Published on : 09 May 20193 min reading time
Why to invest in real estate in London?
London is and will remain London, the capital of the world, some will say! Its language, its economic and cultural dynamism, its universities, its 4 airports and its Eurostar station, London is a bubbling crossroads, a city that attracts those who succeed, those who want to succeed and those who succeed. The political and security environment is stable. The legal and fiscal context is favorable with laws that favor the owners. In addition, the many parks and green spaces make it a really pleasant place to live. Finally, the real estate market, although stable for 2 years, has taken on average 10% per year in value over the past 20 years. It is robust because the stock of housing is dramatically below needs. There is also the very favorable exchange rate if you have funds in euros or dollars. It is more than likely that prices will soon rise again, the question is when? As you will see, there are many reasons to buy an apartment in London.
How to invest in an apartment in London?
Many websites allow you to access the loan and to repay you partially or totally through the rents received. You can enjoy a very dynamic London real estate market and a high capital gain on resale, this is called the “capital gain” (10% per year on average from 2000 to 2015). In England, buy-to-let is governed by special legal provisions.
1) Know what your goal is:
Resell in a few years and bet on increasing the price of your property or pay the property on a certain number of years (10, 20, 25…) and then enjoy monthly annuities (supplement of retirement)?
Do you want to keep the option to live there for a day or to make it available to your children later?
This objective will be decisive in the choice of good (good yield versus crush versus potential for increasing the value of the good).
2) Market knowledge is essential:
What is the Neighborhood that goes up? Is it new or old? Will it be restored? Is there any possibility of enlargements? Is there a garden or not? Is it a freehold or leasehold?
3) Choose a promising neighborhood:
In which area of London should I choose? This does not necessarily mean the most expensive or the cheapest, but a place where people want to live, for various reasons: accessibility, good schools nearby, living area, shops, etc.
4) The borrowing rate:
We know the best “mortgage brokers” (brokers) whose job is to negotiate with banks the best rate for you. The higher the personal contribution is, the more interesting the rate. Note: the buy-to-let loan rate is higher than for a purchase to own the property.
5) Think about your tenant-target to choose the right property:
For a family: storage is important
For students: ease of maintenance, comfortable without the need for luxury
For young professionals: modern style and easy to store
6) Possibility of insurance (not obligatory) covering the non-payment of the rents:
The “rent guarantee insurance” for protection inexpensive and reassuring at the same time!
7) Do not forget to keep cash for the maintenance of the property (ex: change the boiler etc …).
8) Choose to self-manage rental, or go through an agency for agency fees.