Category: Real Property in Britain

The real estate market in London will keep on rising…?

The growth of real estate prices in London is not surprising, according to many independent analysts: after all, in the world for several years ‘quantitative easing’ is raging, and printed money, one way or another, leak in the real estate market. The capital of the UK is the habitat of almost all the millionaires from around the world. So expecting the scenario with a certain fall in prices is probably not worthy to consider; moreover, the long-term forecasts include the scenarios with 35% growth of real estate price in the next decade. The printing money press keeps on running. Therefore, even if the deterioration of the economic situation becomes evident, the prices will come down but not for long in nominal terms. And then they will not only return to the previous level, but also rise up substantially.

The limited supply of housing and the uniqueness of the English market attracts buyers, despite the continuous rise in prices and inflating bubble in the real estate segment, according to senior analysts at Alpari. If previously real estate in London was acquired by both locals and foreigners, in the last year the share of buyers from abroad has substantially increased and went far beyond 50% mark. Millionaires from various countries consider it to be a good taste to have a house in London, though, objectively speaking, the price tags are too high. The proposal also narrows quite significantly, and it only adjusts the price, so it is growing at a 15-25% annual rate; plus the increase in the end values is also observed with an increase in conveyance solicitors services and other auxiliary, yet essential services.

But in general, against the background of instability in the stock market, real estate market as a conservative tool is becoming more in demand by investors,  a member of the board of directors Topaz Invest, Max Rajewski says. And first of all their interest accounts for ready-made objects. And it’s not just London. A similar trend is observed in UAE and several EU cities. The demand as for residential complexes and cottage villages on the maximum availability and minimum risk is an increasingly popular investment. ‘I believe that in times of financial instability, the next few months in house prices in London will continue to grow, because the development and construction projects are not that many, and the demand is growing. The excess demand and limited supply will continue to push prices up’, the expert concludes.

However, certain niches have changed slightly. In the most prestigious areas of London the construction of 50,000 luxury real estate objects is scheduled or has recently started according to Financial Times. This construction activity is quite justified, because after the crisis of 2008, the local real estate market began to actively recover. Demand from investors off scale. Although in recent years the interest towards elite options has decreased. In 2014, which showed the highest total sales of luxury class of objects worth more than £1. The new owners have found only 3900 houses located in central London. Against the background of the implementation of new exclusive residential complex on the bank of the Thames, the situation is not going to cause concerns though, as the temporary reduction is caused by the downfalls in the economies of China and Russia, and experts believe that the situation will get back to normality with an inevitable export of capital and normalisation in the local economies.

What are the advantages of mortgage lending at British banks?

The biggest advantage which promises appeal to the UK banks, is the interest rate, which is maintained at a really low level for decades. In 2014 the National Bank of England base rate was about 3-5%. If we draw an analogy with CIS countries, one of the largest investment groups, the rate starts from 8.25% and goes beyond up to 25% and even further. Naturally, taking a loan at one of the British banks is a significantly more profitable opportunity.

Importantly, non-residents of the United Kingdom take advantage of loyal conditions for obtaining the loan of maximum amount. Today, they can count on the issuance of 70% of the total cost of the acquired property, although lenders at the same time put forward a number of conditions. For example, foreign investors can press for a reduced interest rate, provided that they will make an additional amount of assets in a particular bank. These proposals are formed by the interest of the English banking services to co-operate with their clients for as long as possible.

To date, in the banking system a common practice is the issuance of mortgage loans for a period of 5 years and the maximum period for repayment capped at 25 years. The procedure for registration of mortgage loan is generally similar to the stages of which are provided in the issuance of mortgage banks across the globe. The first stage of the procedure for obtaining public funding requires identification. To do this, the banking institution will request your passport and proof of address. For more convincing, you can submit a statement for utility bills.

Next, the client is required to provide information that would convince service bank in financial solvency of the borrower, ie the ability to repay the initial payment. To do this, you must submit an extract from the personal account or else provide a letter, certified by the bank manager, whose client is the applicant for a mortgage. To prepare for a purchase more diligently you should better team up with experienced banking and conveyance solicitors.

As for confirming existing assets, a statement which allows you to check the financial viability is necessary to provide. To do this, provide statements on the stocks held by the real estate, passive capital, for example, in the case of shareholdings, statements about the presence of works of art, etc.

One of the crucial points that defines a successful decision or denial of a mortgage is the document on obligations to third parties – Assets and Liabilities Statement. This checks all the customer’s credit history: whether there were any delays in payments and, most importantly, whether the loans are currently being faced. In some cases, bank employees check the internal database, if a customer raises doubts as to the solvency.

The basics of acquiring and managing real estate in the UK student sector

The procedure of purchasing student apartments in cities like Liverpool or Manchester is performed through the developer. The most effective option is to secure the purchase of an object at the off-plan phase of development. It allows you to buy apartments at really low prices that are protected from growing beyond the construction period.

For the implementation of the transaction the investor initially makes a deposit of £5,000, and then after 21 days, completes a payment equal to 50% of the total cost. The remaining 50% of the price of the object must be paid at the time of completion.

Buying student property at off-plan poses minimal risks. Investor is legally immune from freezing of construction and, in the case of overruns of building (6 months and longer), the investor will be fully refunded the deposit made. Fully trained counseling is the most important thing when choosing any product: when making a responsible step, teaming up with a decent real estate agency and professional conveyance solicitors is essential.

Managing the property

After putting the construction project into operation, the investor signs a contract with a company that will manage the property in the future. The competence of these companies includes: the selection of reliable tenants, the systematic sending of income investor control over the state of the premises, payment of utility bills, etc. Management companies usually cooperate with educational institutions, to ensure maximum effectiveness of education and, of course, driving significant revenue by providing quality services.

The dividend amounts

On average, over the first three years, the investor receives 6% – 9% of rent net profit from the management companies. Furthermore, this figure will be revised and gradually increased. The growth of profitability will be affected by the growth of rental rates, which is characteristic for a specific region. The management company is obliged to transfer net profit to the owner of the object quarterly.

The conceptual differences

Student apartments in Liverpool, Manchester and other university towns in England are considered to be residential projects, where officially registered students and personnel can live. These apartments constitute the most affordable category property and represent studio apartments with the standard layout. This type of premises can accommodate a wide range of tenants: students, graduates, employees of universities, young families, etc. The most frequent types that fall in this category are: studio apartments, apartments with two bedrooms, apartments with improved layout, etc. When investing in a real estate, the investor is required to design the interior, since the objects are available without furniture, while their costs vary within £2,000 – £4,000.