Investment Fundamentals - A.P.W.

What safeguards do investors have when buying UK property?

The UK property market is one of the oldest and most robust in the world. It is backed by quality regulations which govern all aspects of it, meaning that investment in it is secure and guaranteed by the rule of law.

Regulations and governance play their part in driving the long term value of properties.

All newly built properties benefit from a ten year warranty from the National House Builders Commission (NHBC), which gives buyers confidence.

Investors investing in newly built properties should look for safeguards for their finances during the building and construction stage. For instance, if a developer goes bankrupt during the construction of the property, what happens to money that has already been paid?

Investors contemplating a property purchase need to be mindful of how their money is safeguarded. They should look for insurance solutions (known as ‘step-over’ insurance) and money which is held in escrow. Step-over insurance enables a new builder to be found to continue a development, at no cost to the buyer, in the event of insolvency. Holding money in escrow means that payment cannot be taken by a builder and is held safely until completion.

What risks are there with property investment?

While the future value of property cannot be predicted, over the long term it rises. However, it’s necessary to understand that property can lose value in the short term.

Therefore, property is a long term purchase – perfect for

However, due to the constant demands for housing needs, property surges forward in value in the longer term. This makes it a solid investment.

Investor Profile for the ‘Property as Pension’ approach

All sorts of people invest in property: in everything from houses, to apartments, shopping malls, commercial units, student accommodation, to parking places. Property investment has long been a solid way to increase personal wealth.

Different countries take different approaches to property investment: the more dynamic markets around the world see property speculators purchasing multiple units in areas of high demand. The London market is well known as a solid – and expensive – property market.

In some countries however, people do not buy and sell properties with such enthusiasm: houses are seen in Germany, for example, as something to be acquired (and rented) to live in. People there often buy houses with a view to creating a home, and the rights of tenants can be strongly entrenched in national legal systems, meaning it is difficult to evict a tenant who does not pay rent.

This view of property in mainland Europe results in some cultural quirks: apartments in Germany don’t come with kitchens as the previous tenants often take them with them when they move.

While property is an excellent investment, the high level of buy-in (in the form of a hefty deposit) means this form of investment is only open to those who already have a large amount of capital to invest.

APW works with many expatriate clients, in expat ‘hotspots’ such as the UAE, Qatar, Singapore, Hong Kong, and others. We have helped professionals as diverse as teachers, managers, engineers and many others acquire buy-to-let properties in the UK and, with manageable monthly investments, our clients have been able to build up a passive income portfolio for future needs, including retirement.

If you’re keen to explore the UK property market, we can help you learn more.



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