British real estate investment is a relatively reliable and stable investment direction for Chinese people in the UK.The property types, property rights structure, purchase process, loan methods, and tax insurance in the UK are very different from those in China.Before investing in British real estate, Chinese people need to know the relevant knowledge about buying houses in the UK in order to reduce investment risks and maximize investment returns.
So in this issue, we start with an overview of UK real estate.
Advantages of UK property investment
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is more Stable rate of return
If chosen correctly, UK real estate will bring a relatively stable rate of return.
Real estate investment income mainly includes two aspects: house appreciation and rental income.Collecting rent is a stable and fast source of income in real estate investment.
The average rental yield in the UK is stable at 4-7% and is trending upward.The rental income of high-quality properties in good locations can even be as high as 10%.(Historical data from the same period is for reference only).
Property sales are convenient
The British second-hand real estate market is very active. Once the right time comes, the investor's house can be easily resold, and the transaction proceeds can be transferred to any designated account conveniently and quickly.
This means that the investment can be withdrawn at any time when needed, and transaction fees are low.
Diversification of property investment
There are many different types of investments in the UK property market Opportunities are available, ranging from palatial mansions and villas to stylish and modern high-rise residential apartments.
In comparison, real estate investors have limited choices in some emerging countries.Many properties in the UK have freehold title, which means that the fixed asset belongs to you or your heirs until you sell it.
There are also a few real estate properties in the UK that have a limited useful life. This period is generally as short as 99 years, and many are as long as 999 years.Moreover, the service life can be extended with simple procedures and protected by law.
Good quality and complete insurance system
The construction quality of British houses is also Very good.The British government attaches great importance to the supervision of houses and has always attached great importance to insisting on strong supervision of real estate construction. This has made the quality of British houses excellent, and many old houses from the Victorian era are still in use.Anyone who has been to the UK will definitely not forget the old houses that can be seen everywhere on the streets in the UK. Some of them are still in use even though they are hundreds of years old.
Disadvantages of UK property investment
1. The amount of investment is huge
Whether it is development investment or real estate investment, the funds required often involve millions, tens of millions or even Hundreds of millions of yuan, even if investors only need to pay 30% of the capital for upfront investment or Installment payments are also well beyond the capabilities of many investors.The occupation of a large amount of own capital causes investors' net assets to decrease rapidly when there is a short-term macroeconomic crisis. Even like Hong Kong during the Asian financial crisis in 1998 and the United States during the subprime mortgage crisis in 2007, many investors entered the market. Negative equity status.
2. Longer investment payback period
In addition to real estate development investments, the investment can be recovered within three to five years with the completion of the development process. In addition, the payback period of real estate investment can range from ten to eight years to twenty to thirty years or even longer.To withstand such long-term financial pressure and market risks, on the one hand, investors are required to have strong financial strength, and on the other hand, they are also required to attract institutional investors for long-term investment cooperation.
3. Special knowledge and experience are required
Since the procedures and fields involved in real estate development are quite complex, direct participation in real estate development investment requires Investors have specialized knowledge and experience, thus limiting the number of investors involved in real estate development.If real estate investors want to achieve their expected investment goals, they also have high requirements for their professional knowledge and experience.
What are the types of properties in the UK?
Real estate in the UK can be divided into many different types, including apartments, Villas, townhouses, low-cost houses, etc.Compared with China, British real estate provides investors with more choices.
Modern apartments usually do not have freehold rights, but only 99, 125, 250 or 999 years of use.The construction process of the house is often not as detailed and elegant as that of the old house.The property fees of modern apartments in different communities also vary according to different supporting facilities.These details must also be included in the real estate investment report for careful analysis and consideration.
Detached houses are the most expensive in the UK.It is an independent villa with its own garden and parking space.Depending on the location, the price of a single-family villa will vary greatly.
A semi-detached villa is a large villa divided into two independent houses on the left and right. Each house generally has its own independent garden and parking space.This type of house covers a smaller area than a single-family villa and has lower construction costs, so the price will be cheaper than a single-family villa.
Townhouses were usually built between 1930 and 1950 and have the precious features of a classical style.The advantage of a townhouse is that it has a back garden (usually about 10-15 meters long) and comes with freehold ownership.Townhouses can add significant value to the property itself through rear wall extensions and roof modifications.The disadvantage of townhouses is that they usually do not have a parking garage, and parking must be parked on the road in front of the door.The noise and thermal insulation coefficient may be slightly inferior to detached villas and semi-detached villas.
Townhouses can be subdivided into two types: Classical (generally very grand buildings) and Modern (built since 1970).The classical style is usually located in urban areas of London, has a larger space, and generally has an independent garden and garage.The modern style has good thermal insulation, sound insulation, multiple bathroom facilities, and ample parking space.Townhouses can bring high rental returns. They can be rented not only as a whole house, but also as a unit.Disadvantages include the need to frequently walk up and down stairs.
Vacation villas/farmhouses are all very old small houses, many of which are in the countryside, and the prices are relatively expensive. The main reason is that the British prefer old and distinctive houses.Many British people use these houses for retirement or vacation.
The types of low-rent housing include: semi-detached villas, small townhouses and apartments.The government will rent low-rent housing to residents at low prices or for free.Although they are not sold at will, the government will sell them to low-rent housing tenants at low prices according to policies.Sometimes local governments are short of funds and auction some low-rent houses that are vacant or in need of repair.The quality of this kind of house is generally acceptable, but the community environment of the house is not very good, and the safety and appreciation space will be affected to a certain extent.
Privately owned low-rent housing was generally sold by the British government at a low price in the 1980s to the tenants living in the house at the time.In terms of market price, this kind of house will be cheaper than ordinary commercial housing.This kind of house investment has relatively high risks. First of all, it is unsafe. Secondly, it may affect future housing prices.
UK property ownership (� What is the difference between land use rights)?
The biggest advantage of a permanent property house is that you don’t have to worry about its useful life. It is a lifelong property of the owner. The property will generally increase in value steadily and can be passed down from generation to generation. .
Land lease right means that the buyer has ownership of the house on the ground, but the ownership of the land occupied by the house is owned by others or the government.The disadvantage is that when the land lease term is approaching, the house price will be significantly reduced when the house is transferred. Generally, the seller needs to complete the lease renewal through a lawyer and pay the renewal funds before the transaction can be carried out at the normal market price.This type of house must obtain the landowner's consent before it can be remodeled, transferred or sublet.
Shared ownership means that the home buyers jointly purchase the house, jointly contribute capital, jointly apply for a loan, and bear equal obligations to repay the loan and various daily expenses of the property.Shared property rights can be further divided into: jointly owned property rights and proportional shared property rights.
Shared ownership means that an individual and an organization (usually a housing association) each own a certain percentage of the property.Usually individuals can purchase 25%-75% of the proportional share, and the remaining proportional share is owned by the individual and owned by the housing association.The advantage of shared ownership is that it makes it affordable for more buyers to get their first step into property ownership, and under certain conditions, stamp duty on shared ownership properties can be waived.
Shared equity is a government-based open market house purchase scheme that aims to make it affordable for potential homeowners who cannot afford to buy their own homes.
Ready-made houses and unfinished commercial houses (generally called off-plan houses or off-plan properties) are for sale in the UK, and the price is generally higher than the same type of second-hand houses on the market at that time.
The above is Lanshajun's analysis of the advantages and disadvantages of UK real estate investment and the property rights of property types. Once again, all real estate investors in the UK are reminded to check and confirm the property rights type of the house they are purchasing before purchasing the property.
