Category: UK investment info

The level of deficit and rising prices for real estate in London

The real estate market of the capital of England has always been distinguished by stability, evidenced by a stable annual growth rates even during the general stagnation in the world market, which occurred in the 2009-2012 year and when property in London costed about 5 times higher than property in general throughout the country and generating around 7% of profit annually. That’s one of the most crucial parameters investors evaluate before investing money in this or that project.

Analysts understood why the value of real estate residential sector in the capital does not depend on the fluctuations of government securities, stocks, gold, etc. They concluded that in stable condition market the balance between demand and shortage of supply is maintained. In particular, Countrywide has announced the results of their research,  where it was obvious that the demand and competition is increasing, while the number of available housing facilities is steadily declining – in 2014 one property was the target of 9.7 customers, while in 2012, these figures were much lower – 8.5 buyers per unit, and 7,1 buyers in 2010.

In the context of investment deficit it is definitely not a negative phenomenon, since it serves as a guarantee that the property will always maintain a high level of competitiveness because of its exclusivity. So if by now the size of the deficit of housing units is about 30%, the shortage of luxury housing, located to closer to the city center, is estimated at about 37%, not to mention the auxiliary expenses, such as legal services coverage – using conveyance solicitors to close the deal is absolutely required.

Accordingly, the elite real estate in London is rapidly growing in its value: in 2014, the increase in the price ranged from 10 to 14% (depending on the area). A similar trend is observed as for increasing rent: many tenants, according to data from The Telegraph, are ready to pay from £24,000 to £45,000 for rent, located in the center.

That deficit has provoked strong demand for luxury property, the most favorable opportunity for investment, because of lower risks and a high potential for maximum yield. Real estate in London will continue to go up in price – a conclusion reached by the experts Knight Frank independent agency. Their predictions have affected the period from 2015 to 2018. The total amount of the price increase is 35.8%, with the most intense price growth will occur in the period from 2016 to 2017 (by 4.3%). Analysts explain this trend by the fact that the lack of living space will not be able to eliminate up to 2020, since at the moment there is a lack of facilities in the amount of 50 thousand houses. Thus, the main groups of investors of the past decade (Arab, CIS and Chinese investors), who acquired real estate in London, have all the chances to repulse spent capital and bail out on net profit through resale transactions.

Investing In English Real Estate: The Lucrative Business?

Buying a property in England is a perfect, already time-tested investment method, which means not only their safety but also the augmentation of capital, as English estate is constantly increasing in price, and therefore investing in it is at least gives a certain protection of capital against inflation and external risks.

Buying a property in the UK has become particularly relevant in light of the instability of the global economic market: the global crisis in 2008, oil crisis that started in 2014, the fall of Russian economy and Chinese currency – all these events force international businessmen to seek for decent protection solution. The UK has perfectly recommended itself as the most favorable place for profitable investments in real estate – year after year it attracts more and more real estate investors, boosting the local market to an incredible volume. Thus, e.g. the price for residential housing in London jumped by almost 110% since the year of 2000, and according to large financial institutions like BNP Paribas, another 30% surge is expected in the next 5 years. Real estate sector is a locomotive that boosts legal industry as well: according to solicitors.guru, a savvy legal startup allowing you to find law experts (certainly including solicitors in West Sussex region), admits the earnings of conveyance solicitors are going to increase by 7% in the next 2 years.

England is a country with well-established traditions, international language and advanced economy and most importantly, positive investment climate – all the prerequisites are there to consider real estate investment opportunities. There’s no luxury tax, like in France, there’s no tax on property (although you’ll have to get ready for certain expenses), and the origin of monies is less thoroughly scrutinised in comparison, for example, with the US.

Selling real estate in England performed slightly different than in many European countries, as the British, are not likely to sell single structures, but completely the estate, so the transaction value is calculated not basing on the number of square meters of housing, but taking into account the total area of sold estate. All these details can be easily dismantled by a competent expert in the field of real estate, but the overall essence of the profitability of real estate acquisition in the UK does not change with years.

Another fact worthy of mentioning is that after the transaction the new buyer of the estate does not get a standard certificate of ownership, but a document confirming the right to lease the land for a long time, usually 500 or 1000 years. This is due to the fact that all the land belongs to the Anglican Church, so the real buyer gets the contract, confirming the right of long-term lease of land in England.

The reliability of such investments is guaranteed by the stability of the British economy, which, in spite of the last crisis, remains to be one of the most powerful economies in the world, so buying property in England allows you to become a full participant in its economy.