The basics of acquiring banking property in the UK

The concept of ‘banking property’ includes all the property that was confiscated, arrested or bailed. Bank property in London forms a self-sufficient segment, which is intermediate between the secondary and primary housing market (new buildings). The investors who know what’s what in this practice, take the opportunity to invest in this type of facilities and oftentimes succeed due to beneficial terms of deals. The city of London is chosen due to its economic stability and rapid development (the city generates around 24% of the national GDP), which is characterised by constant price growth in the cost of housing and high demand for residential premises. All this serves as a guarantee for almost risk-free, profitable purchases.

By the present moment the British banks are among the largest owners of real estate, who are ready to provide the investors with a variety of proposals. Virtually all the major banks in London work with real estate companies, whose task is the sale of all the objects in the possession of the banks. Importantly, bank offers are sold at a price lower than the average market rates.

To clarify the prospects of the potential profitability of the affair, having a comprehensive understanding of the advantages and disadvantages of a potential deal is absolutely essential. Thus, confiscated, seized or planted banking property in many cases could represent a promising deal in relation to the purchase of new or resale property. The main advantage of this segment is costs – the purchase of real estate from bank is mostly a prerogative of investors who are limited in the size of their own capital allocated for investment. In practice, implementing the sale of bank property, is below the average pricing level by 30-40% on average. However, the price difference in some cases can reach up to 80%. Factors that affect such a large fall in prices will be announced later.

Another advantage that awaits investors seeking to buy property in the UK bank is financing. The funding comes from the banks, who control the object. London banks are interested in attracting customers not only for real estate at affordable price, but also for associated with property investment project. First of all, it is an opportunity to implement a property that is listed on the bank’s balance sheet. Secondly, the ability to provide mortgage to customers who purchase the object. And thirdly, providing loans at low interest rates to eliminate the risk of non-payment of a mortgage loan. The main recommendation when choosing a bank is to review the bank’s portfolio and real estate conditions as for mortgage lending. These conditions will be largely impacted by the area where the object is located and its total cost. As a rule, the maximum amount of a mortgage for non-residents of the United Kingdom reaches 70%. The client will incur costs that accompany the procedure of registration of the transaction for the sale, as well as cover the associated legal expenses; mainly the services of conveyance solicitors.

Student property in the UK: the basic things an investor should be aware of

students-property-investingInvesting in student property in major university towns in England is a highly profitable direction, so by now a strong demand for residential properties in the student residential sector has formed already. The fact is that in cities such as Liverpool, Oxford, Manchester, Cambridge and Sheffield a constant influx of foreign students is observed who need a place to stay. This provokes a strong demand and increased competition between buyers. The demand for real estate in cities often exceeds the market average competition in London (12.1 buyers for the object). As a consequence, the market sales prices, as well as rental prices are rising fast.

A group of analysts from Knight Frank investigated the growth of rental rates in such cities as Oxford and Cambridge, and it was found that the rent has increased by 170% and 160%, respectively. These figures are considered in comparison with the growth in rentals in other cities out of a radius of top universities.

Thus, the main prospects of investment in student property lies in the steady demand due to the influx of students globalisation; intense price growth in sales, which is higher than the average market value growth rates have equivalent objects; minimal risk and a quick return of capital. The average investment in student property sector will pay for themselves within 1-2 years, the net profit can be obtained from both the rental and transactions on the resale.

The procedure to conclude the agreement with developers

When buying student property investor should enter into a contract with the developer. To reserve object investor pays a deposit in the initial phase of construction of real estate. This would require a £5,000 on deposit – this would amount to a part of the total price of the object. After the expiry of 21 days the buyer and the developer exchange contracts. In parallel to this, the investor contributes an additional 50% of the project cost. After this operation, the buyer becomes the rightful owner of the property, and completes the payment of remaining 50% by the end of construction time.

Investors are thus reliably protected from construction freezing. If the complex is not launched on time (the delays of more than 6 months), the client is compensated for their investments. Development company will pay the full amount of investment, namely, the initial payment of 50%. This condition is spelled out in the regulatory legislation of Great Britain. The legal services are covered separately by the investor – the work of conveyance solicitors will cost you up to 0.6% of the total cost of the premises.

How operation management companies function

Once the complex is put into operation, the apartment owner signs a contract with the management company. The competence of the manager will be to search for tenants with stable solvency. Also, the management company will follow the property status, terms of payment of utility bills, etc. The potential annual yield of the owner will vary between 6% – 9% in this case. The contract with the management company is typically reissued on an annual basis.

The average yield of apartments handed over to rental use, is exceeding 6% per annum (according to a typical contract investor receives net income at the end of each quarter). Due to intensive growth in the long term lease the investor’s annual yield is expected to increase.

UK real estate investment flows from Russia are draining, falling from the top list

uk-property-investment-flowsThe Russian investors activity in overseas property market, and UK  in particular, is switching from the path of rapid growth to accelerated falling. Most potential investing customers receive salaries in local currency, and along with the sharp decrease of the Russian economy the price for the real estate has risen by 50% in less than 2.5 years. In addition to the price of the available options, significantly increased the cost of maintenance of apartments and houses, and naturally, the cost of conveyancing solicitors services.

The state of affairs is most probably going to have a long-term effect. The dynamics of the economy in projection on overseas property investment is pre-determined for at least the next year. The economic situation, in turn, is largely dependent on the foreign environment, the continuation or termination of sanctions, the dynamics of national currency fluctuations and the of oil prices. However, the situation may not change significantly as the demand for overseas property from Russians is expected to rest at the same level due to capital transfer from the country. Firstly, a large part wealthy Russians is interested in foreign trade of real estate, including those that hold savings in more stable currencies or paid in foreign currency. The fall of the ruble does not negatively affect them. Secondly, there has been a change of priorities recently. Previously, the majority of customers considered buying resort property for their own leisure in Spain, Bulgaria, Montenegro, but now such purchases are declining, and emerges a larger group of buyers who buy real estate for investment objects. By investing in profitable real estate individuals and businesses are traditionally trying to diversify their assets, to protect themselves from hazards and create a ‘reserve airfield’. Thirdly, through foreign real estate agencies specialising in the Russian customers real estate is oftentimes purchased by citizens of other CIS countries, such as Kazakhstan. Their purchases are sometimes credited as ‘Russian’ and technically affect the performance demand.

A look into the 2016

So what trends will be see this year? The process of Investing in profitable real estate liquidity of stable economies will increase. The most significant reason for Russians customers acquiring overseas property is political and economic stability. These factors are important for home buyers in the UK and Germany: this reason was noted by 82 and 76 per cent of respondents, respectively. After stability comes the climate, this is where the United States and France are leading the race, while in the United States this factor is considered in conjunction with price (52.8% of respondents). Interestingly, when Russian problems in the economy emerged, a surge in interest in the real estate options of the following countries was observed: UK, Germany, USA, France. In November and December 2015 it was recorded an increase in demand for profitable real estate. The Russians are in a hurry to invest surplus funds amid rising dollar. Up to 30% of buyers purchased overseas property for investment purposes. In addition, many foreign objects purchased to create a ‘reserve airfield’.

The Lucrative Real Estate Investment Areas In London By District

The most promising areas for investment in London real estate in the current market are Battersea, Nine Elms and Vauxhall, as these areas are focusing on long-term, really financially attractive projects. In Battersea and Nine Elms a whole neighborhood is erected, here in just 10 minutes of walk you can reach Sloane Square in Chelsea. On the one hand it’s an expensive offer, but on the other, buying an apartment in London, in the new district, where 90% of the objects represent luxury housing, is the dream and goal of many. In addition, the area is very close to Chelsea, so the demand is very high, too.

london investment areas

The most famous and popular areas of London outside England are Chelsea and Belgravia. Not surprisingly, prices in Chelsea always grow, because the demand for apartments in Chelsea exceeds supply, and the interest of international investors to the maximum. Successful bankers and brokers in London give their preference to invest in real estate in Chelsea, and their families love this area for endless shopping opportunities, cafes and designer boutiques. The areas of Chelsea and Kensington boasts half of the 100 most expensive streets in London. For example, Kensington Square is the UK’s most expensive street, this is where the average price of real estate equals 5.5 million pounds.

It is also considered to be advantageous to invest in real estate area of ​​Battersea, thanks to a good location, as well as a number of aspiring construction projects. Battersea is also considered one of the best areas in central London and has a gorgeous location on the River Thames. Over the past three years, the area scored the highest price of population growth in London. Currently, the area is planned for massive restructuring and by 2020 it is expected to actively rise in price of real estate. In addition, the planned construction of two new metro stations, eight complexes with restaurants and shopping centers is also approved.

The demand for new buildings in prime London was always greater than supply, so in these areas no new premises are built according to conveyance solicitors reports, although suddenly you may get lucky, and you will be able to buy an apartment in a small building in the prestigious location. For example, over the past 10 years, the first new premium in this area was Vicarage Gate in Kensington.

In central London, Liverpool Street was one of the first areas to be updated, so it is worth paying attention to this area of ​​London and its surroundings. According to forecasts in five years the cost of real estate in Liverpool City could increase by 23%. Also the number of projects is actively constructed in the quarter of London Bridge: new homes, shops and business centers pop out.

The most promising area in south-east London is Greenwich. Experts say that real estate in this area will increase in price by 19.4% over the next five years. In the north-east of London one of the most promising districts is Stratford, where the 2012 Summer Olympic Games were held and around 2800 housing units have been built. According to experts, in the area prices will rise substantially, as in Greenwich, by 19%.

London Outperforms Paris In Terms Of Elite Property Sales

Luxury property in London is sold more frequently than in Paris. Although French capital is around 4 times smaller in terms of population (8.6ml in London vs. 2.2ml in Paris), London has been its rival for long centuries. Two of the largest Western European metropolis have much in common. But when it comes to real estate, these two cities stick to very different development paths. Sales in the upper segment of the real estate market rose by 121% from December 2005 to June 2015 in London, while the identical mark in Paris is estimated at just 60%.

london-luxury-real-estateAccording to market analysts, this difference is explained by the fact that London demonstrates way more impressive results in terms of business and economy development: the city generates approximately 23% of the country’s annual GDP. London is often seen as a haven for capital for wealthy people from around the world, and Paris is a no match to England’s capital in this regard, which is confirmed by a variety of factors. English is a recognised international language, a high concentration of financial institutions in the United Kingdom and the tax status of ‘non-residents’ are attracted to the British capital paid professionals and successful businessmen from different countries.

However, the introduction of stamp duty in December, 2014 has made the purchase of the houses in London even more costly. A slowing economic growth in China and the decline in oil prices has led to some reduction in demand for prime London real estate from foreign buyers as reported by numerous respected conveyance solicitors agencies. As a result, the amount of acquisitions in the most expensive districts like Knightsbridge, Belgravia or Mayfair is gradually reducing. In October, the agency Knight Frank has reduced the growth forecast for the elite of London property market for 2016 from 4.5% to 2%.

Savills agency analysts say London prices for elite real estate are reaching the maximum. At the same time, elite real estate in Paris still has potential for appreciation. An increase in pricing for the most expensive real estate objects in French capital has stopped after the victory of Francois Hollande in the presidential elections and the introduction of the wealth tax. Today, the cases when unique historical houses for sale do not find their buyers are quite frequent. The total volume of transactions has declined in 2012.

What can you expect in the future? In Paris, the negative impact on the real estate market is provided by the laws governing the procedures of renting apartments and houses. The vast majority of property owners in the capital – the French, do not appreciate the restrictions on their property. In London, foreign players in the real estate market are big players in the market. Given the fact that the number of dollar millionaires and billionaires in developing countries is growing much faster than in Europe and the US, we can predict an increase in demand for the elite property in London.