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.