The cost of real estate in the UK depends on the multiplicity of factors. Of course, the proximity to transportation, cultural and large infrastructure hubs, as well as the prestigiousness of the district play an essential role. However, there are more aspects you should take into account and the form of ownership is one of them. Basically, there are two types of ownership in the country: freehold that implies buying a house with the land on which it is located and leasehold that in most cases stands for buying an apartment in a house or building. In this case, you don’t own the property technically, but only for a specified period, which may vary greatly: from 25 years to 999 years, depending on the particular embodiment. Legally speaking, you are entitled to long-term lease apartments from the owner of land and buildings and are required to pay for the lease of land and building maintenance costs, usually in proportion to the area of the premises. When acquiring this or that property you have to keep in mind the expenses for the services of conveyance solicitors – typically they charge up to 0.6% from the total price of the housing.
Mentioned below are the basic costs of maintaining a premises in the capital city – the ones you will have to cover regularly:
- Council tax, replenishing the local budget. The amount is defined by the area where the premises is located; this amount typically ranges between £800 and £1,500 annually; however, the cost may be individually calculated. These funds are used for municipal needs, such as garbage collection, police and fire departments maintenance, and etc. In the case of apartments rental, this tax may be covered by the tenant, ie, those who actually lives in an apartment.
- Utility costs such as water, heating, electricity, gas, internet, TV, etc. On average these expenses account for £100 – £300 per month. In the case of renting the apartments, these costs are paid by the tenant
- In the case of tenure on condition of Leasehold you pay for the lease of land (ground rent). The amount of this payment is usually determined depending on the number of rooms in the premises and ranges up to £700 per year and higher. This fee is payable by the owner of the apartment. Even if you rent an apartment, paying ground rent is considered to be your responsibility.
- In case of leasehold, you cover the costs of maintenance of the building (service charges), which are calculated in proportion to the area of the premises. The amount of service charge in London varies in the range of £2 – £4 per square foot, that is, from £1,000 a year for a one-bedroom apartment. If the residential complex is equipped with sports gym or a swimming pool, the expenditure items will go further.
- It is also necessary to take into account the costs of finding tenants and managing the apartment. On average, the cost of the service to search for a tenant in London makes up to 8-10% of the annual rent. The cost of finding a tenant and taking care of full property management ranges from 15% of the rent and higher.