Introduction: - Whenever we talk about investment, real estate always comes in the first position. Go to any city in the world and you will notice much visible change in the city landscape. There are much construction works always going without any break. From day to night, workers, machines are engaged in construction.
Why Should You Invest In Property?
There is no denying that there is a boom in the property sector all over the world. But the point which has surprised everyone is the property price in the United Kingdom. Various industries body calculated that there is the highest growth in the United Kingdom. Growth is always there but this year, the growth figure has broken the record of the last six years. There must be some reason. Here we are points the reason for this growth in property.
1. Demand and Supply Rule: - This simple rule of economics is always applicable in different sectors. But when supply is not sufficient price rises. Since the starting of 2020, people from the UK are suffering from various measures taken to control Coronavirus along with coronavirus. This virus virtually handicapped the whole world and all the booming sectors come to a halt. But the same virus created an opportunity in the real estate sector. People started putting their money into buying some economical homes for themselves.
Coronavirus also pushed people to have a place of residence not located in densely populated areas. People living in cities densely populated area started leaving that place and shifting their home to places where there is enough space. There is a high risk of corona infection where there are more people who are living. In short, different factors pushed people to invest money in the real estate sector. All of the sudden, demand increased and industry was unable to provide that much housing to the public.
2. Low-Interest Rate: - We cannot deny the fact that the majority of people take property through different shorts of loan. The interest rate for a Bridge loan, mortgage loans, housing loans, etc is an all-time low in the UK. Low-interest rate makes it easy for people to purchasing a property. Additionally, major banks also systematize and minimize many documents to avail of the loan. People who were earlier living on rent started thinking about owning their own home due to low-interest rates and less documentation.
Let’s say, you are paying 5000 pounds on rent and there is a low-interest rate and you can have your own home by paying just 6000 Pound per month. Here you just have to spend 1000 pounds extra per month and you are living in your own home. After the loan period expires, the home is all yours.
3. Problems in Government Housing: - Government is the biggest supporter of the general public and various industries body. An association of home buyers predicts that the UK needs more than 250, 000 houses per year. But the government is unable to provide that much house to the public. Many political parties and politicians always promise to supply more houses for the general public, but this is not possible as on date due to various problems. If the government is unable to provide, simply means private builders will come to develop housing and it means high pricing. These are some constraints of government.
Government finding it difficult to find new land near major cities likes London to develop more property.
Many housing developed by the government is not convenient for home buyers. The not so developed transport system, lack of basic amenities, crime ratio, far away from the main city area are some of the main points that hamper the home buyer to purchase a house there.
Developed also involves Environmental cost. Strict greenbelt land policy stops the government to use green areas for the development of housing.
4. People’s Inclination towards Having Homeownership: - Even middle-class people have understood the difference between rent and homeownership. Rent always involves lots of problems. You have to adopt various terms and conditions put up by homeowners. You cannot have a personal feeling about the house. Low interest along with other factors is helping people to have their own home. Homeownership is always better than the rented space and people’s inclination towards that is increasing day by day.
6. Renting Has Become Expensive: Earlier it was not costly to take a house on rent in the UK. The property rate in the United States also increased rent prices. Now renting has become more expensive. As per the private renting index, the price has increased from 90 to 115 from January to December 2020. This increase is measured on various criteria but one thing is sure, the price of renting increasing. And when a person compares that increase with low interest, it is better to buy a house.
Points To Consider Before Buying a Property in 2021 in the United Kingdom
There is no denying that the property rate is high but purchasing this year is the best way to capture this wave. The interest rate is also low; renting is high, which makes 2021 a perfect year to go for buying a property for yourself. But purchasing is not without any worries. However, if you follow some points religiously there is less probability that you will face any difficulties.
1. Amenities: - Never forget this point. Many housing complexes nearby the city of London does not basic amenities. How can you live there if there is no proper water supply, sewer line, electricity line? Besides that, the crime rate is also a point to consider. Never purchase a house where there is a high crime rate.
In case you are getting a property at a good price then buy it but do not plan to live there instantly. Rent that property and live at a place with good amenities and a low crime rate. Waiting is a good strategy. After 3 to 5 years, amenities improve slowly. Then you may shift to that place.
2. Location: - Always calculate travelling time and cost. London is a big city and travelling is quite expensive and time-consuming. When you know that your house location is very far away from the place of working, do not buy that. Maybe you will get a property at 10 per cent less price but if that location is far away from your workplace, you need to pay 15 per cent annually. Consider points like security, connectivity, infrastructure, amenities, and commute time to work and back.
3. Value for Money: - There is no doubt that people purchase a house to live and enjoy their life. But at the same time, the investment perspective is important. Discuss this point with the broker and property dealer. Ask property increase rate for the last 5 years. A good investment perspective means good value for money. Whenever you feel you need to sell the house for any reason, you can sell it with good returns.
4. Read All The Related Documents Carefully: - Many real estate developer tries to fool the customer by hiding various important facts. Be aware of those scrupulous people. Ask and understand point like
5. House Size and Type: - There are various ways to understand this point. Always ask the carpet area and whole house area separately. Builders calculate it differently and try to fool the customer. Take note of other spaces like lobby area, staircase, gallery, Washroom, stock room, etc. Do not get confused with the super built area and carpet area. Let’s say, you are a family of 7 members then how will all they manage in a 2 BHK. There are different types of houses like independent units, apartments, luxury homes, duplex, triplex, semi duplex, etc.
6. Reputation of Real Estate Developer: - Many times, it is not possible to check and every point while buying a home. You cannot check the materials of everything after the construction. But there is some way to get to know some important points. Google the name of the real estate developer and read reviews and comments on different websites. A good property developer maintains its reputation by using high-quality material while constructing the home. Check the title deed of the plan. Also, ask for a registration certificate from builders before buying. Alternatively, you may visit different housing complex developed by the same builder to know more about them. People already living in that housing complex give honest feedback.
7. Always ask for payment receipt and any schemes:- There is high competition in the real estate market. Many companies try to lure customers with different schemes. Always ask for some sort of offers. Real estate developers offer household items like television, refrigerator, washing machine, juicer, and other small, medium, and large appliances to lure their customers. Never forget to take receipt of your payment. A receipt is a proof that you made a payment.
Different Sorts of Cost of Purchasing a House in the UK
If you are planning to own a house in the UK, you must have some knowledge about some basic property terms and the overall cost of owning a home. In-depth knowledge of keywords helps a prospect buyer in understanding the terms and conditions in a better way.
Deposits: - Deposits are the initial amount you need to pay to avail of the loan. No company or banking institution offers a 100 per cent home loan. It is up to you to prove that you have some sort of saving to prove that you can repay the loan without any difficulty. In the UK, deposits amount range from 05 per cent to 40 per cent of the total property value.
Stamp Duty: - If your property value is beyond 125, 000 pound, you may be asked to pay 2 to 12 per cent stamp duty. You can use various online calculators to check total stamp duty on your property.
Legal Fee: - Depending upon the various factors, you may need some legal advice from a solicitor or convener. That legal fee may be up to 1000 pounds.
Removal Costs: - When you buy a new home, you are required to shift all your belongings from your current place of accommodation to the new place. That involves cost. Shifting or removal fee is charged by packers and Movers Company. If you do not have many items and your new place of residence is not far away, you may save some amount on that removal cost.
Mortgage Cost:- If you do not have the cash to purchase the house, still you can have a house with the help of a mortgage loan. Here you need to mortgage any other property you have and the company gives you a loan to purchase new property. This whole process involves various costs.
Interest Payment: - If you are taking the home on credit, you need to pay interest on that loan amount. Depending upon the agreed terms and conditions, the company charges interest. People also call it loan repayment.
Insurance: - Purchasing a property is a risky affair and that’s why we suggest new property buyers always have house insurance. That insurance is costly. House insurance covers all the home appliances along with valuables inside the home.
Conclusions: - Capture this boom in the property sector and plan any sort of property transactions in the UK. This time is best for selling and purchases both. The property rate is high, so you can sell it. The interest rate is low, so you may purchase a new property.