Student real estate in the UK today is considered one of the most profitable and promising investments. English universities are very popular, including among foreign students, so studios and apartments designed for a student audience are in steady demand, and the price of entering the market compared to other types of real estate is low and affordable for many investors, and mortgage loans in England are not roads.

This article is a reference and information material, all the information in it is presented for informational purposes and is for informational purposes only.

"" talked about this last time in the article "". But in order to assess the profitability of investments, in addition to prices and demand, you still need to analyze the profitability of real estate and the costs of maintaining and acquiring it. What we decided to do this time, also giving advice on how to choose the right object.

Additional expenses
When buying any property, you can not do without additional costs, and student property in the UK is no exception. First, you will have to spend money when making a deal. According to Polina Filatova, Managing Director of LondonfoRus, in the UK there are tax benefits on the purchase of real estate (stamp duty): if the purchase price is less than 125 thousand pounds, then you do not need to pay tax, and since student property is usually cheaper than this amount, tax is not paid. However, if expensive housing or several properties are purchased, the stamp duty rate can reach up to 15%.

And in any case, the legal costs of conducting the transaction are paid. Sometimes they are included in the cost of housing, and sometimes not: "Then when investing in student apartments, the cost of lawyers will be from 500 to 1000 pounds," - says Eugene Springis, Director of the Investment Department of Dom International Ltd (London). And according to Polina Filatova (LondonfoRus), an average of £700-900 is spent on lawyers, plus additional fees are often charged for drafting documents.

There are additional costs even after the property becomes a property. “In the UK, there is no single property tax, but you have to pay a council tax (council tax), which goes to the maintenance of the police, government agencies and street cleaning. Its amount depends on the region and ranges from 200 to 2,500 pounds per year,” says Yulia Kozhevnikova, leading expert of Tranio.Ru, an Internet center for foreign real estate. “Also, income from renting out real estate is subject to income tax (Personal Allowance), but, however, if the income is less than 10 thousand pounds, the tax is not charged, but if more, you need to pay 20% for income up to 32,010 pounds per year, and up to 40-45% with a more solid amount,” says Polina Filatova (LondonfoRus). “And by the way, if the planned profit is laid higher than 32,010 pounds per year, then it is better to register real estate for a legal entity, and even with income up to 10,000, it is important to declare it and register with the tax service as a non-resident, otherwise they will automatically withdraw 20 %”, adds Eugene Springis (Dom International Ltd (London)). But, true, if the property is expensive - more than 2 million pounds, then buying through a company will not save you from high taxes, “since you have to pay an annual tax (Annual Residential Property Tax, ARPT) in the amount of 15 to 140 thousand pounds and tax on capital gains (Capital Gains Tax, CGT) at a rate of 28%,” Yulia Kozhevnikova (Tranio.Ru) warns.

In addition, often student real estate is acquired under the LeaseHold system, that is, on a lease, then you have to pay for the ground rent on which the objects are located, according to Sergey Chupakhin, Managing Director of Dom International ltd, payments usually amount to 100-300 pounds per year, and according to Yulia Kozhevnikova (Tranio.Ru) - 150-500 pounds, and sometimes reach up to 5 thousand pounds.

And then there are the costs of maintaining housing, the cost of repairs, furniture, appliances that should be in the room, and insurance: “So, in central London, in buildings with a swimming pool, gym, elevator and concierge, maintenance fees can reach 4– 5 thousand pounds sterling a year, and utilities take an average of 1.68 thousand pounds sterling a year (but they, if the housing is not empty, are usually paid by tenants - by meters. - Ed.). Minor cosmetic repairs can cost around £700 a year, while major repairs, for example for a three-bedroom home, can cost around £20,000. Let's say installing a heating system costs about £6,000, plastering costs £4,000, and electrical wiring £2,000. Standard insurance costs £150-600 a year,” says Yulia Kozhevnikova (Tranio.Ru), concluding that on average, about £9,000 is spent annually on housing maintenance in the UK.

But that is not all. If the owner does not want or cannot take care of the property on his own, he can entrust this to a specialized company that pays utilities and taxes, organizes the rental process, monitors the order and safety of the property, makes cosmetic repairs, etc. On the one hand, this is good, as it eliminates worries, but, on the other hand, such services cost money. “When renting out housing, the management company takes 12–15% of the annual rental income, and when managing without renting out, it takes 4–7% of the estimated income,” says Yulia Kozhevnikova (Tranio.Ru). In general, the costs are quite significant, but, as Evgeny Springis (Dom International Ltd (London)) notes, in the UK taxes can be optimized.

Yield
But even without much optimization, student real estate in the UK is considered a very profitable investment. “It brings in 1–2% more than residential and commercial properties,” says Yulia Kozhevnikova (Tranio.Ru). And according to Evgeny Springis (Dom International Ltd (London)), it is second only to investments in chain hotel rooms, largely due to the fact that they are in high demand and, with the right choice of an object, are almost 100% occupied.

"The main function of student real estate is to extract rental income," says Maxim Klyagin, analyst at Finam Management. And according to various estimates, the income from renting such housing is 1-15%, and the net yield is about 6-9%, but in some projects it reaches 10 and even 15%. “For example, in London, according to accommodationforstudents.com, the most expensive student apartments are rented in the Mayfair area for 1,200 pounds per week, and the cheapest in the Morden area for 60 pounds a week,” reports Sergey Chupakhin (Dom International ltd). “And the “gross income” from one unit of housing in the UK as a whole averages about 8 thousand pounds per year,” says Yulia Kozhevnikova (Tranio.Ru).

In addition, student real estate, like any real estate, can rise in price over time. “And the increase in the value of such an asset annually ranges from 3 to 9%,” says Polina Filatova (LondonfoRus). She cites the return on a £54,950 apartment in a new development in Liverpool:

Thus, even with a slight increase in prices (conservative forecast), in five years the yield of student housing could be 12.7% per year (excluding costs).

Investment advice
But such profitability is achieved only when the investment object is chosen correctly. First of all, the property must be located close to a popular university. “If it is within walking distance from the university, it will always bring a stable income and will always be liquid,” says Sergey Chupakhin (Dom International ltd). Although it is still important to choose the right city. If funds allow, then, of course, you can not think for a long time and buy housing in London - this is almost a win-win option. But if the budget is not so big, you should pay attention to other "student" cities - fortunately there are a lot of them in the UK. If you look at the whole, then you need to choose objects in those cities that are attractive to students. In the description of investment projects, developers usually report the size of the city's student population, which determines the level of demand and the future return on investment. The more students, the more income can be, but, it is true, the higher the real estate prices. And besides, the profitability will be less if there are already a lot of student apartments in the city or if the institutes themselves provide housing.

“For this reason, one should not aspire to Oxford or Cambridge, because everything is very clear there and every year the same number of students enter, who must live in special colleges with a certain bias depending on the specialty they receive. You have to be careful with Manchester and Liverpool. These are two cities in which the student housing market is relatively oversaturated and it is risky to invest here without professional advice, especially since most of the objects are built far from institutions, practically on the outskirts or in unfavorable areas. But in Newcastle and Sheffield, on the contrary, there is a lack of student housing. Both cities host more than 50,000 students and only have about 10 student apartments, so yields could be higher there. As well as in Birmingham, where there is also a large lack of student housing, although in this city you need to be careful with the choice of location, advises Eugene Springis (Dom International Ltd (London)). – But whatever the city, the most attractive facilities are near large institutions with the start of programs in October and February, this will provide an additional flow of students, and if the apartments are not occupied in October, the downtime will be minimized - from 12 months to 5 – 6 (again, we are talking about secondary objects in which there is a possibility of not 100% occupancy). And also, as Sergei Chupakhin (Dom International ltd) notes, it is better to focus on universities where foreigners study: the fact is that many British students try to conclude a contract for 42-48 months, excluding vacation periods when they go home, and foreign students students do not usually require such breaks in rent.

But in general, for student real estate, the rule also applies: “location, location, location again” - it is this rule that determines the success of investments.

But it is also important to evaluate the characteristics of the housing itself, it should be comfortable, not very cramped, with new repairs and furniture. And the more infrastructure in the complex, the better.

The builder must also be assessed: “Most of the English builders have a good reputation. They try to build the house on time, as they usually guarantee the payment of rent from the month indicated as the month of completion. For example, if the house is to be handed over in September 2015, and construction is completed in December 2015, then the developer himself pays the buyer here the amount that he should have received from the tenant (i.e., in this case, rent for 3 months ). This is not profitable for developers, so most of the objects are rented on time. Nevertheless, when signing a contract with a developer, it is necessary to pay attention to its portfolio, history and reputation. Also important is the clause on the guarantee of rental payments. In some cases, developers write income projections rather than guaranteed income, but the buyer is interested in guarantees. Therefore, the contract must state “guaranteed income”. Although an object without a guaranteed income can be attractive, if, for example, it has an ideal location and / or signed contracts with a reliable management company and an agency that will rent it out,” says Polina Filatova (LondonfoRus). “In general, the management company should be well-known and large. And it is better to choose an agency with an office so that it resolves issues on the spot, and not remotely, and that it provides not only sales services, but also other relevant after the sale, for example, resale, solving everyday issues, taxation and declaration, etc. .p.,” adds Eugene Springis (Dom International Ltd (London)). And by the way, if the agency is ready to resell the property, and even more so if it guarantees resale, this indicates the reliability of the project, as well as the willingness of the developer to buy the property at a fixed price after a certain period of time.

Well, in addition to real estate, the developer and the agency, it is important to study the contract. And if you don’t like some point, you can and should change it: “Don’t be afraid of negotiations with lawyers who draw up a sales contract, you need to insist on prescribing the conditions that are important for the buyer, and exclude what confuses you,” recommends Polina Filatova (LondonfoRus).

And before buying, you need to decide whether to take student apartments under construction or purchase secondary objects from the previous owners. With the first option, you have to wait for the object, but with the second, you don’t. But the first option for the investor may be more profitable, since for objects under construction, the period of guaranteed annual rent payments is usually 5-7 years, and for secondary market projects, the guarantee can be only for 3 years (or if the object is old, there will be no guarantee at all) .

And don't avoid mortgages. Of course, now, due to the devaluation of the ruble, the actual interest on the loan may increase, but “mortgage is an additional guarantor, especially when investing at the construction stage. With a mortgage, the bank makes an additional check of the developer and management company and analyzes all the risks of the project, explains Evgeny Springis (Dom International Ltd (London)). – And besides, mortgages provide an opportunity to obtain leverage, and due to the low interest rate, income on investments increases. For example, you can buy one object for cash or two rooms with a mortgage with a down payment of 50%. In the second case, the total profit after all payments on the loan will be greater than the profit from a single object purchased for cash.

“And we must not forget that the process of buying property in the UK is very simple, you can even buy apartments remotely, and in fact, many investors have never seen their purchases, which did not prevent them from receiving a good income. And the student real estate market is now at the stage of growth, the demand is high, which means that for a long time these investments will be profitable,” says Polina Filatova (LondonfoRus).

We transfer money
One of the most popular questions today from Russians planning a purchase abroad is whether there are any difficulties in transferring money from Russia abroad. After all, whatever one may say, the international situation today leaves much to be desired. Doesn't it affect the citizens of Russia?

All the experts interviewed by the portal assured us that buyers from Russia do not experience any particular difficulties. Eugene Springis (Dom International Ltd (london)) describes the money transfer procedure in this way.

In the UK, money is not transferred directly to the seller, all transactions are carried out through lawyers. Employees of the company - agents - accompany the transaction, but the money is transferred to a special client account with lawyers, the money goes to the lawyers' account from the seller's side only when the sale and purchase agreements are exchanged. Before the lawyers on the buyer's side will allow money to be transferred to their account for the purchase of real estate, they must verify the origin of the funds. Such a check is called AML (Anti money loundering), and only when the lawyers are convinced of the purity of the funds, they will allow them to be transferred to the account. The transfer of funds in this case must be carried out from the personal account of the buyer. Cash payments will not work under any circumstances.

As a rule, Russians can easily confirm the origin of funds, although they are surprised at the very question. However, so far none of the company's clients has received a refusal. Any Russian bank transfers funds, but at the same time it also requests documents for passing currency control. And there is nothing complicated in this procedure if it is under the control of lawyers. Someone uses accounts abroad and makes transfers from there. The procedure for processing a transaction and passing the AML check is the same for residents and non-residents, and there is no difference where the client is located. Most purchase transactions take place remotely, and clients, including local residents, do not meet with lawyers and send contracts by mail.

Timur Nigmatullin, financial analyst at FINAM, adds that for Russians, the difficulty may lie in the fact that the purchase of real estate is usually not the basis for obtaining a residence permit. In addition, the expert warns, when opening an account in a British bank, they require a passport and proof of address of residence. At the same time, without a bank account, it is very difficult to get this very confirmation, that is, a vicious circle is obtained. But the banks are doing it anyway.

Natalya Zavalishina, CEO of Distant Property, considers the growing difficulty for clients who had savings in rubles, and several payments are expected to be the main difficulty. In this case, it is difficult to predict exactly what amount will be “output”, moreover, losses occur during the conversion process.

We also asked our commentators to guess what would happen if our “colleagues and partners” nevertheless disconnected Russian banks from the SWIFT system. However, experts are almost certain that this will not happen. But if this does happen, then SWIFT will most likely be replaced by a new system, - believes Igor Indriksons, real estate investment manager and founder of Indriksons.ru. But even now, in addition to SWIFT transfers, there are other tools with which you can pay for the purchase of real estate, notes Oksana Salfali, Managing Director, London Relocation Consultancy-property in London. Many clients who buy expensive property in the UK have bank accounts in other countries. Many people still purchase real estate in the name of an offshore company, which allows them to maintain confidentiality, so funds are transferred from the accounts of foreign companies without any problems. Yuri Pankov, senior appraiser of the Swiss appraisal company Swiss Appraisal in Russia and the CIS more pessimistic, he believes that in the event of SWIFT shutdown, the UK risks losing a large and generous investor in Russia. Perhaps, we suppose, these pragmatic considerations should stop the West from making decisions that will benefit no one.

Portal summary
Student real estate in the UK is characterized by a relatively low price, that is, entry into its market is possible for many investors, and at the same time it is in demand and has a high profitability. In many areas of England, the income from renting it out even exceeds the income from renting residential and non-residential real estate, including more expensive ones. And besides, prices for this type of housing today show steady growth, the risks of losses are minimal, and the cost of maintaining it is not so high. For example, due to the low cost of objects, there are tax benefits on the purchase of real estate (stamp duty) and income tax on the rental of real estate. In general, if you choose the right project and the object itself, it is difficult to find the best area for capital investment today.

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Investing in student property in the UK

The UK student sector has developed into a mature and globally recognized investment. A proven track record and high levels of demand led to record high student property investment in the first half of 2015.

In the first half of 2015, investment in UK student property reached a record high of £4.2bn, up 70% from the previous goal and 40% from the previous peak in 2012. According to overseas property analysts, total investment will be around £5.5bn in 2015. In recent years, there has been a particular increase in interest from foreign investors. As investment matured, the core of investment activity shifted first to UK-based private enterprises and the private equity market, and then to global institutional investors.

The growing interest in UK student property is also supported by the positive growth in the number of students. According to UCAS experts who analyzed the number of applications and filled places at universities, in the current academic year, there is a corresponding increase of 3.4% and 3.3%. Thus, the filling of university places increased by 16,800 compared to last year, while the result reached more than half a million places. But that is not all. UCAS analysts specify that the growth of students living in the UK increased by 3.2%, students from the European Union - by 7.6%, and representatives of other countries - by 5.7%. The figures easily exceed the previous peak values ​​of 2011.

Experts see every reason for further growth in the number of students. Attractiveness in terms of the quality of education, value for money, prospects for further employment and student lifestyle in university cities play a decisive role in choosing a place of study.

One of the great opportunities for individual investors to enter the lucrative student housing market in the UK is new development in Liverpool designed for student accommodation. Investments in this project generate an interest rate return on the invested funds from the first day of their investment until the completion of construction, and as a result will bring a 10% net annual income guaranteed for 3 years. 4% on invested funds during the entire construction period.

Student property at this development in Liverpool is comprised of modern detached studio apartments, with prices for large studio apartments starting at £67,400. The project is approved for both student rental and permanent residence.

All apartments will be furnished. Furnishings include bed, bedside table, large wardrobe, shelves, flat screen TV; internet will also be available. Bathroom and kitchen.

The apartments are centrally located, next to the university quarter, access to infrastructure facilities is carried out directly in the development itself. The apartment complex is equipped with a 24-hour video surveillance service and includes a modern gym, table tennis and billiard tables, relaxation areas with LCD TVs, a cinema room and study rooms. Completion of construction is scheduled for September 2016.

Another interesting offer in the current student housing market in the UK is new development in Glasgow . Comprising nearly 500 apartments, the £70 million project is the largest to date. Advantageously located in the West End, just a short walk from the University of Glasgow, the UK's 3rd largest university city.

Glasgow is in the top ten cities for the best investment in student housing, as ranked by international real estate experts. Glasgow is home to 6 universities - more than any other UK city outside of London. They have 80,000 students and 60,000 of them do not have the opportunity to live on campuses. 11,000 international students are in need of top quality housing.

The new student housing project in Glasgow is close to a renowned university and stylish bars, cafes and restaurants in an area of ​​picturesque Victorian architecture. The average cost of apartments is £170,000. In the G12 West End area, average house prices are 89% higher than the city average. At the same time, 35% of net profit is guaranteed for 5 years (7% per year starting from September 2016).

The University of Glasgow is expanding, this £135m project aims to renovate infrastructure to meet growing demand and build on the university's world-leading reputation for science. Today, the university already has 13% of international students in Scotland, who bring 70 million pounds to the local economy annually. This expansion will give the university an additional 74 acres in the West End, the equivalent of 30 homes.

In addition to this multi-million dollar university expansion project, there is also a £1.2bn Glasgow Harbor site redevelopment that will result in 130 acres of development spread over two miles along the Glasgow waterway at the confluence of the Clyde and Kelvin rivers. This project will give the city almost 19,000 square feet of living space, 13 restaurants and offices, hotels and entertainment venues.

More than 1600 apartments are offered for sale, characterized by 100% occupancy. The development company's current waiting list is 2,000 students.

If you are interested in investing in student real estate in the UK, and we will take you in detail to all the questions you are interested in and select the most investment-attractive options.

Read other relevant articles on investing in overseas real estate

Recently, the activity of agents offering to purchase "British real estate" has become more active. Read about how this could end in my article three years ago.

Original taken from

Over the past month, I have already heard twice from different people, in fact, the same (with slight variations) curious story about “investing in UK property”.

I have no desire to sue anyone, or even argue with anyone, so the story will be without names and surnames. The purpose of this article is not at all to expose someone there or warn against communicating with specific firms. The purpose of this article is to use these stories to talk about some of the important principles of investing. As the old proverb says, "A ship aground is a beacon to a sailor."

One firm with a British name entered the Russian market a few years ago and began offering investments in UK real estate. To find investors, the firm actively partnered with both investment advisors and real estate agents, paying sellers generous commissions.

The objects of investment were mainly rather unconventional options for inexpensive UK real estate - parking spaces, self-service warehouses, student dormitories, etc. Investors were offered to purchase these properties under a long-term lease agreement. And immediately sublease these facilities to a British management company. The company took over the management of the acquired property in the interests of the investor, guaranteeing (!) an investment return of 8% per annum in pounds sterling.

The question of why the British themselves are in no hurry to invest in such a profitable offer, and why the company prefers to raise money in distant Russia, for some reason did not arise from investors.

There was, however, one nuance: the period of guaranteed payments on investments was two years. Allegedly because in the future this yield may increase even more. But these were only promises-forecasts not supported by the contract. The guaranteed return period was two years. Investors preferred not to pay attention to this nuance. Advertising articles also promised investors that investments would be liquid, and they would be able to sell the property at any time to other investors or tenants.

The property was registered in the name of the investor, the investor received an official document from the UK Land Registry.

In the most unfavorable scenario (for example, in the event of bankruptcy of the management company), the investor remained the owner of the property with the right to independently use it or rent it out.

Investors were also told that there would be no UK taxes on real estate and income received from renting it out.

Interested investors had the opportunity to look at investment objects on the spot.

The proposal looks good, doesn't it?

Not surprisingly, many wealthy Russians bought into it, investing fairly large sums in British real estate. An additional argument "for" was that within two years the yield at the rate of 8% per annum in pounds sterling was actually paid, which served as an important confirmation of the attractiveness of the firm's proposals. During these two years, satisfied investors managed to tell many of their friends and acquaintances about a wonderful investment option.

And two years later... the fairy tale ended. The firm has notified investors that their properties are no longer in demand with tenants. Therefore, the management company ceases to pay any remuneration to investors.

If investors don't like it, then of course they can always sell this property to someone else. That's just how to find a buyer, while being in Russia? And who needs real estate that does not generate income?

Of course, turning to a Russian consultant in this situation is of little use, they will not be able to help in any way. :) It's one thing to sell and promise mountains of gold, it's another thing to be responsible for your promises.

To top it all off, investors received a letter from the British tax authorities demanding that they fill out and file a tax return. No, taxes there and in fact, it seems, should not arise, as promised. But the tax return to the British tax authorities, as it turned out, still needs to be filed. Failure to comply with this requirement results in severe fines. How to file a declaration for people who do not understand English laws? Representatives of the firm recommended for these purposes to contact a British accountant. And even gave contacts. Everything would be fine, but only the British accountant's fee ... turned out to be approximately equal to the investor's income received from these investments over the previous couple of years.

What happened? Yes, it's just that Russian investors were shoved into illiquid assets in such an intricate way.

In this situation, it is noteworthy that, from a legal point of view, the British company fully fulfilled all its obligations: the property was purchased, registered in the name of the investor, and the promised yield was paid for two years. And the fact that further the investor was left with useless illiquid assets is already his investment risks.

This story has several lessons.

First, a foreign company name does not protect you from absolutely anything. There are no less prohindeev abroad than in Russia.

Secondly, in any investment it is extremely important to have an exit strategy. Investing money is a simple matter. But getting them back with a profit is much more difficult.

Thirdly, if you are not familiar with the legislation of the country of investment, then its requirements may turn out to be an unpleasant surprise for you.

Fourth, any oral or even written promises (but not legally executed) are worth nothing.

Fifth, most consultants who enthusiastically tell you about investment prospects will disappear when problems arise. And they won't be able to help you.

(Sixthly, I’ll write in brackets, for my fellow consultants: guys, don’t try to sell what you don’t understand! Someday this may turn into a big problem for you).

And, perhaps, the most important thing: effective investments in "real" assets - business, real estate, etc. – are impossible without the complete immersion of the investor in the transaction. Such forms of investment do not provide for any guarantees and measures to protect investors, which sometimes take the form of collective investments through banks, investment funds, etc. Neither the big name of the company, nor the presence of an investment adviser will protect you from mistakes and deceit.

Can real estate generate income? Of course it can. That's just for this, you must fully control all stages of the transaction, be inside the transaction, and not believe empty promises.

The search for a profitable way to invest money leads many to think about the need to place them in the most reliable instruments. From this point of view, they seem to be an ideal way not only to save, but also to significantly increase funds. They allow you to save financial assets from inflation, make them work and bring additional income.

Real estate in England

The UK real estate market is traditionally considered one of the most profitable and predictable, and the current stage of economic recovery after the crisis makes it even more attractive. The English market is characterized by a favorable combination of several factors, such as:

• independence from the main problems of the eurozone associated with the volatility of its currency;
• chronic shortage due to a small amount of free land, an influx of immigrants and an increase in the number of households;
• no taxes on property and wealth, as well as on the increase in the value of real estate for non-residents;
• minimal transaction costs for transactions (only 3-5% of the value of the object).

These features provide stable interest from foreign investors. Most of them consider real estate investment in England secure and prudent investment of capital.

Price policy

According to research by the English bank Lloyds, real estate prices have been steadily increasing since 1994. Over these 20 years, they have increased by about 3.5 times. In the first half of 2014 alone, the number of transactions worth more than £1 million was 1.5 times higher than the same indicator of the previous year, and since 2009 their number has generally increased by 4 times.

The cost of apartments in the fashionable areas of London is growing at a particularly high pace. Kensington, Westminster, Chelsea and Wandsworth accounted for more than 21% of the seven-figure deals, with about half of the purchases made in other parts of the capital. The next most popular among foreign investors was Elmbridge, located in Surrey. Real estate prices in major English cities, of course, are lower than in the capital, but much higher than in Europe.

Investment Opportunities

Today, there are thousands of diverse objects on the English real estate market, so it is difficult for many capital owners to independently understand the advantages of a particular offer. Experts' recommendations regarding the rules for selecting the best option usually come down to the need to decide on the purpose of investment and, based on it, select the right property. The most promising in terms of investment are such real estate investment in England, How:

• Early stage apartments in central London new developments are attractive with minimal distraction and excellent value growth potential. When buying an object 2-3 years before its delivery, the investor fixes the price in the contract, but pays only 10-20% of its value. The rest of the amount is paid after its commissioning, and the right to resell the property is retained.
• Apartments and houses in Greater London are highly liquid and steadily rise in price by about 10% per year.
• in the capital and major cities (Yorkshire, Bristol, Manchester, Sheffield) for the purpose of subsequent leasing. It annually brings up to 10% of income and is constantly growing in price.
• Malls and stores located in areas of growing business activity or planned redevelopment. The growth rate of such real estate is much higher than the average level, however, there is a risk of choosing an unsuccessful point location.

Non-residents in England are provided with a mortgage, the amount of which reaches 70% of the cost of housing. Usually, only interest is paid on it, and the main debt is extinguished when the object is sold. Based on such conditions, the rental income usually covers the monthly interest payments and maintenance costs of the property. In a favorable situation, the annual return on investment can reach 30%.

Generally speaking, a balanced economic policy of the government leads to the fact that almost any real estate investment in England turn out to be beneficial. For example, rental income ranges from 4.5% in central London and 5-6% in other areas of the capital to 6-7% in major cities across the country.

Obviously, investing in UK real estate is a smart and well-thought-out investment decision. Due to the stable growth in the value of objects and the balanced economic policy of the government of the country, it is constantly growing, therefore, in the long term, the profit of investors can be very significant.

How the crisis and sanctions affect the London real estate market, how much you can earn by investing in construction and housing standards in Foggy Albion

Recorded by Denis Tykulov

"If you're tired of London, you're tired of life." Samuel Johnson

The end of 2014 - the beginning of 2015 turned out to be a difficult period for those of our compatriots who were going to acquire. Elections, changes in the taxation system, money laundering scandals and tightening control over foreign capital, including from Russia - all these factors could not but affect demand. But in parallel with the disturbing news from England, their own history developed at home - sanctions and counter-sanctions, sharp fluctuations in the exchange rate and other events that negatively affected the economy and the psychological state of the population. Buyers of real estate, at least from Russia, for some time froze in anticipation ...

Ludmila Aksenenko– Director of the Sales Department of ORDO Group: Indeed, a lot has changed over the past year. At first, sales practically stopped, and for several months, and this was due, first of all, to legislative changes in England, concerning, among other things, foreigners. For example, before there was an investment threshold of 1 million pounds sterling, and the property could be included in this amount, then the bar was raised to 2 million pounds and they stopped taking into account real estate in principle. In addition, it has changed, a progressive scale has been introduced: the more expensive the object, the higher the tax. Another important factor is the elections, and all these events took place almost simultaneously.

And buyers calmed down, and quite noticeably - for about eight months. Even those who were actively choosing properties to buy slowed down. There were also developers who suspended sales, not understanding how to adequately evaluate square meters. And then, apparently, people got used to the idea that everything is so unstable that you just need to focus on your current goals and needs. That is, if they were going to live or teach children in London, then they still faced a choice - either rent or buy housing. Especially those who had savings in rubles, it was not profitable for them to wait at all, they became more active, and from the spring of 2015 sales started again.

Elitnoe.ru: By the way, how did the sanctions affect you? And has the portrait of the Russian buyer changed after the resumption of sales?

Ludmila Aksenenko: Sanctions certainly had an effect. But not to reduce demand, but to correct it. It's just that other people began to buy a different product. For example, if two or three years ago the average budget for a Russian buyer was 3-5 million pounds, although, of course, some people bought for 20 million, now people have reduced it to 1.2-1.5 million pounds . Given that you can’t really buy anything cheaper than £1 million, and not only in the central districts of London, the budget has actually decreased by 2-2.5 times.

But the number of people acquiring, of course, has decreased. Those who could afford it and wanted it bought before the crisis. With such money now, of course, it is more difficult to handle ... Well, you yourself understand ... At least with the newly declared money. Because the sanctions have really complicated relations with banks, many new requirements have appeared. In any case, for the Russians - our compatriots are now being checked in all respects. So that the money is white, so that there is no political background. But in any case, investors today still prefer to invest in mature markets, the main task today is to save money. Therefore, London remains one of the top capitals for real estate acquisition.

Elite.ru: Only the Russians have the top ones?

Stuart Leslie- Sales Director of the largest English developer Berkeley International: The main investors in are Arabs and Russians, the Chinese are quite active. A person who buys a home in London - regardless of the country of which he is a resident - usually has three main reasons for this. The first is education, the excellent quality of education, which is especially important for parents who want to send their children to study abroad. The second is, of course, the acquisition of a second home so that you can come here at any convenient time. London is the cultural capital, there is magnificent architecture, museums, theaters, art galleries, in general, everything that a person can wish for - all this is here. As the classic said, “if you are tired of London, you are tired of life”, and this is true. And, finally, the third reason is the security of investments, stability. Yes, there will be no crazy income from, for example, renting out real estate, but prices for it will be guaranteed to grow.

Elitnoe.ru: Do Russian buyers have any specifics? For example, what areas of London are popular with our compatriots?

Ludmila Aksenenko: Russians have long been part of the culture of London, the majority opts for the central areas, especially Kensington and Knightsbridge, Mayfair and Belgravia ... Our compatriots prefer to invest in areas with traditions, with developed infrastructure, they say “We don’t just invest money, we have children living here, we have a business here.” That is, they buy apartments in order to live there, so that their children live there, so that their acquaintances rent this property, that is, to use it - and this is the main thing. At the same time, Russian people believe in the center and in the fact that expensive apartments here are a reliable investment. They are interested not so much in investment attractiveness as in capital preservation.

Elitnoe.ru: And how much income can you get from renting out residential real estate?

Ludmila Aksenenko: The average rental income in central London is 3-4% per annum. In developing areas, it reaches values ​​of 5-6%, but the risks in terms of tenant tenure are also somewhat higher. At the same time, one-bedroom apartments in central areas are sometimes on the market for no more than two days, as there is an increased demand for them, given the developed infrastructure of the areas and constant business. Two-bedroom apartments are also in incredible demand, as in other metropolitan areas of the world.

If you buy an apartment from a developer at the initial stage of construction, then the income from renting it out will also depend on the area, the annual market growth in central London is 8-12%. That is, the investor, purchasing real estate at the initial stage, invests in the first year up to 30% of the cost of the lot even before the commissioning of the residential complex and receives a 100% return on the initial investment. Well, construction takes an average of two to three years.

Elite.ru: Can you tell us more about this, using a specific example?

Stuart Leslie: Consider the price dynamics of our Kensington Row project, which we started building in 2011. This is a complex with ultra-modern infrastructure, its own park, with a concierge service from Harrods Estate, it is located in one of the most prestigious areas of London, 30 minutes from the most important park in the British capital - Hyde Park - and in close proximity to Holland Park.

Kensington Row is implemented in divisions, or - as you usually call it - queues. So, in 2008, even before the start of construction, investment prices (off-market) for a two-bed apartment with an area of ​​87 sq. meters averaged 740 thousand pounds. By the end of the construction of this stage, in 2014, the price for such an apartment was already 1.4 million pounds. Now we offer the same apartment in the next block of Kensington Row (the building has already been built, interior decoration is underway), which will be commissioned in seven months, we offer for 1.7 million pounds.

Elitnoe.ru: And what risks does the buyer bear when purchasing housing at an early stage of construction? What does the scheme for buying real estate in a residential complex under construction look like in general?

Steward Leslie A: Our buyers do not take risks. All construction risks in England are insured, this is a mandatory procedure. Among other things, we provide our tenants with a 10-year construction guarantee and a 2-year interior finish guarantee.

The standard scheme for acquiring apartments from a British developer that does not use borrowed funds is as follows: the buyer pays 20-30% of the transaction amount during the first year (depending on the stage of construction) and 70-80% of the cost of the object - only upon completion of construction .

By the way, we had buyers from Russia who wanted to reduce the price and offered to pay 100% immediately, but we do not take money in advance, we build with our own funds. Therefore, there are no discounts for 100% payment, we are not interested. The growth in the value of real estate is due to the growth of the market and the increase in the construction readiness of the facility.

Elite.ru: Are there any features that would be nice to know about for those who are just looking at real estate in London? For example, I noticed that in the Kensington Row project, ceilings are rather low, by our standards ...

Ludmila Aksenenko: For London, this is just the standard. Here, the city authorities legally regulate the height of buildings. So such ceilings are not because the developer has saved money, there are certain norms, and developers strictly observe them - average ceilings are 2.4-2.65 meters. High ceilings are found only in old buildings that have been reconstructed, or in mansions, which, as they say, are built according to an individual project. In addition, there are even super premium objects - penthouses, where the height in the hall is 3.2 meters, and all other rooms - a maximum of 2.8 meters. And this is the norm.

But a pleasant surprise for our compatriots may be the full compliance of the apartment with the presentation materials that they saw when buying, when construction was just beginning. In Britain, building standards are indeed very high, and developers most fully comply with all the requirements of architects and building designers.