Buying property in the United Kingdom, particularly in London has been one of the most rewarding investment alternatives for both locals and the investors in the US, Asia and Europe in recent years. The property market, especially in London has been quite active with the increased mortgage options, government schemes, new housing projects and the declining property prices because of Brexit and the slowing of the economy.
The newly-built residences in London, property ads in newspapers and on internet, mortgage publicity of banks and free assessment interviews are under the close-marking of the property investors in the UK and all around the world.
Figures verify buoyancy of the property industry in the United Kingdom. According to the data of UK Finance for the second quarter of this year, the number of new mortgage agreements made with the first-time buyers of property in London for the first time is 9,960. The data for July 2019 show a 5.5 percent rise in mortgage demand of the investors who want to rent out property, compared to the last year and that 5,800 agreements were made with them. “Help-to-Buy (Equity Loan)” scheme provided by government for the first-time buyers of property, and the inviting mortgage choices of banks always keep demands buoyant.
Demand for property in London has gone up continuously for the three-year period following Brexit Referendum. The potential buyers of property who want to benefit from the additional incentives have taken action to complete their purchasing transactions prior to Brexit.
Property companies speeded up their investments
Sales figures of construction companies prove the outcome of this mobility perceptibly as well. According to the figures announced by one of the largest British construction companies, Baratt, they sold 17,856 new houses across the country and made a profit of 910 million pounds in the previous year. The latest data of National House Building Council indicate that applications of the construction companies made for building of new housing peaked within the last 12 years.
One of London’s largest property investment companies, The Galliard Group currently performs 6,905 housing construction projects In London the sum of which is worth 3.95 billion pounds. The group that plans the construction of 10,000 houses as well offers the opportunity of state’s “Help-to Buy” contribution in its several projects. The developing regions of London which will be popular in future attract investment of the company. Besides, it encourages potential buyers to invest in the property for renting out.
The newly-built residences in numerous regions such as Streatham, Clapham, Balham, Wimbledon and Greenwich which have easy access to city, and within the settlements in the north such as, Paddington, Islington and Shoreditch show up consistently as the evidence of property investments and buying expectations.
“In the last five years, 85,000 Turks purchased property in London”
Property is a quite attractive investment option for the Turkish residents in the United Kingdom. There is no restriction to buy house for the Turkish citizens in the country, including the parties of Ankara Agreement. However, buying a house does not provide residence permit. CEO of Allytta Real Estate Investments, Neşe Jenkins pointed out that Turkish people show interest in London quite increasingly in recent years. “We don’t know the exact number of the Turkish house buyers in London; but our researches indicate that 85,000 Turkish people purchased a house in London in the last five years,” said Neşe Jenkins. She mentioned 400 percent rise in the number of Turkish investors who contacted their company for the commercial investments above 10 million pounds as of 2019.
Despite the expensiveness in London, economic and cultural dynamics of the city hypnotize a lot of buyers, including Turkish citizens with respect to long-term investment. The new railway routes to other regions from London which hosts 4.5 million tourists per year, offer the opportunity to buy affordable house by making no concessions to urban facilities.
“No Condition of Residence Permit for Turks to Buy Property in London”
Buy Property in London TurkishBank UK offers mortgage service to the Turkish citizens who reside in United Kingdom and would like to purchase property. Residence permit is not required to benefi t from the service. The evaluation process following application lasts at least 3 months. It should be noted that minimum mortgage term is 2 to 3 months after property purchase agreement is signed with the landowner.
The Turkish citizens without residence permit in the United Kingdom should open an account at TurkishBank UK to use the mortgage opportunities of TurkishBank. Experts of the bank inform customers about different mortgage packages in the following process and ensure selection of the ideal package. Lastly, the applicant collect the necessary documents for mortgage and submit them to bank. These documents contain information regarding savings of the potential buyer, his/her bills of account, salary information, and his/her stocks or company partnerships if any, and other income documents which exhibit financial status.
TIPS FOR BUYING PROFITABLE PROPERTY
Buying property in the United Kingdom, particularly in London is a pretty profitable investment. Nevertheless, such profit requires purchasing the most suitable house with the ideal buying method at the right time financially. In our publishing where we touch on all aspects of investing in property in the United Kingdom, specialists of the industry provided detailed information on: various alternatives for owning a property, significant points to be considered in selection of property, mortgage facilities and legal processes for Turkish citizens, Brexit and future designs in the property market. Do not buy house before reading our article!
The right time to buy a house!
One of the questions asked by the investors who decided to invest in the United Kingdom is “When to buy the property?” The industrial representatives underline that the lack of confidence in economy of the island where Brexit is the main agenda topic, is short-term:
“We observe the remarkable downward trend in the sale princes of property in environment of uncertainty generated by Brexit. As banks still offer the opportunity of long term and low interest loan, using savings for buying a house is rational. Such environment involves appropriate conditions particularly for tenants to invest in property,” said the Head of Retail & Personal Banking in İşbank London Branch, Ethem Berk Türköver. He states that prices of property will not increase as long as the environment of uncertainty insists.
Director of KATRIN Properties and President of ABTIC – Association of British-Turkish Investment and Construction, Kerem Yavuzarslan spoke of the property industry as the safest investment alternative in mid-term and long term. Yavuzarslan remarked that the Turkish citizens with savings should welcome the opportunity given by the active property market in the UK.
Huseyin E. Huseyin, Senior Partner of Bowling & Co Solicitors which has rendered the British and international investors legal counselling services about trading property for over 60 years in London, specified that a growing number of investors take action and contact them with the intention to invest in British property and there are numerous Turks among them. Hüseyin added that capital return of property is quite satisfactory if investors select the right property and work with the expert people in the industry.
“Investors need to be aware of the UK property market conditions to obtain maximum benefit from their investment. Although the Brexit vote has reduced consumer confidence in the UK, property market prices rise steadily in some regions and properties are usually popular. A recent research indicates that Britain is still an attractive property investment market with data suggesting 4 out of 5 property investors based in Hong Kong, Dubai and the UK are still investing in British real estate. Moreover, the cost of buying UK property has fallen for overseas investors due to the devaluation of the pound. Such condition encourages those investors,” said he.
“London property market is currently a Buyers’ Market”
General Manager of One London Property Group, Emre Belge highlighted the downward trend of the UK property market which peaked in 2014, owing to Brexit and change in the stamp duty. “The property market has gained a sound equilibrium and brings along nice opportunities to buy. “House prices in London have been balanced since 2014 after a fall of 10-15%,” said Belge.
Belge went on the reasons which make purchasing property in the UK advantageous:
“Brexit provided an advantage of about 15% especially for the investors whose main income are in USD or EUR, except Pound. GBP/USD parity which was 1.45 on the referendum date declined to 1.18 and is currently 1.23. From this aspect, the biggest investors of the UK property market are from the US and Europe this year whereas the market was dominated by the Asian investors last year.”
Emre Belge urged on the other opportunities brought by the property market which has slowed down. Furthermore, he stated that the construction companies with unsold properties offer potential buyers discounts at high rates. Belge talked that their company follows particularly such stocks and seize the chance of discounts at high rates.
Emre Belge kept speaking about the reasons which make purchasing property in the UK advantageous: “Interest rates of the Bank of England set based on the monetary policy correspond to 0.75% and the economy slowed down under the effect of Brexit, so interest increase is not envisaged for a while. Thus, the above points present an advantageous period to investors. That’s why we regard London property market as a ‘Buyers’ Market’. In other words, buyers have more bargaining power nowadays. We think that an investor who invest in the UK property market in the near future will earn significant profit when he sells his property at the end of five years.”
One London Property Group at the helm of Emre Belge gives support to its customers during their whole buying process which contain houses and commercial properties.
East London and new metro line are the favourite regions
The second most important question posed by the potential buyers of house covers location of the house… Regions such as East London, surrounding of London River in Greenwich, Thamesmead & Abbey Wood, Bank Side, Waterloo and Southall come to the fore in “Opportunity Areas” study of London Municipality. Even though the properties in Southeast London, particularly centre of London are generally preferred for buying, their yield is low because of being in expensive regions. Forecasts of the industrial representatives about London and the other regions are similar to below:
• East London: East London offers lower prices, so higher yield. Islington, and North London which contains the upper area lead the way as the regions open to development. Newham, Barking and Dagenham districts are prominent with affordable prices.
• Kingston Upon Thames and Southwest London: Richmond, Kingston, Wimbledon and Putney maintain their popularity, since they are preferred by especially Turkish families due to the presence of schools, accessibility and social environment.
• Surrounding of Elizabeth Metro/Crossline: This metro line to be opened at March 2021 links Heathrow airport to the city centre. It is promising for the future investments on this line. The line accesses to the following stops: Reading in North, Abbey Wood in Southeast and Shenfield in Northeast London. It goes to Berkshire and Essex as over ground via the existing lines.
• South London: Property companies intensively invest in Streetham, Croydon, Clapham, Balham, Waterloo and Greenwich districts in this area. These regions attract potential buyers with its accessibility to city centre via railway line, development potentials and affordable prices as well.
Attractive regions other than London
In addition to London, the regions such as Manchester and Leeds shine out as the profitable cities for investment. In particular demand for Birmingham, Bristol, Nothingham and Manchester which host universities has increased nowadays. Professional property investors may choose Liverpool and Newcastle for their profitability. Besides, properties in Cambridge and Edinburg are sold very quickly.
Thanks to its closeness to London and CrossRail high-speed train which will start to give service in 2021, Berkshire Region appeals investors. This region is particularly preferred by the British citizens who seek for classical lifestyle, large spaces and gardens. Hosting events such as Royal Ascot races and Henley Royal Regatta, Berkshire involves a lot of mansions featured as the country’s most expensive ones. Furthermore, this segment shows utmost interest in Scotland.
Bath, Richmond and Brighton are demanded constantly. Former historical city centres are positioned as luxury locations in which finding a property is always more difficult.
Lastly, Essex, Surrey, Suffolk, Dartford and Hampshire are popular regions for former residents of London.
Think long-term for high profit!
Earning high profit from property investments require long-term plans. Ethem Berk Türköver from İşbank pointed out the possibility to make loss in short-term trading of properties if downward trend of property prices continues. “We believe that the long-term property investments for residence are proper alternatives for our customers. With respect to interest rates, we think that they may gain a downward trend, considering the environment of uncertainty and stagnation. The economic negativities which may be experienced after Brexit may lead to interest discounts to boost the market,” said he.
CEO of Allytta Real Estate Investments Neşe Jenkins is hopeful about long-term investments. According to researches and analyses regarding the future of property industry, property prices and rent prices are anticipated to go up by 14% and 10% from 2018 to 2022, respectively. Estimations on the property price index of HM Land Registry indicate that house prices will increase by 56% in 2027. Neşe Jenkins gave recommendation to the investors who want to purchase property only for investment as follows: “Find the best property in London or focus on especially the council estates, dorms, nursing homes and buildings of mixed usage or the lands that are suitable for construction in the regions out of London.” She mentioned very high investment returns and rent income of such properties. Moreover, Jenkins specified that investing in property as a company rather than a person provides advantages in both taxes and succession.
WHAT ARE THE WAYS OF BUYING A HOUSE?
Huseyin E. Huseyin from Bowling & Co Solicitors stated that an investor in the UK can buy a property in two different ways:
• Freehold, means the outright ownership of the land and the dwelling that sits on it and most houses in England are owned on a freehold basis.
• Leasehold, is the second alternative to be preferred for buying a property in the UK. In case of Leasehold, a person with Freehold transfers another person his/her right to use the property for a fixed term. This is specified in a legal document called “Lease.” Term of Leasehold is usually 125 years. It is essential for transferee to get support from a law office, because he/she will be bound to the conditions specified in Lease. Most of the flats in the UK are owned through Leasehold.
SIGNIFICANT POINTS TO CONSIDER FOR PROPERTY INVESTMENT
Invest for at least five years
CEO of Allytta Real Estate Investments, Neşe Jenkins listed the following significant points to consider for potential buyers of property:
First, determine your expectations very well and think about your investment purpose.
Forget earning return in short term. Plan an investment for at least five years against the price trends which may be either downward or upward.
Do not regard your budget just as buying expense. Add taxes, additional duties, attorney fees, investment and financial adviser’s fees and the municipality and title deed expenses to your budget.
Use your reasonable effort to choose the ideal region.
Collaborate with a professional property investment and management company.
Get information about the planned renovations and extra payments before buying the property.
New projects generate higher returns than old ones
Director of KATRIN Properties Ltd, Kerem Yavuzarslan made the following suggestions:
If you purchase a house for renting out, contact the right bank, make a long-term loan agreement and take the rent income into account. New projects generate higher rent income than old ones.
If you want to purchase house for residing, it should be close to the schools which conform to the capacity of your children and appreciated by them. Otherwise, they may have several problems due to choosing the wrong school.
It should be noted while buying a property for investment or residing that the newly-built houses are always sold at a value which is more than 10-15% of their market value. The brand-new house will be pre-owned on the date of its selling, so it will be sold at least 10-15% cheaper than its market value. Thus, it can reach its buying price after four or five years.
If a pre-owned house is bought, and then sold after some renovations are made, its value does not change under the condition that survey reports are issued properly for purchasing the house.
If income is significant for Turkish investors, they should buy their house which has easy access, especially to metro line. Queen Elizabeth Metro which is under construction should be searched as prices are low nowadays. Instead of flats, a separate house should be bought and the alternative of making renovation should be utilized.
Besides, small towns out of London which have smooth settlement should be taken into account.