In a recent poll, over 9 million Americans have indicated that they plan to retire to Florida. This desire is being echoed in the UK, with increasing numbers of British buyers living in the Sunshine State for all or at least part of the year. Consequently, the demand for property looks set to remain high for the foreseeable future.
The main difficulty for the British buyer hoping to retire to Florida concerns visa requirements. There is no such thing as a retirement visa that allows permanent residence in the USA. Unless you have American relatives or wish to purchase a suitable business, it is only possible for retirees to spend six months out of every 12 in Florida.
Having said that, many who follow this pattern say they have an idyllic lifestyle, spending the grey and drizzly British winter months in Florida, and then returning to the lush green fields of England as the Floridian summer begins to get hot and humid. The “snowbird” existence offers an active outdoor lifestyle with blue sky’s, romantic sunsets and day long sunshine, which all sounds considerably more fun and healthy than the virtual hibernation that occurs in Britain during the winter months.
Favoured activities extend well beyond the traditional destination of Orlando and its world famous theme parks. A firm favourite with the retiree market are the award-winning beaches of the Gulf Coast, where turtles come ashore to lay their eggs and where morning and evening walks are the perfect way to start and end your day. Florida also offers wonderful national parks, exotic wildlife, manicured golf courses and fishing in spots where your catch is guaranteed and can be barbecued for dinner in the evenings.
Then, of course, there is the social side. How about Christmas lunch at a country club or one of the many resort hotel buffets? The festive feeling in America starts from Halloween and continues through Thanksgiving right into the New Year. Instead of braving the shopping crowds in Britain on a dark night, you could be watching one of the many illuminated boat displays along the Florida Coast, or dancing and dining under the stars.
One of the more down-to-earth reasons to spend your retirement in Florida is that the property market is very hot, with prices rising from 22 per cent a year in Orlando to 40 per cent a year in Miami, Sarasota and Naples. Although Florida is rapidly becoming one of the most sought after overseas property destinations, there are still certain pitfalls you need to be aware of. These include practical issues such as location, finances and insurance, although a more fundamental issue is understanding Florida’s housing market, which operates rather differently to that in the UK. There are lots of rules and procedures which you need to comply with, although the idea of getting your dream home at the end of it is a very good incentive.
Where to retire?
Potential retirees who have visited a number of locations in Florida over the years have an advantage. It is vital to base your final choice of destination on tangible evidence and experience of the area. Lots of British buyers make the mistake of choosing their property based only on pictures of developments they have been shown, which is a massive gamble and is not recommended.
Be careful about letting previous Floridian holiday experiences shape your ideas too much however.What may have been a fantastic one wee holiday destination could drive you mad if you actually had to live there for six months of the year.
Trips to theme parks or even walks on the same tiny stretch of beach can become tedious after a while. Look for places with theatres, museums, art centre’s and good sporting facilities. Many Floridian cities offer these such as Sarasota, Naples or Fort Lauderdale. Beware the traditionally favoured areas such as Kissimmee and Miami don’t necessarily offer the retiree what they seek.
Most people planning their retirement have financial constraints to consider, which tend to resolve around 2 themes: the capital cost of buying a property and the cost of living.
When thinking about the capital costs, you need you need to consider the investment performance of the area. Some areas are appreciating both more consistently and more quickly than others, and can prove to be a potential pension fund in later years. Other properties in properly zoned areas are suitable if you want to rent your home out when it is not in use.
The Gulf Coast (around Sarasota, Naples and Clearwater) and the Atlantic Coast (around Miami and West Palm Beach) are favourite areas due to the average winter temperatures hitting the 70s, the laid back lifestyle, some of the better beaches and arrange of cultural facilities. It’s not all Mickey and Donald: there are excellent museums, art galleries and theatres which make for an idyllic winter lifestyle. A high percentage of British retirees are attracted to golf course developments, where a 3 bedroom house with a pool starts from around £200,000. For a slice of tropical heaven, this price compares very favourably with a second home in any other location in the world.
Esti Baughen, a British realtor who works with British clients buying property in the Sarasota area, has noticed that there has been a boom in British buyers in recent years, attracted by the combination of idyllic waterfronts and superb cultural facilities. Sally Masters, a Naples-based realtor, has seen a growing number of British buyers of condominium developments. Paula Mclaren, based in Orlando, reports extensive British interest in the unique developments in Reunion and Celebration.
An area that remains popular for the holiday-let market is Orlando, due to its collection of theme parks and flexible rental zoning in certain areas. Although rental returns have generally been satisfactory here in the last few years, there have been instances of over-optimistic claims and dubious guarantees made by property management firms. Some failed to mention the dangers posed by a concentration of short-term properties located in a particular area, leading to too many properties chasing too few renters.
Pensions for those wishing to Retire in Florida
On more practical issues, those who are hoping to retire to Florida will be pleased to know that their UK state pension remains payable after moving to the USA. The particularly good news is that, due to an agreement between the UK and the USA, the annual increase in the UK state pension is still paid. This is not the case in certain other countries, as has recently been publicised.
Where pensions remain taxable in the UK, for example for ex-UK government employees, the double taxation treaty ensures that in the vast majority of cases you are only taxed once. In other words, if you continue to pay UK tax, this can be credited against your USA tax demand.
Visas and permits
UK citizens do not currently require a visa to enter the USA and can visit under the temporary visa waiver scheme. However, they must have a machine readable passport and remain for a maximum period of 90 days. Anyone who wants to stay longer than 90 days must apply for a non immigrant visa. There is no such thing as a retirement visa for living in the US, and at the time of writing there are no plans to introduce one.
Getting a B-2 visa, which allows a stay period of 6 months, is usually straight forward for a retiree owning a home in Florida, although it should not be misused or regarded as being merely a formality. You are likely to be asked to prove that you are still resident in the UK and have sufficient funds for your stay in the US.
In order to live permanently in Florida you will require an immigrant (permanent residence) visa, which can be very difficult to obtain. Proof of owning a home is not in itself a qualification for long term residence. If you do not quality to live in America by birthright or relationship, it can be very hard to obtain a permanent residence permit.
The process of finding and applying for the correct visa is both challenging and time consuming but hugely important to complete if you want to stay on the right side of the American Immigration Department. It is vital to get professional advice as to which category of visa you should be applying for. There are many companies varying in size offering visa services, although some are tied in with employment or business opportunities. Costs for their services can differ enormously and do not always relate to the scope of the service. A number of companies offer a “no visa no charge” service, but always find out what the final cost is going to be.
Wills and inheritance tax
It is critical to make a will if you own any assets, including owning a property in Florida. The Florida courts are bound by State Law to try and follow valid foreign wills, and the double taxation agreement between the UK and USA usually ensures your estate will not be liable for taxation twice. However, the USA will apply inheritance rules which differ slightly from English ones. For example, without a will your Florida estate would not be apportioned between relatives in the same way as it would in the UK. You would be well advised to seek out the advice of a professional who has knowledge of UK and USA law.
Healthcare and health insurance
There is no national health service in the US, so individuals are responsible for their own expenses. Getting health insurance is vital or you could end up bankrupt. There are a number of different expat policies available if you intend to reside permanently in the US. If you have a Social Security number, you could use a mainstream US provider such as Blue Cross Blue Shield. If you are only staying in the USA for part of the year you will need to arrange an insurance policy in the UK.This requires quite a lot of shopping around as coverage for several months at a time is hard to track down.