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.
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.