What you should know about purchasing banking real estate in the UK

Before the registration of the transaction for the purchase of bank property in London foreign investors should take into account the most basic factors that may influence the decision to purchase. According to the regulatory decree, the client undertakes to assume the risks associated with the given real estate. This means that in case of the existence of a certain debt, for example, for the contents of an object or an utility debt to the housing cooperative, the new owner is obliged to repay all the existing debts. If the previous owner of banking real estate has signed a lease and acted as the lessor, the new owner of the facility is obliged to wait for the expiry of the lease, and only then request the tenant to vacate the building. In view of this, it is advisable to hire legal entities that analyse the actual debt situation and take into account all the nuances that can affect the cost increases or unprofitable transaction. Legal backup is essential as banks may cooperate with 3rd party agencies that are interested in the sale without disclosing the entire picture – conveyancing solicitor and debt specialists could be the professional categories that will help you out.

banking realestate

Also, investors should take into account the time associated with the financing. As mentioned above, the bank services are ready and motivated to provide financial support. However, the potential buyer, referring to a particular UK bank, which offers the property for sale, agrees to accept funding exclusively from this particular bank. So, if there is a need for mortgage lending, the client will be able to use only the offers provided by the partner bank on the certain conditions defined by the bank. That is, the investor will be unable to select the best loan program at other banks, plus lower rates could be unavailable to the investor. Importantly, the conditions of long term loans offered by British banks as for real estate financing, which is sold at a discount of 70% or even more, could be far from optimal. However, in practice, this does not affect the financial profitability of the operation, although it implies certain ‘handcuffing’, limiting the choice of the investor.

The prospects confiscated or arrested real estate bears for foreign investors are largely associated with the affordable end price, so option can be considered to be optimal for many buyers running on a tight budget, even if the repair costs or debt repayment, net income from such investments may rise up to 100% of the purchase of the bank property. The investor may gain additional benefits by investing a certain amount of money in a property-focused project (usually the amounts start from £250,000) or moving capital to the partner bank (the amounts of £500,000+ should be considered). All in all, given the deficit on the property market, all of the above aspects trigger particular interest for such real estate segment in foreign investors.

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The stages of acquiring property in the UK: the underwater payment rocks

After the purchase transaction is complete, you will need to pay the state a fee as payment of expenses related to the acquisition. Now the legislation set the bar at a rate of 4 per cent of the transaction amount. You do not need to understand all of the transactions and other legal tricky cases, all of this is the prerogative of the agent or any other person who may be your confidant, plus the validity of the amount is verified by conveyance solicitors. If you are working with an agent you will have to pay up to 5 percent of the total cost of the purchased object, while conveyance solicitors, whose participation in the deal is obligatory, are typically paid up to 0.5% of the purchase. The cost of the premises is fixed in the contract, and the payment obligations of the seller and the buyer are listed there.

In order to take the construction of the house on their own land, it is necessary to communicate with the local authorities. Once administration gives go-ahead for the start of construction, you will need to draft a future housing, and then send it to the Ministry of Environment.

All in all, you can hardly call the pricing policy for the property in the UK to be democratic. In the center of London to purchase a one-room you will need around £1ml. The further you go from center, the lower the prices will be, but no less than £220,000 according to the offers as of March, 2016. In other localities, e.g. Liverpool or Manchester Greater area the prices are way more moderate – this is where 1 bedroom apartments start from as low as £70,000.

Before the acquisition of the object it is necessary to hire professionals that conduct an inspection of the premises and the adjoined buildings. At the end of this procedure you will receive a formal opinion, in which the state property will indicate that you need to repair and how much it will cost. For this paper, you will need to shell out up to several thousands pounds (although it doesn’t apply to the brand-new property of the higher price segment, that typically come fully furnished). This conclusion is then required for the registration of the mortgage, because the bank will need to make sure that the value of the object actually corresponds to its real condition.

The next step is a contract. It is notarised and sold under the close supervision of lawyers. After the transaction, your lawyer will ask you to provide all the necessary documentation; plus you may be asked to confirm the nature of the funds you are using to acquire the property. Then, in order to become full owner of the object, you will need to register all the documents at the Land Registry; and once this procedure is completed, you can consider yourself to be the landowner.

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