Plunging into the student real estate sector

student housingBritish mortgage experts are arriving at a conclusion that the most profitable housing rent in the country accounts for students. The average yield of this property is 12% per annum. This high figure is due to several reasons. Firstly, as in other countries, British students often rent rooms, not entire apartment. The owner gets more profit when providing each room for rent separately. Secondly, in the UK there’s too few student dormitories to accommodate everyone. For example, in 2010 to 490,000 of beds at the dorms were provided to as many as 700,000 of students. Thirdly, education in the UK is becoming increasingly popular among foreigners. The number of international students increases year after year, so the demand for housing rental grows accordingly.

The most popular cities for students remain to be Durham, Cardiff, Birmingham, Liverpool and Nottingham, all of the above having the same feature – a relatively low cost of housing at a high yield. In the past few years the industry is booming: according to CBRE’s, in 2011 sales in this segment of the UK market amounted to £863ml., while in 2010 this figure was equal to £93ml. In 2012, the growth continued and exceeded £1bn.

The total investment in the student’s real estate sector in the UK has exceeded £2 billion in the second year: according to the agency CBRE in 2013, the size of investment in the sector of commercial real estate has reached £2.1 billion. Unlike most other real estate sectors in the UK, student apartment sector is experiencing an investment boom in the regions outside of London. Thus, from the total amount invested in the sector in 2013, 88% of the share accounted for objects outside of London – 30 regional centers of the United Kingdom. Such cities as Coventry, Swansea and Manchester have received the greatest share of investment, because of the opportunities for implementation of large-scale projects with high rental income and strong demand for student housing for rent.

According to the reports of conveyance solicitors, over the past 2 years there was a significant increase in the number of foreign investors attracted to the sector. So, while in 2011 the share of investors from abroad accounted for only 23%, then in 2013 already this mark has increased up to 52%. The most prominent group of investors includes the residents of the United States. For example, the Greystar Company, one of the largest operators of student property and homes for rent in the United States, has acquired a portfolio of student hostels in England estimated at £310ml.

The basis for the increased interest in the sector of student hostels in the UK is the fact that the current market cannot satisfy the demand to the full extent. Despite the skyrocketing tuition fees, we see an increase in the number of students in the UK, and in particular, students from abroad. Those foreign students prefer to live in comfortable complexes of student hostels, rather than in the private sector. For example, in the 2013/2014 academic year, the number of foreign students admitted to British universities accounted for 61.985 individuals, the highest rate since 2010. As a result, the percentage of load on many hostels exceeded 95%, guaranteeing stable income and attraction of new investors in the sector.

The state of affairs around rental and new buildings market in the UK

real-estate-investmentThe number of people renting apartments in the UK has increased from 2.15 million in 2004 to 3.35 million in 2010, which accounted for a 55% increase over the 6 years. This is primarily due to the high prices of housing and the reluctance of banks to lend money for acquiring housing. This situation leads to the fact that there is a significant increase in rents, which in turn increases the return on investment in the purchase of further property rental trend. According to a recent survey conducted by a number of the UK’s leading real estate agencies and company, aggregating conveyancing solicitor and allowing you to find a solicitor effortlessly, every tenth rented house in Britain in 2012 generated at least 10% of income, and the average yield across the country amounted to 6.2%.

The amount of foreign buyers in the UK property market is dramatically increasing. And while a decade ago the presence of wealthy foreign buyers in central London was the norm, now greatly increased the number of foreigners acquiring more affordable business-class housing in all areas of London and beyond. Currently, the share of foreign buyers in new buildings varies between 40 and 60%. These are mainly buyers from Asia, namely, China, Singapore and Hong Kong, CIS and Arab countries residents. Also, because of the sovereign debt crisis increased the flow of buyers from Southern Europe. In 2011, the value of real estate purchased by foreigners in London was estimated at £5.2 billion, exceeding the analogous index of 2010 to £1.5 billion to put London in the first place in the world.

High return on invested capital, is only one reason that London is a world leader in foreign investments in real estate. Perhaps more important is the fact that, historically, London has always been a “safe haven” for foreign investment in real estate. Customers who invest in real estate in London, considering their investment not only in terms of the real estate, and much more broadly: the rule of law, stability of power, leading the educational system, the rich culture, tradition and heritage contribute to a reliable accumulation of wealth.

A recent study by the University of Oxford revealed the rise in prices in central London is directly related to the growth of instability around the world. Thus, London real estate has become a delicious piece of pie for many wealthy investors looking to protect themselves from inflation.

London is a global brand; and not many cities can compete with the city in terms of infrastructure, level of life and business development climate. Even if alternative real estate markets exist, comparable with London on the level of openness and transparency, they are very not numerous. Investments in real estate of England and London in particular are now fairly considered to be mid and long-term investments. The combination of qualitative characteristics of London as a financial center (the financial center at least in Europe, comparable to the largest regional centers – New York and Hong Kong), legal, political, cultural and social hub, standing out with dynamically developing, reliable infrastructure and a particular urban landscape, just instill confidence in the fact that the status of London as a safe haven doesn’t raise any questions.

The principles of local tax budgeting in the UK

uk local taxesThe local government financing is an important part of the national financial system, even though these bodies largely act as her separate units. In 1988, for example, local authorities have spent £45bn., which accounted for 25% of the gross domestic product of the country. Since the early 50’s of the 20 century the financial resources of local authorities grow mainly due to government subsidies and an increase in debt to various government agencies and corporations.

A significant part of the revenues of local budgets is generated by local taxes. In the United Kingdom there are no special taxes for various territorial communities: the county and the new unitary formation collect the same amounts of taxes. Over the past two decades, local taxes have undergone a number of reformations, which served as the basis for serious political problems in the country. Thus, a traditional housing tax (domestic rate) was replaced in 1989-1990 by the local tax (community charge), immediately nicknamed as poll tax, since the same amount was due to be paid by each adult living in the territory of the local community. The introduction of the poll tax was a kind of a national scandal: protests by local councils, residents, opposition campaign in the media led to the fact that in 1993 the tax was replaced by a new local tax (council tax). Like the two previous ones, the new tax actually represents the tax for accommodation, it is paid by every adult citizen of the local community. The tax base is the value of the property used as a dwelling; and all property is divided into eight categories, depending on which is determined by the size of the tax and a specific dwelling. At the same time, a significant role is played by the number of people living in the premises: so if the housing serves as a home for just one person, a 25% reduction from the total amount is granted.

The state of affairs around real estate

The tax on non-residential premises (non-domestic rate) up to 1989-1990 was self-assembled and installed by local councils. In accordance with the bill of local finances, the input and the poll tax, the distribution tax on non-residential premises became centralised: it is collected within a special fund that is allocated by the Government between local communities, depending on the needs and the fiscal framework of the latter. Thus, the local tax is used for leveling income communities, occupying a middle position between the tax and the government subsidy. In addition, local councils may collect fees for the consumption and payment for services rendered, as well as take out loans,  the local council applying for a loan shall enter into force only after approval by the Minister for local government. What is important, there’s no tax on acquiring property, although there are certain obligations for the buyer, for example to service the deal with the help of conveyance solicitors on an obligatory basis, the buyers are not required to make large payments.

UK real estate opportunities: all you should know about investments

uk_propertyReal estate in London for investment purposes, liquid housing in the capital, formation of the market price, the size of dividends on investments – thorough understanding of these aspects is absolutely essential for the acquisition of truly competitive housing in the capital of England.

The prospects of acquiring real estate in London and general market trends

In 2014, real estate in London is the most attractive target for many international investors. To date, housing prices in the center have reached record levels, so £60,000 price per square meter of living space is now a reality. The local prices are even higher than in Hong Kong or New York, which was considered to be the most expensive during the periods of stagnation.

Diversification of investment with minimal risk in real estate in London

Such a stable price growth is a measure of the ability of capital to diversify. Thus, by investing in residential facility in the capital will almost certainly guarantee recoupment within a few years: its value will rise and it will be possible to carry out operations with resale to drive dividends.

Real estate in London has always been distinguished by the high cost, even in the period from 2009 – 2012’s; when the crisis has hit the global real estate market, real estate in the capital of England didn’t lose their price positions, and moreover, it has steadily started moving forward. Thus, the luxury property in the center is offered at a price higher than in the regions by about 5 times. Properties in regional cities in the UK exceeded the the cost of residential facilities in other countries by at least 2 times. All this has ensured the influx of buyers in the market and steady growth of new investors in the country. Just in the last few years, the market attracted more than 110,000 new customers.

By acquiring property in London, investors can at least count on positive recoupment prospects in the nearest future. According to the consulting agency Knight Frank, from 2015 to 2016 there was a sharp price surge in the residential sector. Indicative price growth has reached 4.3% mark compared to this year. In general, if we consider the medium-term increase of the price indices, by 2018 the cost will increase by 35.8%. Analysts themselves, making preliminary forecasts in 2013, expected to observe 27% price growth., a platform that allows you to find a solicitor, predicts that conveyance solicitors services will remain at the same mark, although it is counted in percentage (up to 3%).

Investors themselves have high expectations on recoupment by real estate in London and lay investors themselves, which is evidenced by a recent study conducted by Zoopla. The aim of study was to examine what investors expect from the purchase of housing in the capital. Approximately 92% of respondents stated that they expect a rise in prices in the first quarter of next year, which is 65% more as compared with the first quarter of this year. Only 3% of respondents believe that real estate will fall in price. According to the same research, but carried out in 2012, the respondents did not have such confidence in the market, and about 19% of potential buyers have stated about the possible price falls.

From this standpoint, property in London has a very ‘high credibility’ on the part of investors from abroad. And it is confirmed by the number of transactions – about 65% of all the transactions for the purchase of residential buildings of the capital is carried out by foreigners. These people were mainly natives of Asia and the Middle East; high activity of buyers from the CIS was also observed. The latest category is primarily interested in the elite sector, so it is admitted that every 15th house acquired at a price of £10,000,000 was associated with Russian-speaking investors.

Acquiring property in the UK: a prospective direction from every angle

UK acquiring propertyThe confidence in the security of your funds is an integral part of investments in the UK property due to the country’s both political and economic stability. Along with the purchase you get an opportunity to get the best education for you and your children, plus the prospects for virtually any business development are spectacular.

Real estate in the UK is divided into several types, price categories and forms of ownership. Depending on the buyer’s taste and opportunities, the British realtors are willing to offer city apartment in modern buildings, small houses in the countryside, or comfortable, spacious private house in the suburbs. The market can satisfy virtually any demand: you may want to consider even noble Victorian mansions or luxurious lofts in the heart of London, although, of course, the prices for these options would be excessively high – London has been ranked top as for price growth tendencies in the world by several giant companies, such as CBRE and Knight Frank. Thus, the price of real estate in prestigious areas of London starts from £1 million, while the cost of a square meter varies between 10 000-25 000 pounds, reaching the sky-high £60,000 mark. Therefore, one-bedroom apartment may easily cost you £400,000 – 500,000, and a small house on the outskirts of the city of London may cost you from £300,000 to £400,000 (pound against the dollar at the beginning of February 2012 – a little more than 1.5 dollars per pound). The state of affairs around constantly growing prices are actively utilised by investors, who manage to enjoy pure dividends from their investments in less than 5 years. With the deficit of up to 30% in housing according to the official statistics, the construction tempo remains at the same level, which gives a solid ground for further profitable operations with property.

Of course, the prices for housing in other cities are significantly lower, although the gap between, let’s say, Manchester or Leeds and London is enormous, and may equal 7 – 10 times. And this is where another interesting option emerges: buying real estate in the capital of Wales, Scotland or Northern Ireland – in Cardiff, Edinburgh and Belfast respectively is another profitable direction you may want to pick up; the price of apartments in Cardiff, for example, starts from £100,000.

In general, trends in the market UK property are preserved and not likely to be changing in the nearest future. Despite the economic crisis and the European financial problems the prices and demand have decreased, but returned to the previous level and started their way forwards in less than a year. In the UK there are no restrictions on the purchase of real estate by foreigners. All transactions are concluded on the same procedure as for UK citizens and for non-residents. The prices for conveyance solicitors services didn’t undergo any changes either: their percentage share remained at the level of up to 0.6%.