Find your dream retirement destination in the Mediterranean

Back in the May issue of Moneywise Magazine, we reported on some of the many pitfalls of retiring abroad - from healthcare problems to financial difficulties and property scams.

But with the right advice and some careful planning, the dream doesn't have to end in disaster. So here's our lowdown on some glorious sun-soaked destinations.


The small but perfectly formed south European island of Malta is one of the most popular destinations for UK retirees. "It's safe, secure, and very British," says David Creffield, author of The International Retirement Directory. "There's a very low crime rate."

And with a subtropical Mediterranean climate, featuring mild winters and hot summers, the weather is a big draw - as is the language."Almost everyone speaks English," says Derek Wells, founder of and a representative for Maltese estate agents. 

Property prices on the island vary considerably. A simple two-bedroom apartment in the south costs around €90,000 (£80,400), while a villa in the capital city Valletta could set you back €3 million (£2.6 million).

The property market has struggled over the past two years. According to Global Property Guide, Malta's overall house price index dropped by 1.02% over the year to the third quarter of 2010.

However, prices are starting to stabilise and Wells says the market has not seen the sort of peaks and troughs associated with the UK property market.

The Maltese tax system is also kinder to retirees than that of the UK, imposing a flat tax rate on income of 15%, and there is no capital gains tax or inheritance tax.

Of course, one major consideration for those looking to retire abroad is healthcare. As with all EU countries, Malta has an agreement with the UK that any retirees who reside there will have access to its healthcare system, one which Wells says is very advanced.

"In the past couple of years, a state-of-the-art hospital has been built and the World Health Organisation has ranked Malta's health service fifth in the world."

One-way flights from the UK typically cost around £100 in peak season (travelling with budget airlines and checking in one item of luggage), and around £50 off-peak.

Tax on pensions income: 15% flat rate
IHT: No.


Cyprus is another favourite for British retirees, not least because purchasing property in the country is impressively straightforward. The entire process can take just 24 hours in some cases, says David Copeland, director of Cyprus investment specialists 1 Cyprus Property.

But it pays to get specialist advice. Some buyers have lost out by failing to realise they haven't got the title deeds or that there's an outstanding mortgage on the land. "Make sure you use a bar-registered property lawyer," Copeland adds.

Property prices in Cyprus have fallen by as much as 30% since the credit crunch, according to the Global Property Guide. But Copeland says the market is improving. Apartments cost around €120,000 to €150,000 (£105,000 to £132,000), depending on area, while houses range from €350,000 to €650,000 (£308,000 to £570,000).

However, it's the tax breaks afforded to residents that are a real draw for UK pensioners, with tax of just 5% on pension income. Living costs can be expensive, though, says Copeland. "Go for local produce where possible."

With the same reciprocal agreement as Malta, the healthcare system is slightly better than that of the UK and is accessible for British retirees.

One-way flights from the UK cost on average between £100 and £120 in peak time (using budget airlines and checking in one item of luggage), and between £50 and £55 off-peak.

Tax on pensions income: 5%


Gibraltar has become more desirable as a retirement destination for Brits as transport links between Gibraltar and the UK have improved. Direct flights now take off from London, Manchester and Liverpool, taking around two and a half hours.

"Once you arrive at the airport in Gibraltar you're only 10 minutes away from everything because the place is so small," says Siobhean Gribbin, a spokesperson for estate agent KS Sotheby's in Gibraltar.

The biggest attraction of Gibraltar, adds Gribbin, is the fact it is so similar to the UK. "Everyone speaks English, all the favourites from the high street are here, and even the policemen wear the traditional British uniform," she says.

Living costs such as energy bills are higher, but with a warmer climate - the average temperature is 29°C in August and 10°C in January - there's little need for heating.

Gribbin says the healthcare system is also similar to the UK in quality, and UK retirees have full access to it.

The size of the territory, coupled with the fact that it's an industry hub, specifically for the online gaming industry, means there's always demand for housing so both the buy-to-let market and the residential property market are strong.

Prices vary but are generally quite expensive: €140,000 (£123,000) could buy you a reasonably sized two-bedroom apartment, while larger villas can cost up to €4 million (£3.5 million).

But pensioners aged over 60 benefit greatly in Gibraltar as there's no tax on pension income. There's also no capital gains tax or inheritance tax (IHT) to worry about (but it's worth checking with the UK Pensions Service, as there has recently been a pensions dispute between Gibraltar and the UK).

One-way flights from the UK cost on average between £70 and £100 in peak time (using budget airlines and checking in one item of luggage), and between £35 and £40 off-peak.

Tax on pensions income: None


Year-round sunshine and a good healthcare system continue to entice retiring Britons to Spanish shores. Little wonder then that Spain topped Standard Life's poll of retirement hotspots earlier this year.

Pensions in the country are taxed at a flat rate of 15%. Be aware, though, that Spain does have IHT and it can cause problems as assets do not pass automatically to a spouse tax-free. Widowed partners may have to pay up to 34% in IHT on the death of their spouse.

The Spanish property market suffered heavily in the global recession and in some areas prices continue to fall. According to the Global Property Guide, average house prices fell 4.46% during the year to February 2011. They were down by 5.2% in large cities and by 6.7% on the Mediterranean coast.

However, prices along the coast are still the most costly. Rhona Hutchinson, managing director of relocation specialists Retirement Spain, says prices for an apartment start at €60,000 (£50,000); properties inland are cheaper.

"It's fair to say only the properties being offered for sale sometimes 50% cheaper than they were 10 years ago are actually selling," adds Terry Wood, director of Relocate to Spain.

Meanwhile, the rental market is busier than ever and rents are lower than they were 10 years ago in saturated areas. "Now is a very good time to purchase a bargain," he says.

One-way flights from the UK cost on average between £60 and £75 in peak season (using budget airlines and checking in one item of luggage), and between £40 and £50 off-peak.

Tax on pensions income: 15% flat rate.
IHT: Yes

Your Comments

I have been involved with groups who are campaigning about so called illegal properties in Spain. The situation is complex, but usually involves local administrations turning a blind eye to properties built in areas where there is no authorisation for residences. In many cases, although the local council has happily accepted taxes paid on a new build, often for a numner of years, the owner is subsequently told that their home is not legal, and threatened with an order for demolition. The luckier ones get hefty fines. There are moves to attempt to 'regularise' many of these properties now (whether or not that is the same as legalising them I am not sure) but some that are built on protedted land, it seems, will still have to go.

I would advise anyone who has a very limited budget to beware, as you will need a nest egg set aside to cover unexpected costs, which seem to be far more prevelant than in the UK. Also, do your homework, and get a relaible UK lawyer involved in the process. Do not use a local Spanish lawyer who may have a hidden interest in selling the land or property involved, but try to get legal representation outside the area you are buying (the British Consul has a list of English speaking lawyers). Overall, be careful, if something doesn't tie up, or seems odd, it probably is. Don't be fooled by reassurances that 'this is just the way it's done locally, regardless of what the official legal position is.'

I am 57 yrs old & 4 yrs ago a RTA left me permanently in a wheelchair. Although marrried & am fairly independent, but find the warmer climates much better for my health & general day to day living.
We regularaly go to the Canaries, specifically Fuert & Lanz, whick have the bonus of all year round sunshine despite the longer air journey.
What if any are the benefits for disabled wheelchair users when looking to retire to a warmer climate. I am hopefully due to receive a compensation payment, which should enable me to buy a suitable property.