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Buying PropertyBack to top Back to main Skip to menu
United Kingdom (UK) - Buying Property
Despite the latest problems with a double-dip recession and mortgages being more difficult to secure, the current economic state has good buying opportunities for those who want to buy a property outside of the English capital, without a need for large mortgage. As the Eurozone jumps from crisis to crisis, the number of wealthy European buyers in London has increased.
Foreigners can buy property in the UK and most nationalities are eligible for investment loans, but there aren’t many banks offering them. Those who live abroad have to give proof of income and can expect to be asked to pay up to a 40% deposit. Mortgage rates currently go up to five percent and the type of mortgage available depends upon its intended use. Foreigners can often secure loans in their own country as they may already have established assets they can charge against and have mature relationships with their existing banks. It is smart to check out the tax implications when considering such a loan.
Steps to purchasing property in the UK
The main thing expats have to do is to set a budget and, if a mortgage is needed, make the necessary arrangements. Expats also need to secure the services of a conveyance solicitor.
Once a buyer has found a property and made an offer to the vendor’s agent that has been accepted, the agent submits the offer to both solicitors via the Memorandum of Sale. It means that buyers could do this themselves if the seller allows it. Mortgage providers can require both parties to be professionally represented.
The seller’s solicitor has to contact the buyer's solicitor and provide them with a copy of the seller’s title. Then, the buyer's solicitor raises enquiries on the title and all other matters that he or she considers relevant. The solicitor also requests a list of fixtures and fittings so that the buyer can be told what is to be included in the sale. The solicitor also puts in hand all the usual local searches. Mortgage offers are often slower, meaning that most mortgages come through within about five weeks of an application being submitted.
All the work that is mentioned above is part of the pre-exchange of contracts. It means that neither the seller nor the buyer is committed in any way and either party can still withdraw from the transaction. Once this part of work is done and the potential necessary mortgage offer is received by the buyer, the solicitors can discuss the completion dates required by their clients.
Once agreed, it is time for the exchange of solicitors' contracts. In this stage, expats are often asked to pay 10 percent of the purchase price at exchange of contracts, securing the deal so that neither party can withdraw. Anyone who decides to withdraw after the exchange of contracts will lose their deposit and can be sued by the seller for any subsequent loses they may suffer. On completion, the solicitor pays the balance of the purchase price, so expats need to provide this amount to their solicitor before completion. The solicitor also has to settle the remaining sum for the property and then register the title at the Land Registry, sending the buyer evidence of registration. After all is settled, the property belongs to the new owner and they can take possession of the keys.
UK property terms
The legal process for buying a property.
An individual owns the land and property completely, and is therefore responsible for all maintenance and repairs.
Since much of the property in London is leasehold, this applies to almost all apartments in London and to some houses. In general terms, the reason property is leasehold is that there is an area of commonality where more people live under the same roof and therefore have to contribute towards the costs of repairing the structure of the building and any communal areas.
This is particularly needed when someone is purchasing an apartment. Lease terms vary but most new leases seem to be granted for about 125 years. It is very important that expats find out from the agent about the remaining term of the lease they are buying and discuss the same with their solicitor. In that case, solicitors will be able to advise on whether or not the term is long enough.
Recent legislation change has increased the rights of leaseholders, enabling them in some situations to collectively buy the freehold of their block of apartments or individually purchase an extension to the original lease. A solicitor needs to advise on this if relevant when buying the property.
How to find property for sale in the UK
Most properties are can be seen online, and the information always includes details of the real estate agencies, which also have independent websites. Estate agencies have local neighbourhood magazines that display properties and other general information in the area. Newspapers across the country also have property sections, some on certain days of the week.
Some properties are auctioned and notices of these are placed in magazines and newspapers. Agents can inform buyers of this market movement.
Independent property finders in London are efficient and can save time, especially for people who are not so familiar with the UK purchasing process. One of the main advantages of using such services is that property finders are retained by their clients and so they pose no threat to the agents who give them access to properties not on the open market.
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