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.

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.