• The cost of maintenance of residential property in the UK

    UK Real estate market

    maintenance-costsThe 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.
  • Acquiring real estate in London: the types & numbers

    UK Real estate market

    london-estateIn the UK, a Victorian house is any house built during the time of Queen Victoria's reign in any style of Victorian architecture. All these houses, standing out with slate roofs and protruding windows, Victorian houses make up about 70% of residential real estate in London. Municipal homes represent a form of public housing in the UK. Municipal residential houses were built and managed by local authorities to provide housing for the local population. In 2005, approximately 20% of such housing is owned by local authorities and housing associations. Construction of municipal residential buildings has decreased dramatically with the arrival of the Conservatives who spoke in support of homeownership. Importantly, council houses built in the 20-40-ies of XX century are quite suitable for comfortable living, especially if you are considering economy class options, while the houses of a later period are oftentimes smaller and less convenient. Municipal houses account for 20% of London's residential property.

    Laws forbade local governments to invest in the construction, which doesn’t allow it to subsidise it out of tax revenues. Moreover, persons who rent housing in the municipality, receive a right to buy their council house at very favorable terms. Buying the Right has allowed tenants to buy their homes in the property at a discount of up to 60% of the market price of houses and 70% of apartments depending on the lived life. Municipal authorities could no longer invest in the resulting profits from sales in the construction of new homes, and the total number of houses, especially those that are in demand, decreased. Today, municipal homes are very unpopular among the population, and the term ‘municipality’ is used with a pejorative connotation, although initially most people thought that living in such homes is quite acceptable option. Now more and more people living in municipal buildings receiving the support of social security funds.

    Nearly 5% of London property is comprised of houses built in Regency era (most often it is the luxury expensive mansions, palaces and manor houses, built in the XVII-XVIII centuries), and modern buildings, also called ‘new developments’ in style and appearance design reminiscent of New York's skyscrapers. The latter do not enjoy the wildly popular among the indigenous British, but they willingly inhabit, businessmen and investors, making London their second home.

    Residential real estate market makes a huge contribution in Great Britain's prosperity, it’s one of the most important factors determining the development of the British economy. It contributes to the growth of other industries, including legal industry, servicing a multiplicity of aspects, e.g. conveyance solicitors make the deals happen, banking lawyers deal with mortgage and loans issuance and etc. There’s a point of view that the growth may be associated with the emergence of bubble because of flowing international capital. Well, in fact it’s just a single aspect of the system that is considered by many aspects along with the deficit of real estate.

  • Can Foreigners Buy Property In The UK?

    Investment Info

    foreign investmentsThousands of non-UK residents purchase property in London, England and Scotland - the UK legislation does not put any restrictions on foreign ownership of real estate. Moreover, foreign buyers can count on a mortgage loan to purchase real estate with a very attractive interest rate and have a number of tax advantages to their names almost equally to the ones British and local tax residents have.

    What’s the process?

    Once you have found a premises that suits you, you are making an offer to purchase the property. If the proposal is accepted, the memorandum is drawn up, stating the names and addresses of the parties, the address and price of the object, as well as the coordinates of lawyers seller and the buyer. Yes, you will have to find a decent lawyer to sort it all out - drop in at solicitors.guru, a prominent platform aggregating experienced and trusted conveyancing solicitor to find a solicitor that meets your requirements. Statistically, the deals fail because of the sluggishness of the lawyers, so the choice of a lawyer is extremely important, taking into account that the demand for real estate especially in the capital is extremely high. Both lawyers draw up a contract of sale, with the buyer's lawyer makes all sorts of requests to the local authorities for information about the plans of further construction, land registry checks, and others. At the same time a purchased object should be evaluated by independent engineer. The main objective of this evaluation is to investigate the technical condition of the object. When all the requests received and the contract is ready, it is the buyer's lawyer sending the seller’s lawyer a signed contract and the deposit, which is usually accounts for 10% of the project cost. At the same time, the buyer sends the seller's lawyer a contract signed by his client. The contract establishes the day of the termination of the transaction, ie the date of the official buyer is taking possession of real estate. On the day of the end of the transaction the buyer makes the final payment and gets the keys to a new home or apartment.

    What is the difference types of property? Freehold property includes not only the building itself, but also the land on which it is located; it mainly applies to houses and townhouses, rather than apartments. Leasehold implies giving an exclusive possession of the property on lease for a certain period of time (the maximum of 999 years), and is usually provided for a nominal annual ground rent - from 25 to 500 pounds per year. Share of freehold is a relatively new concept, which arose after the reform of 2002, and is something of a cross between freehold and leasehold. The ownership in this case means that the building is purchased by all the owners of apartments in it, who created the company, officially owning the building. Each apartment has a ‘share ownership’ and the proportional part of the shares in the company belongs to the owners of the building.

  • Understanding the nature of real estate investment flows: CIS countries

    Investment Info

    real estate investment flowsOver the past 15-years old there is a trend of significant investments in real estate of Great Britain capital from CIS investors. Since the 90s investors from Russia and CIS took the 5th place among the total mass of real estate buyers in London. So why real estate prices in London attract such interest among CIS residents? What are the payback prospects and what projections are expected in real estate market in the coming years?

    The situation in the real estate market in London: the cost to date and the prospects for profits

    The fundamental motive that prompts CIS residents to pour their capital in housing is, first of all, the profitability of such investments. The fact that the London market of immovable property is not stagnating even during tough times, remaining stable even to the general decline in the value of housing across the country in the post-crisis years of 2010-2012. The property in the capital of the United Kingdom not only does not fall in its price, but increases. Thus, the maximum peak of prices for real estate was observed in 2007-2008, characterised by the highest dynamics of sales of real estate in London, housing prices, interest from buyers and increased rents. However, now in 2016 the figures exceeded the cost of housing in 2007-2008 by as much as 9% already. If we analyse the situation across the country, the cost of residential properties in the capital has gone 2 times higher. The total cost not always includes conveyance solicitors services, which may account for another 1 - 2%.

    Property in London, according to statistics compiled by Knight Frank will go further by 7% in 2016, if we take the average statistical and housing areas. More prestigious objects and luxury apartments in respectable areas of London will experience an annual increase of 12% or even higher. From this it follows that our CIS residents investing in particular residential facilities will be able to gain large sums from resales. The owners, not seeking to sell their houses and apartments, make profits from renting space for rent, but that is a rare case. So, in the Eastern and industrial areas, as well as the suburbs of London, the increase in price of property can range from 2 to 5% for 2015, in central London, these figures may be as high as 15% per year.

    In view of the prevailing trends CIS citizens are increasingly resorting to acquire property in the capital. Statistics compiled for 2014 by the same analysts from Knight Frank, is eloquent: real estate objects in London priced at under £2 million are largely acquired by CIS residents bought up, and they occupy a leading place among all those who have made a deal, surpassing the Asian and Arab investors. Russian investors took the 5th place among all the nationalities, who have concluded the contract on the purchase of property in London, outnumbering Chinese and the Arab buyers. 85% of the total number of transactions conducted in 2013 on the sale of apartments in the exclusive central London - City of London, were made by investors from Russia and CIS countries. Approximately 35% of the population of the Eastern districts of London, where budget accommodation is located, priced at £150,000, were primarily purchased by the member of CIS diaspora.

    Facts speak eloquently for themselves. In turn, the British government is actively promoting the opportunities in the acquisition of housing in the capital, creating different subsidiary programs, for example, ‘Buy a house’, as well as giving the opportunity to take a mortgage loan on a property in London, even for non-residents.

  • Student property for sale: what you should know about the UK market

    UK Real estate market

    student-propertyOf course, the largest selection of student property is concentrated in London. There are 18 special complexes - Purpose Built Student Housing - cottage settlements providing such infrastructure. They are scattered throughout the city, and new construction is concentrated in the 1st and 2nd zones.

    Britain is good that the best universities are located not only in the capital - a huge number of educational institutions from around the world is located in other cities. For example, in Manchester and Sheffield the University of Manchester and Sheffield Hallam University are rated 2nd and 3rd most attended institutions after London Open University. Almost every major city in England has a decent university, and the choice of locations is quite diverse. In addition to these locations, as well as the world famous Oxford and Cambridge, this type of facilities is available to investors in Liverpool, Nottingham, Canterbury, Plymouth, Leeds, Liverpool, Bristol, Newcastle, Birmingham and many other cities.

    The price aspect Such a variety of locations provide a wide range of opportunities for domestic and international investors, so while in London the price of such objects can easily go beyond £150,000 mark, in other cities the average cost of student housing is estimated at £50,000 - £60,000. The cheapest offer, found on the market today, starts from £32,000. It was a room of 15 square meters. with a bed, desk, TV, wardrobe, shower, toilet and shared kitchen. The apartment, sold out as for now, is located in a residential complex with a gym and relaxation area. This way or the other, you should add around £1,000 - £3,000 payment for conveyance solicitors and real estate agencies services.

    Some experts mention even starting sums as low as £25,000. This is where much depends not only on the city, but also on real estate itself. If this is a tiny studio or room in a long-established and somewhat outdated design, of course, it will be cheaper. Objects of the same area in the new ultra-modern units are quite expensive, although you may want to located in rebuilt buildings, previously used for other purposes, the price may be slightly lower (though not always). Also, the cost depends on the type of accommodation. You can buy a simple student apartment - modernly equipped rooms with a shower and toilet but with a shared kitchen, they will be much cheaper, and you can also make a choice in favour of improved student apartments - more comfortable and spacious, as well as some studio apartments in new buildings, which tend to be more expensive. In addition, the proximity to the educational institution is also crucial - the more remote it is, the cheaper it will be.

    Remarkably, the special student complexes are typically managed by large asset management companies, maintaining strict order and enter into contracts with universities, that is, find tenants, and thus completely eliminating this concern for investors. Moreover, the demand from tenants and income from rental is oftentimes guaranteed by developers themselves.

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