Summary: All sovereign countries have their peculiar property and taxation laws. They also have local councils to administer smaller areas within those countries.
Research the specific local area before you spend a penny, or else you may make a very expensive mistake.
Introduction:
On the whole, Britain is a nice place to live. The climate is temperate, the people are civil, crime is kept to a low level and you have easy access to the continent of Europe.
You can live in the highlands of Scotland or a flat in trendy Hoxton. You can have scones for tea or go out for a curry.
The society is stable and the last revolution was hundreds of years ago. Property rights have been left largely untouched by successive left-wing and right-wing governments.
So, what do you need to know about buy a property there?
First check: Who actually owns the property.
Britain has a Land Registry which records ownership. Make sure the person you are giving £500,000 to actually has the right to transfer ownership of the property to you outright, ‘without any liens or attachments.’
Another thing to watch for is ancient rights of way or unclear boundary lines. Britain is a small, ancient country full of haughty, buttoned-up people who are prone to beggaring themselves litigating boundary lines.
Don’t become one of them. Get your home free and clear.
Beware of leasehold.
Leasehold means the house is yours, but the land below is rented, for 99, or rarely, 999 years. Sometimes the lease is less than 99 years.
This is a way for the aristocracy to retain a key source of wealth, long-term: the land. The owner of the freehold can levy charges which are onerous; this is a current minor political scandal in the UK.
Own the freehold unless the location is essential to you, or spectacular. Some apartments (flats) can be bought in which each flat-owner has a share of the freehold.
Beware of local property taxes.
In your country property may be taxed, or not. The state may get a percentage of the sale price, or not.
The UK doesn’t tax residential property; it has ‘Council Tax’, a tax which is levied on persons. Some councils have significantly higher taxes than others. If you live there as a resident, you’ll have to pay this tax.
Beware of predatory mortgages.
The more novel the mortgage, the more you should be careful of it. Mortgages which offer features like 100% upfront and paying back the bulk of the principal at the end of the term should be shunned, unless you are a very crafty operator and know exactly what you’re doing i.e. you’re going to sell the house in year 5 at a fat profit.
Make sure you read and understand the small print. If you don’t, get an independent professional to explain it to you.
Hint: the estate agent is working for the vendor and not for you. The banker is working for the bank and not for you. Don’t take their word for anything. Read more …
Beware of bad mortgage brokers.
They are not interested in giving you a good deal. They are interested in getting the best deal for their company. Read more …
Beware of predatory estate agents.
A ramashackle house with ancient wiring, having nutty neighbours, sited in an area of urban blight, which is going to have a motorway built next to it, which is near a business premises which is noisy at certain times … an estate agent is not obliged to tell you any of this.
In the UK, you are not obliged to get an independent survey of the property, but only a fool doesn’t get one.
Try to see the house and the area in its worst light. If it still looks OK, carry on!
Beware of bad builders.
UK builders are not obliged to have any qualifications whatsoever. This makes for great freedom in house-building, but you are much more like to get a ‘cowboy-builder’ if you just pick one out of the ‘phone book.
Look for online reviews and and personal recommendations before you hire one.
Beware of bad solicitors.
England & Wales have no effective oversight over lawyers. He can mess up your purchase and the Law Society will do … nothing.
You will have to get their work independently checked, if they have not already been personally recommended to you.
Again, the vendor’s solicitor is working for the vendor, not for you.
Get a survey done!
Britain has a long history and a wide variety of properties. You might be buying a house that was built when Queen Victoria was in her dotage.
Houses can have subsidence, damp, dry rot, wet rot, lead piping, asbestos, a bad conversion and old wiring which can’t handle modern loads. They could have been built cheaply, to a low standard, by a modern property baron.
Pay for a decent surveyor who will do a thorough inspection and give you a detailed report.
Study local history and future development plans.
Read local papers and websites, read up on local history, go for a walk in the area at different times of the day and week.
Sometimes an area is marked for genuine improvement and sometimes there’s a very good reason houses in the area are cheap.
Local councils and the areas they serve can vary tremendously.
This is particularly true in London. Some boroughs vote Left and some vote Right. This can have huge effects on the quality of life, the cost of living there and the attitude of the locals.
There is also local history: some boroughs are enclaves of the rich, and some, of the poor.
You want to live somewhere conservative and middle-class, basically, unless you’re young, childless and it’s your first home.
Having your car getting broken into every few months gets very old, very fast, no matter how bohemian an area is.
Remortaging to buy more property is not a bad idea.
Over time, property prices in cities go up and up and up. You remortage to buy (an)other home(s), or a better home, and then sell when the kids are grown up, and then move to the country, pocketing the difference.
Congratulations: you’ve won the property game!