The legal aspects & financial attractiveness of real estate in the UK

uk real estateDespite the apparently high costs, the UK property market is one of the most liquid markets in the world. Particularly in London, investing in real estate could be the best antidote to falling prices, a hedge against inflation and obtaining capital gains.

The demand for real estate has always been driven by the UK, first, because of the country’s small territory – only 1,000 miles from north to south and 400 miles from east to west. The growing needs for housing development in population of England must be in permanent balance with the need to preserve the countryside and green parks. Thus, governmental policy promotes substituting industrial areas with green field sites, located outside the city. Depending on the area, where transformations are expected, the grant can be provided to clean the territory. In addition, the environmental concerns contribute to the requirements for its research that is undertaken in respect of history of a particular property, and where the land itself may be dumped. Essentially, the current legislation can be held liable for contamination that occurred many years ago, despite the fact that it became the result of the efforts of the previous owner.

The current economic situation in the world makes the UK real estate market even more attractive. The population of Great Britain has been steadily increasing, while the number of construction of houses and apartments in Britain lags behind the demographic situation. The state of affairs is exacerbated by a shortage of housing against the background of a huge influx of foreign workers: the protracted crisis in conjunction with progressive unemployment drives people to change the residence for more economically prosperous countries in search of work. Thousands of people in London every day are turning to employment agencies in search of housing apartments for rent. In this regard, investment in real estate the UK always bring stable rental income. At the moment conveyance solicitors admit the fact the pricing has reached its historical peak.

Referring to the Land Law of Great Britain (which also regulates the UK real estate market), you will find that the basic concepts here have not changed since the time of William the Conqueror, when in 1066 he laid the foundation of the system, which the country is genuinely proud of, and for the foreigner it is, as a rule, the subject of genuine bewilderment and incomprehension. However, stability of the area is another factor that drives interest to the sector. By law, all land in England and Wales belongs to Her Majesty Queen Elizabeth II, and all the other mortals have only the unconditional right to use of land and buildings located on it. Freehold form of ‘ownership’ is very similar to the international practice concept of tenure, which can be called ‘ownership’ and so, if you own real estate in freehold rights, you become the full owner of real estate buildings located on this land you are free to enroll in any operations with your property, it is only necessary to coordinate your actions with local authorities.

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The overview of budget real estate against the background of luxury housing in London

london-housingWhile in London a deficit of real estate of around 30% is observed, which is not able to cover the demand, but the real estate market in the capital is ready to offer a wide price range of residential properties, busting the myth of the inaccessibility of the apartments in the UK. The price is affected by a number of factors, first and foremost – the district, the area, number of floors, parking, transportation, proximity to cultural, entertainment and public facilities.

Budget properties in London is not a myth, such an option can be purchased by selecting residential buildings in east London. It is a kind of industrial area with mostly English-speaking population neighbourhoods. In East London the entire neighborhoods with typical bedroom apartments were built, which have a greater similarity with the French suburb housing. The city center is in 1 hour drive approximately, and that’s one of the main factors affecting the overall cost of the apartment. To date, one-bedroom apartments in the area can be bought for £180,000, while the two bedroom options start from £220,000. However, this is not the final price – more less significant expenses may be associated with property condition evaluation, legal services (all the deals are made through conveyance solicitors) and other aspects should be taken into account.

Many investors purchase the entire buildings with small-sized rooms in the suburban parts of London for recoupment through the rent, allowing to gather around 3 – 5% (at the time of 2014). Another category of buyers – the parents of students and students of London universities in need of proper housing. About 60% of transactions in the budget flats was recorded to parents or close relatives. Moreover, even in spite of the relatively low cost of such apartments they are constantly increasing in their cost. The owners of such apartments are able to bring up to 7% of annual income when making a transaction on resale.

However, both, who invest their own money in real estate capital of the UK, make up a large percentage of buyers of luxury real estate in London. According to Knight Frank statistics, the property objects priced at £1.5 – 2ml are primarily acquired by CIS residents.

The price for luxury apartments and townhouses located in the fashionable districts of the capital, which are close to the center, the so-called, Prime Central London, start from £5ml. Thus, for example, a 3 bedroom apartment with balcony and parking lot costs at least £7 million in Belgravia – the most expensive district in London, which has managed to sell more than 26.61% of transactions above £10 million.

The average price of London real estate in the fashionable areas varies widely. The peak performance falls to Mayfair and Belgravia, as well as Chelsea and Knightsbridge. Approximately 30% more affordable residential apartments are located in the elite areas of Regent Park and Hampstead – the top 10 regions that sold 8.15% and 3.4% of elite property objects the price of which has gone beyond £10 million.

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The ins and outs of UK student real estate market operation

student property UKFor the recent decade the analysts admit the record growth in demand for real estate in major university cities in the UK. A similar trend was triggered by a sharp influx of foreign students who come to England from Asia, Western Europe, Eastern states and the CIS countries. The maximum demand for cost-effective student apartments is observed in the leading university cities, for example, in Oxford, Sheffield, Liverpool, Cambridge, Manchester and many others.

Characteristically, the demand for student property sector in cities such as Liverpool and Manchester exceeded the demand for residential properties in London. This directly affected the intensity of the pace of growth in rental rates, which have increased by 25% over the last year in Liverpool and Manchester. In turn, high yield of student real estate has raised the investment appeal to these objects. Among the factors that increase the volume of foreign investment in student property in England the following ones are listed:

  • Rapid price rise and intense increase in rental rates;
  • High levels of yield. Management companies provide investors with yields of 6%  -9% for property rental;
  • Reduced risks. Investments in real estate are typically the most predictable and transparent types of investments, the yield of which is provided by the stable growth of prices for the rental and sales market;
  • The ability to make the mid and long-term investments. Net profit can form a resale property at higher prices.
  • The ability to transfer the management of real estate companies. Management companies will be looking for creditworthy tenants, transfer of income to the owner, control rooms, etc.;
  • Stable profit at the end of each quarter.

Buying a property outside of the UK

The process of buying property in the UK student admits the absence of a buyer for the country. For the transaction the investor is required translated into English copy of a passport, an additional notarised. It is also required to provide a bank statement certifying the place of residence of the buyer. The first amount of £ 5,000 is transferred either through a bank or paid by card. After that, the transaction involves conveyancing solicitor of the two parties (developer and investor). You may want to check to find a solicitor and get stunning quality legal support to minimise all the risks, as well as guarantee transparency of transactions and their effectiveness.

The costs incurred by the investor when payment for legal services

In England, any type of transaction associated with real estate purchasing is conducted through solicitors. The volume of expenditure will depend on the complexity of the procedure of purchase, however, as a rule, they vary in the range of £1,200 – £1,500, but may go way higher. If the investor conducts several operations to purchase a variety of apartments or in case the customer is looking to acquire a costly premises, then the service is likely to reduce the price for its services. The volume of net income from the rental or resale of student property will depend on the size and successful planning. Then you can see an indication of the annual rental yield of investing in a particular construction project.

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The Process Of Acquiring Real Estate In The UK

acquiring property in the UKAs soon as you make a proper choice and select the property you wish to acquire in the UK, a property purchase request has to be made. Depending on the nature of the offer, it may be based on a full market value, provided by realtor and at low cost, which you would be willing to pay for the selected property. As soon as the question of the cost of a fundamentally resolved and agreed upon, the parties proceed to legal formalities, their relations are now governed by conveyancing solicitors.

The contract
The buyer’s lawyer will receive a contract from the seller’s lawyer. Normally the contract has a standard format, and then a number of further steps is taken. In the case of the alleged renovation or expansion of the property it is necessary to consult with the local authorities and various organisations. For example, it is necessary to receive communications plans and schemes of electrical wiring in the building. Queries to the local authorities can help to understand many nuances, for example, the category of the road adjacent to the building (private or public) to clarify whether the selected object is responsible for the entire scope of requirements and standards of planning and construction, etc. The cost of such surveys is generally available at 200 500 pounds price.
In addition, your attorney will submit a request to the seller for all the necessary information concerning the purchased object, relative to the boundaries of the possessions, basic public services, existing disputes and various issues of this kind. You can completely rely on the information and answers to questions, confirmed by a lawyer. Another thing is that an inventory of all that becomes the property of the buyer to purchase the property is compiled; in some cases, an agreement to acquire additional items by the seller can be achieved, for example household appliances, furniture, etc.

It is advisable to make a survey on the state of the purchased object and obtain the appropriate expert advice. This will help you to find out whether the object is purchased according to normal procedures and whether it has some current problems or had problems in the past. In the latter case it is necessary to evaluate the cost of the work required to bring the facility to normality, apart from the cost of the premises. The cost of such surveys varies depending on the object size, but in case of more or less standard housing it will cost you from 600 to 1,500 pounds. A report on the condition of the real estate object is an essential requirement of any bank in order to assess whether the sale doesn’t overstate the value of the object. If you do not resort to financial assistance to the bank and buy a property at your own expense, obtaining such a conclusion is still strongly recommended to avoid the possible problems in the future.

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Banking property acquisition: the underwater rocks to be aware of

banking-propertyForeign investors, experienced in the acquisition of banking real estate in London, are aware of the fact that the bank initially exposes an object on a strictly fixed price, and it is usually overpriced. However, the practice shows that investors can bargain on the final amount, since banking institutions are primarily interested in profitable sales of the objects on balance, given the fact of a lending opportunity at the same time; therefore, are willing to significantly reduce the value of the property. When buying real estate from a bank it is recommended to announce your own proposal.

In London, if you purchase new or resale housing is accompanied by the essential independently assessed examination, which establishes the technical compliance of housing and its operational capabilities. Usually, this procedure is extended for a period of 3 months. Banking services are interested to avoid such delays, so often stop at the ‘average’ price between the investor’s proposal and price of proposal for the client. Especially recommended to appoint its own proposal to investors who seek to invest in the banking elite housing located in central London.

However, the purchase of real estate bank is also accompanied with certain of disadvantages. Those investors planning to acquire confiscated or seized property must be informed that a reduced cost of such facilities is largely defined by technical condition of housing and commercial office spaces. About 70% of the bank property in London requires cosmetic or major repairs, and the scope of which defines the discount amount.

That is why in some cases, banking real estate can be purchased at a price of 80% below the average and around 40% lower than its nominal value. So, before you complete a purchase, you should better evaluate the potential expenses associated with repairs – cooperating with the 3rd party organisation, not interested in the deal, could be a reasonable approach and this investment may pay off. However, this service, just like all the legal expenses associated with conveyance solicitors services are implied to be covered by the buyer. If the property is sold at a discount of 30%, then perhaps a better option would be the purchase of resale property at a higher price, but without the need to invest in repair, especially taking into account the tough technical and engineering requirements for the buildings in the country. The average price of typical houses in London in 2014 equaled to £600,000. However, even taking into account the need to invest additional capital for the repair, the size of the discount may covers it, providing an investor with a pure income. When buying real estate bank should also consider the need to sign new contracts with public utilities companies. It will be included in the estimate of additional costs, however, it is highly likely to be a burden because of the contract renewal time frames.

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