simply
You agree to buy a property in Spain for €800,000. Completion is in four months.
At 1.17, that's roughly £683,800.
If sterling weakens to 1.10 by completion, the same property costs about £727,300 — nearly £44,000 more. You haven't renegotiated anything. The property is identical. The price in euros never changed.
If sterling strengthens to 1.22, you save around £28,000.
Neither outcome is under your control, and both are entirely plausible over four months. Currency pairs routinely move 5% or more in that timeframe.
For most people, this single unmanaged variable dwarfs every fee, charge and cost they carefully compared during the buying process.
The three phases where currency matters
1. Between offer and exchange. The purchase isn't legally binding. It could fall through on survey, on finance, on the seller changing their mind. You have exposure, but not certainty.
2. Between exchange and completion. The purchase is committed. You are definitely paying that amount on approximately that date.
3. Ongoing. Maintenance, service charges, local taxes, mortgage payments if you've financed locally, and rental income if you're letting the property. These are recurring exposures for as long as you own it.
Each phase calls for a different approach, and that distinction is the whole of the practical advice.
Phase 1: probable but uncertain
If the purchase might not complete, committing to a forward contract creates a risk of its own — you could end up holding €800,000 you don't need and unwinding it in a market that's moved.
This is the situation vanilla options exist for. You pay a premium for the right, not the obligation, to buy euros at a set rate on a set date. If the purchase collapses, you walk away and the premium is the only cost. If it completes and the rate moved against you, you're protected at the rate you planned around.
For a purchase where a 5% move represents £40,000, an option premium is usually a small fraction of the risk it removes.
A limit order is the lighter-touch alternative: you set a target rate, and if the market reaches it, the trade executes automatically. No obligation, no premium, but no protection if the market moves the other way.
Phase 2: committed
Once you've exchanged contracts, the transaction is certain. A forward contract fixes the rate for the completion date, and the question becomes settled — you know exactly what the property costs in sterling.
Many providers offer flexible forwards that allow drawdown across a window, which matters when completion dates move, as they routinely do in overseas conveyancing. Ask about flexibility on the date before you book anything, because a rigid forward and a delayed completion is an avoidable irritation.
Phase 3: ongoing ownership
If you own the property for a decade, you'll make hundreds of small currency conversions — and small transfers are typically priced far worse than large ones.
Two things help:
A currency account to hold euros, funded in larger, better-priced conversions and drawn down for local costs.
Regular payment plans for predictable outgoings like mortgage payments, priced as a series rather than as isolated small transfers.
If you're letting the property, rental income arriving in euros can fund euro costs directly. Converting rental income to sterling and then converting sterling back to euros for the service charge is a round trip that costs you twice.
Practical points that catch people out
Deposits are exposure too. A 10% deposit paid at reservation is a real transfer at a real rate, often months before anyone thinks about the main payment.
Purchase costs are on top. Notary, transfer tax, legal fees and registration can add 8–15% depending on jurisdiction — and they're payable in local currency as well.
Your lawyer's client account may not be the cheapest route. Solicitors and notaries frequently convert through their own banking arrangements at rates that were never negotiated on your behalf. Ask.
Timing is not a strategy. Waiting for a better rate is a position, and an unhedged one. Some people are comfortable with that; most who say they're comfortable with it haven't quantified what a 6% adverse move looks like in pounds.
The question to ask yourself
Before agreeing the purchase, work out what a 5% adverse move costs you in sterling on this specific property.
If that number is one you'd be uncomfortable explaining to your partner over dinner, you have a currency decision to make — not a currency opinion to hold.