Investments in London property with the eyes of the professional

Investments in real estate of London pursue the ultimate goal – getting pure dividends from the purchase of a residential facility. To date, the profits can be made on reselling real estate at the time the highest price increments, as well as providing the facility for rental. In this case, the investment will pay for itself slower, but guarantee stability for the long term.

Among international investors residential objects of the secondary market (cottages, townhouses, detached villas and apartments) have a higher priority. As a rule, they choose these investment objects for the sake of a potential yield. The greatest potential for profitability is determined by the annual growth of capital. On this basis, more than 67% of real estate investments in London enters the objects of elite sector. According to (a legal hub allowing you to find a solicitors in Norfolk, Cheshire and other regions) London’s conveyance solicitors mention the following numbers: the minimum cost of such facilities in early 2015 ranges from £1,200,000. The average market prices for real estate are considered to be premium in the amount of £3,500,000 – £ 4,500,000. However, about 47% of all investors prefer to invest in more expensive objects – property at the price of £6,000,000 – £7,000,000.

This interest in the elite residential sector is triggered by the most intense price increases, which correspond to 10% – 12% of annual growth. This rise in prices makes it possible to gain pure earnings by resale real estate taking into account the difference between the initial cost for the purchase and the final amount of the item at the time of sale.

In this regard, investment in real estate in London comes to the maximum extent in the central regions of the capital. Housing stock in the central area is 90% formed of elite competitive objects. The highest concentration of real estate with a high potential yield is focused in the districts of Knightsbridge, Mayfair, Belgravia, South Kensington, Notting Hill, Westminster and Chelsea.

According to data from Dataloft experts, Mayfair is gaining particular interest at the moment. This area now has the average market price of £60,000 per square meter of living space. By 2016, experts expect a capital gain to £120,000 per square, and by 2020, the Mayfair property may become the most expensive in London at prices up to £160,000 per square meter. Talking about the most liquid real estate at the moment, we should focus on the secondary residential market of Belgravia. The average price of luxury residential properties in this area reaches £10,000,000. Investments in real estate in London, in this case may bring the profits and returning the object in rent because the tenants indicate that they are willing to rent a property in Belgravia at a price of £ 45,000 per month.

At the same elite sector is characterised by stable growth in prices, which minimises the risks of investment. Even in a period of stagnation (2009 – 2012 years), the elite real estate in the fashionable areas was sold at a price 5-7 times exceeding the average market. Now, the price gap is even more pronounced.

Why it is wise to invest in UK real estate

According to the latest statistics, the United Kingdom houses the most liquid, prestigious and expensive real estate objects in the world. Also, the country itself is distinguished by an excellent level of education, modern, dynamically developing infrastructure and totally impressive shopping and entertainment facilities, cultural sites and attractions. The country attracts foreign capital and serves as a master place for outflow of money from all the corners of the globe: from Eastern Europe and Persian Gulf to South-Eastern. The financial heaven for large international businesses and favourable climate for virtually any business development – the shortage of options on real estate market is not accidental. So, what else you should know about the UK property opportunities?

The UK finds itself in a stable economic situation and well-established work of state institutions, loyal legal and tax system for foreign investors, who can consider the following real estate opportunities:

  • Favorable dynamics of economic indicators;
  • The competitiveness of the state;
  • Stable and established activities of the state apparatus;
  • No need to pay income taxes on the sale of real estate for individuals of non-resident status;
  • Loyal taxation system for investors from abroad.
  • Thorough protection of the right of possession

According to the ratings of The Heritage Foundation and Wall Street Journal and The 2015 Index of Economic Freedom, the United Kingdom became one of 15 countries with economic freedom, boasting the following aspects:

  • It implements the principle of freedom and protection of trade, investment deposits, the business environment on all the levels;
  • Low levels of corruption;
  • Implemented protection and the protection of property of a person;
  • There are effective state institutions;
  • Well-established loyal legislation attitude to lessors of real estate;
  • Well-balanced labor laws.
  • High investment potential and minimum risks

Given the mentioned above fact, the unprecedentedly high costs of real estate are not surprising, especially in London. According to the reports of conveyance solicitors and real estate agencies, the average price in prestigious locations, such as Chelsea, balances in the range of £1.2 – £1.4ml. Moreover, it is projected that the rise in prices will have a long term effect, at least in the next 5 years in the event of the absence of regulations. The trend is due to a chronic shortage of supply, the insufficient number of construction options. Government statistics indicate that for each year the shortage is growing by 100,000 thousand units so meeting the demand is the mission impossible, and the state of affairs naturally provokes a significant increase in rental price.

Nowadays, liquid real estate assets can be acquired throughout virtually the entire country, so investment in real estate acquisition is associated with minimal risk in general. The objects of residential properties are high-quality assets that guarantee the diversification of investments, as price fluctuations in the housing does not involve price fluctuations of shares, commercial real estate, or bonds of the state.


Considering student property as an investment target from every angle

Student property in the UK is now considered to be one of the most profitable and promising investments. British universities are very popular among domestic and abroad students, so the studios and apartments for student audience are in steady demand and the price of entry into the market, compared with other types of real estate is not that large, and is basically accessible to many investors, a potential investor may even take advantage of mortgages. To evaluate the profitability of investments conducting a thorough analysis of its maintenance and acquisition costs is essential.

An in-depth look at additional expenses

When buying any real estate you simply cannot do without additional costs, and student property UK is no exception. Firstly, it is necessary to spend a certain of money when associated with the acquisition. In the UK, there are tax breaks on the purchase of real estate (stamp duty); if the purchase price is less than £125,000, you do not need to cover this tax, and the student’s property, as a rule, fits under the specified range, so the tax is not necessarily paid. However, if you acquire expensive housing or, let’s say, several units, stamp duty rate can reach up to 15%.

And in any case, you will have to pay for legal services of conveyancing solicitors. Sometimes they are included in the cost of housing, but more frequently it is not; in such a case you should take into account the sum ranging from £500 to £1,000, plus possible additional costs for the preparation of documents.

Additional charges follow at the stage once property becomes yours. In the UK, there is no single tax on real estate, but you have to pay a council tax, which is designed to finance police, government agencies, and servicing companies. The amount of the loan depends on the region and ranges from £200 to £2,500 pounds per year. Also, income from renting the property is subjected to income tax (personal Allowance), however, if the income is less than £10,000, the tax is not levied. Though, if the sum is greater, then have to pay 20% on income up to £32.010 annually, and up to 40 – 45% in case of higher amount of income. If the planned profit is put higher than £32.010 pounds per year, it is better to register a property to a company, and if your incomes account for £10,000, it is still important to declare and register it with the tax authorities as a non-resident, otherwise tax authorities will automatically remove the 20%. At the same time, if the property is way more expensive and costs more than £2ml., you will not be able to escape high taxes, as you will have to pay an annual tax (Annual Residential Property Tax, ARPT) in size from £15,000 to £140,000, as well as a capital gains tax at the rate of 28%. In addition, student property is typically registered as leasehold, meaning you have to pay the land rent (ground rent) – the payment of £100 – 500 pounds a year.

The prospects for construction and change of the situation in the London property market

The shortage phenomenon has a downside – many investors from abroad, without studying the market offers, fear of lack of facilities. In fact, the United Kingdom residential capital fund is ready to offer the facilities on the open market, and that to separate on the price class, and class, and geographical location – so each buyer will be able to make the investment.

The fact that real estate in London is available to purchase, indicates a recent report of Savills Company, which reveals that the price category where the cost of the square meter is exceeding £18,000 per square is significantly growing. To date, the elite real estate in the capital is sold at a price of around £60,000 per square meter, at the same time the selection of mid class housing is always there.

In addition, the municipality wants to attract investors into the market, so the real estate development in London primarily focuses on housing. To eliminate the housing deficit, attracting investors and recruitment of primary residential real estate market, the municipality has created a Building Committee, which is tasked with the complete elimination of the deficit by 2020.

In 2014, a multiplicity of construction projects has started on large areas of land. In the West, it is an area Old Oak Common, the construction of which is able to cover the demand of 2.4%. And also the site of The Docklands (East London). At the same time the construction of the primary real estate in London in these regions, as analysts predict, will lead the overall development of the infrastructure, which will affect the value of the objects. Thus, investors will get not only new proposals, but also a marketable commodity that has a high potential yield.

Speaking about the prospects of construction in the elite areas, the historical center, the most promising is the construction of luxury housing estate in Kensington. The starting price of one-bedroom apartments in the complex starts from £1,500,000, plus the legal expenses – the services of conveyance solicitors, but in the next 5-7 years the cost may double. A similar situation was characteristic of the new housing estate in Battersea, the construction of which ended in 2013. By the end of the construction of the area the price has increased by 13% on average. The not numerous construction areas in Chelsea and Mayfair have all the chances to go even beyond the two-fold increase – the elite property niche experiences a significant surge and the trend seems to be having a progressive nature.

All this testifies to the fact that the investment in the primary residential segment is also possible, and it also looks promising. Moreover, the purchase of primary residence is economically more accessible than the purchase of real estate with the aftermarket. To increase availability of real estate developers offering to pay money for the object partially, than making a deposit.

Real estate use cases: understanding where your investments go

The construction market of the capital of Great Britain London offers a limited amount of business-class housing opportunities. In this article we will consider the project of residential complex in Eagle, located in the famous economic and commercial heart of the capital – the City of London on Old Street. The construction of Eagle was insured at the initial stage, so the buyers were legally protected from missed deadlines and frozen projects. Now it is a high-rise building has 26 floors offering large 1, 2 and 3-bedroom apartments and penthouses with panoramic windows on the upper floors.

Buying an apartment in high-rise Eagle is optimal for a variety of reasons. First of all – the location. The City of London is one of the most prestigious areas of London, where the average property increased in price by 10-12% annually. Secondly, the new Eagle has a perfectly landscaped infrastructure. The famous sights are in walking distance: in a 4-minute walk away LondonBridge metro station, and in 2018 the owners of the apartments in the Eagle will be able to move quickly to Paddington station and the picturesque district of Canary Wharf.

Despite the strong benefits, the cost of apartments in the new building are relatively low. Apartments with one bedroom (with an area 64 – 65m2) are exhibited at a price of £925,000. The cost of large-sized two-bedroom apartments up to 120 m2 does not exceed £1,800,000; the aforementioned numbers do not include the expenses on conveyance solicitors though, plus the investors will need to pay for the services of real estate agencies. All the apartments come with full technical equipment and decorations on board, while developers insure customers by giving guarantees on all the finishing work for up to 2 years.

The development company, which organised a large-scale project in the Battersea area, has set a new tone. Global interest in building Battersea Reach is heated and the forecasts of analysts, who believe that the new building will increase its value by 5% faster than other objects of the primary market. Battersea Reach is really a unique project, which consists of 4 high-rise apartment complexes, many of which have amazing views of the Thames.

Battersea Reach offers both luxury large two bedroom apartments and penthouses, and affordable cost apartments with 1 or 2 bedrooms. In addition, each property owner will be able to use a spacious terrace or balcony. Each of the proposed apartments is equipped with exclusive furniture, it is equipped with technical equipment, modern lighting systems, climate control and heated floors. The complex has an optimal infrastructure, since it is equipped with a gym, a business center and a restaurant.