Introduction

Property development finance plays a pivotal role in the Scottish real estate landscape, enabling developers to transform concepts into tangible assets. Whether you’re a seasoned developer or a newcomer, understanding the intricacies of financing is essential. In this guide, we delve into the specifics of property development finance in Scotland.

1. Mechanics of Property Development Finance

Understanding the mechanics of property development finance is crucial. Here are the key components:

2. Loan Amount

The loan amount typically represents a percentage of the property or land purchase price. Additionally, lenders consider funding for refurbishment costs or ground-up construction. As a developer, you’ll receive the necessary capital to kickstart your project.

Property Development Finance: Typically, property development loans in Scotland can be used for a borrowing requirement of £750,000 to £50,000,000 with a loan term of 9 to 36 months.

Bridging Loans: Typically, bridging finance can be used for property development projects with a borrowing requirement from £50,000 to around £2,000,000 with a loan term of 3 to 24 months.

3. Loan Term

Property development finance in Scotland can span from 6 to 30 months. Repayment occurs either from the sale proceeds or through refinancing. The goal is to complete the project efficiently and repay the loan promptly.

4. Monthly Drawdowns

Throughout the development process, lenders release funds based on Quantity Surveyor reports. These reports ensure that the funds align with the project’s progress. As milestones are met, you can access the necessary capital to keep the project moving forward.

5. Choosing the Right Solution

Selecting the right financing solution depends on various factors:

• Project Scale: Consider whether your project involves light development, extensive renovation, or ground-up construction.
• Experience: Your track record as a developer influences the financing options available to you.

6. Popular Uses for Property Development Finance

• New Residential Projects: Property development finance is ideal for ground-up developments, such as building new housing estates or apartment complexes. It covers land acquisition, construction costs, and infrastructure development.
• Renovating Existing Properties: Developers can use property development finance to transform old or dilapidated buildings into modern, desirable spaces. This includes renovations of historic properties or repurposing industrial sites.
• Property Conversion - Change of Use: Property development finance supports converting existing buildings for different purposes. For instance, turning a former office building into residential apartments or converting a warehouse into creative workspaces.
• Private Rented Sector (PRS) Schemes: These involve developing residential properties specifically for renting. Build to Rent schemes cater to the growing demand for high-quality rental accommodation.
• Commercial Developments: Property development finance can fund the construction or renovation of commercial spaces such as offices, retail centres, and warehouses. These projects contribute to economic growth and job creation.
• Mixed-Use Developments: These combine residential, commercial, and sometimes leisure spaces within a single project. Examples include live-work developments, where residents can run businesses from their homes.

Conclusion

Property development finance bridges the gap between vision and reality. Seek advice from experts, explore your options, and embark on your Scottish property journey with confidence. Remember that each project is unique, and finding the right financing partner is essential.

Before you Begin the Application Process:

Consult with an Expert Property Development Finance Broker: At Evolve Finance we understand how property development finance works and can guide you through the intricacies of the process, helping you explore all available options.

A big move is expensive and everything you need will add up very quickly so it is vital you have started saving before you begin.

You should try to save up to 3-6 months’ worth of living expenses so you can afford the move and to settle in. You will need enough to cover all the initial costs such as insurance, a car, finding your new living space and more.

For example the estimated living costs for Melbourne, is $2500 a month.

If you have your visa ready and are getting prepared for the move there are some ways you can keep the costs down.

6 hacks to use to keep the cost of moving to a minimum.

• Sell your belongings before you move

In the months leading up to your move you should gradually begin selling your belongings, furniture, kitchen ware and anything else you don’t need. You will be able to buy these things when you move and this will save you time and money in the long run as the shipping costs will be large.

• Open a bank account before you move

You are able to start the process to open a bank account in Australia before you get there, meaning once there you only have to go in the bank branch with proof of your documents and then you easily have a new bank account. This will save you on transaction fees and you will be able to easily spend money in your new home. Without an Australian bank account you will be charged fees when you withdraw or spend any money.

• Think about the timing

Often the prices of moving as well as rent prices will fluctuate throughout the year, this could be because in September, students are moving and this raises the prices. You should research what your new city is like as this could impact the time of year that is best to move.

• Don’t take your car with you

Not only are the shipping costs to get your car to Australia expensive there are also hefty import taxes you are required to pay. For any move abroad you will be better off selling your car or vehicle in the UK before you move and finding a new one once you are settled.

• Invest in proper travel insurance before you start the journey

Travel insurance is a vital part on your check list and will protect you from a large cost in case of emergencies. Don’t skip on travel insurance as there are many reasons you should invest.

• Start the house hunt early

When moving to Australia you should definitely be searching for your new home as early as you can as there are so many others who are looking for property too. If you find a place to stay quickly you will be able to cut down on the costs of staying in a hotel during the search. This will also help you find somewhere to live for a decent price.

Rent prices in Australia have been rising and currently the average price of renting in Sydney is $750 per week and in Melbourne it is around $550 per week.

So you have found your dream property and have had your offer accepted, now you are ready to handle the nitty gritty mortgage details.

You will have to find the best mortgage deal that works for you and then you can apply online or over the phone. You may choose to go with a broker to help you get the best deals.

Do you need a mortgage broker?

A broker is a qualified and regulated mortgage advisor. They should remain unbiased and be there to help you wade through all the offers and find you the best deal for your situation.

Having a broker will save you time and effort trying to find the best deal, they will also be able to handle the negotiations with the lender for you. A broker will help you understand the mortgage rates and know what you will need.

Make sure to be upfront with the broker about your finances and credit so they can do their job properly.

You either pay them a broker fee which is usually around £500-1000 or they will receive a procuration fee from the lender, which won’t affect your total.

If you are confident you can find the best deals yourself then you can skip this step and move on.

What you need for your application

You will need original copies of all the forms listed below, make sure you have these ready before starting the process, this will help you speed things up.

• A form of ID, e.g. a passport
• Details of your current employment
• At least 6 months’ worth of payslips
• Proof of current address
• Proof that you have the deposit
• Tax return forms, if you are self-employed
• Your latest P60 tax form

A mortgage in principle

This is a conditional offer from a lender with no guarantees this will go through to completion. This helps buyers to have a sense of confidence during the process whilst the lender continues with their checks

The lender will complete credit checks, these could damage your score so make sure not to have too many in short space of time.

‘Soft’ credit checks leave a less visible sign to the next lender so check which type they are using.

Don’t rely on your existing bank or building society as this vastly limits your options and cuts the market short.

Fees

On top of all the big payments you’re making to buy a house it is important to factor in all the other fees you have to think about too.

Arrangement fee

You will pay this to the lender and it can go up to around £2000 which you can pay upfront or add on to the price of your mortgage. If you pay upfront be aware that this is a non-refundable sum even if your offer falls through.

Booking/reservation fee

Some lenders will charge this fee to secure a fixed-rate, tracker or discount deal. This will be around £100-200 and is again non-refundable which you can pay upfront. Sometimes this will be rolled into the arrangement fee and won’t be a separate charge.

Valuation fee

The lender will carry out checks on your chosen property to determine the value in case you miss payments and the property is repossessed. The cost of this will depend on the property value. You can also ask for a survey at an extra cost which will check for any hidden damages and structural problems which is especially important if you are buying an old house.

Legal fees

This is paid to your solicitor and covers all the legal work needed when buying a house including, conveyancing which searches local authorities data for hidden damage on the property. This will cost roughly £500-1500.

Stamp duty

This is a tax paid to the government which some developers will offer to pay if you are buying a brand new home.

The price depends on the property value.

If the property price is between £300,001 to £925,000 then you will pay 5% in stamp duty.

The application process in total can take months to reach completion which is why before you start, it can be helpful to make sure you have all the information, are sure you can cover all costs and have all the correct documents.

Happy Mortgage hunting!

House prices are falling and many believe they will continue on this path through 2024.

This sounds like good news, however for those selling their properties, this means they are having to reduce their asking price. Also, with high and rising mortgage rates, many people still can’t afford to buy.

Predictions for the Property market 2024

• Rightmove anticipates a modest 1% fall in house prices by the end of 2024.
• Zoopla is estimating that house prices will fall by just 2% this year
• Estate agent Savills predicts that UK property prices will fall by 3% in 2024, before recovering in 2025 and rising by 3.5%
• Lloyds Bank has forecast a further 2.4% decrease in house prices over 2024. It expects prices to then recover slightly in 2025
• Global property consultancy Knight Frank expects house prices to rise by 3% this year, rather than a fall 4% as it previously forecast

Despite house prices falling they are still far above the rates of pre-pandemic house prices due to inflation and high mortgage rates. People can no longer afford to borrow the money necessary to buy a house meaning fewer houses are being bought. Even if people have saved for a deposit paying back the mortgage loan creates a heavy financial burden.

The Bank of England has held the base rate at 5.25% and as a result the average mortgage rates have shot up.

Why have House Prices fallen?

With mortgage rates rising, less people are able to afford to take out the loan, pay the deposit and it is harder to prove you can afford the high rates.

This means buyer demand has decreased across the property market forcing those selling property to keep the prices low.

Where have prices fallen the most?

Zoopla has found that areas in Essex, Kent, Norfolk and Suffolk have seen the greatest price decreases.

Colchester in Essex has seen a 3.7% decrease with the average house price at £303,500.

Even in popular cities house prices are slowly falling such as, Manchester, Liverpool and Edinburgh.

Rightmove found that houses in Greater Manchester have an overall average price of £253,806 with most sales being for semi-detached houses with a 1% fall in average prices in this area.

Property Investors hunting for deals

The Financial times reports that commercial property investors are on the prowl for cheap deals as rising interest rates force many to sell their property in an inability to refinance. Many are having to sell this year and are forced to keep the asking prices low to match the demand, this means investors could very well find a great deal this year.

When Mortgage rates begin to decline, the hope is that more buyers will flock to the property market as more people will be able to afford the loans.

Should you buy now?

Buying a house when the prices are falling would give you a great chance for a better return in a  few years when the house prices rise once again meaning you could make a bigger profit when you sell.

In areas listed above, the house prices are falling significantly allowing you to find a great deal on your home in these locations.

As well as areas with falling prices, Move IQ has comprised a list of areas where house prices are the cheapest including Bradford (BD1) being the lowest with an average house selling for £69,939 in 2023.

If you can match the costs of mortgage rates and afford the deposit then this year could be yours to take the first step onto the property ladder at a lower cost.

The hottest real estate markets of 2023 have something else in common. They are all located in the South, according to the US News Best Places to Live, 2023 - 2024 report.

The report examined the most desirable places to live in the US, taking into account affordability, job market, cost of living, and quality of education, among other factors.

So, if you’re looking for a metro area that offers affordability, warm weather, and job opportunities, South is calling. But where should you put down roots? Here are the most desirable Southern areas to buy a family home.

#1 - Raleigh, North Carolina

Median Home Price: $431,000

Metro Population: 469,124

Named one of the fastest-growing cities in America by Forbes Magazine, coming in at number 9 out of 20, Raleigh offers a lot that puts it in the spotlight.

The list of accolades Raleigh has garnered over the years keeps on growing. In 2023, it was named among the top 5 of America’s happiest cities and the best US city for work/life balance.

But why Raleigh? Is it the jobs, people, weather, food, parks, green space, or industry? The city offers them all. Home prices in the metro area have grown by nearly 30% since 2020, but the city remains the dream living place for many Americans.

The quality of life in this metro area is indeed a rosy one—the affordable cost of living, impressive job market, prestigious universities, plenty of outdoor spaces, and myriad cultural, dining, and entertainment choices—it’s no wonder the city is among the best places to live in the South.

#2 - Manor, Texas

Median Home Price: $369,000

Metro Population: 18,285

Manor, Texas, is growing fast. Really fast. The city has at least quintupled its population in the past decade. Realtor.com says the Austin suburb ranks #7 among the top 10 fastest-growing suburbs in the US. The only other Texas city on the list was Frisco, coming in at number 3.

But why Manor? First, the city is known for its affordable housing. Homes, on average, sell for $369k, which is 14% lower than the national median of $431,000.

There are plenty of homes for sale in Manor, ranging from spacious single-family homes to luxurious condos. Check out this listing of  houses for sale in Manor.

Secondly, Manor offers excellent access to employment opportunities, making it an ideal place to live and work. The city is located near major corporations, such as Dell, Samsung, and Applied Materials, offering job seekers plenty of options to choose from.

And for outdoor lovers, there are plenty of things to do in this growing city. Residents of Manor can enjoy many outdoor activities in the surrounding area, including fishing, hiking, boating, golfing, camping, and horseback riding.

#3 - Huntsville, Alabama

Median Home Price: $389,900

Metro Population: 216,963

Huntsville, a city located in the Appalachian region of north Alabama, offers a combination of Southern living with Northern influence because of the many activities that go on in this dynamic city. For those looking to move to this metro, the job market is very robust.

With NASA’s Marshall Space Flight Center located in this metro area, aerospace engineering is a major industry in Huntsville, which contributes to the city’s high median salary of $63,518.

Housing affordability is also a major factor contributing to the desirability of the metro, with family homes selling for $389k on average. Because of its housing affordability, quality of life, and robust job market, Huntsville has been ranked among the top 3 best places to live in the 

United States for the third time in a row.

#4 - Atlanta, Sandy Springs, Georgia

Median Home Price: $371,200

Metro Population: 107,180

Atlanta, Georgia, has a robust job market, with major tech companies such as Apple, Visa, and Microsoft, opening offices in this metro area.

Homes are relatively affordable in this metro, with single-family homes, on average, selling for $371,200—13% lower than the national average. Industry sources show that over 20% of renters can afford to buy a house in the area.

Wrapping Up

If you’re looking for a mix of affordable housing, ample job opportunities, and Southern charm, these four metros are ideal for you. Other growing cities in the south worth checking out include Knoxville, TN, Tampa, FL, and Charlotte, NC.

Right now there is a huge push for people to start buying electric vehicles. Some governments have even gone as far as to say that in the next decade, fuel-powered vehicles will be outlawed. You don’t have to be a genius to know then that installing electric vehicle charging points at home can add significant value to your property’s potential sale price. Having charging points installed will mean that if you decide to sell your house in the future you can get a much better deal for it. Charging points are by no means cheap to install, however; they are not cheap to run.

Increasing your property’s value can help you to get more for it if you decide to sell. A house is an investment, not something you should hold onto forever. Adding charging points is just one way of increasing your property’s value; there are many others. This post will explore this topic in more detail, telling you how charging points can boost your home’s sale price as well as telling you about some other things you can do to maximize your property’s value.

Finding Properties for Sale

You may have found this page not because you are interested in getting an electric vehicle charger installed but instead because you want to buy a house with one. In order to cater to individuals like yourself (if that is why you are here) then this post will first tackle how to find a house to buy. You can of course search homes for sale at eXp Realty or on one of the other online property marketplaces. Using realty sites is perhaps the easiest way to find a property. These sites exist solely to help people find their dream homes.

1.    Realty Sites

As mentioned previously, the first thing you need to do to find a house for sale is to sign up for a realty site. On a realty site, you’ll be able to see all of the listings in your area. The good thing about realty sites is that they are abundant and all have their unique listings, meaning different sites will show different properties. You should sign up for more than one if you want to buy a house. Avoid sites like those run by the Zillow Group as they are notorious for selling people’s personal information to marketers.

2.    Hiring a Realtor

An alternative to using a realty site is hiring a private realtor, ideally, one that works for a reliable and trusted company in your area. Finding realtors to hire is not difficult since they exist in most of the world’s towns and cities. If you cannot find any in your immediate area then you will certainly be able to find some to hire online. Before you hire a realtor you need to conduct extensive research and read their reviews. A realtor’s reviews can give you a clear idea about what it is going to be like working with them.

Right now there is a huge push for people to start buying electric vehicles.

3.    Determining Needs

What specifically do you need your new house to have? Obviously, because you are here in this article you need an electric charging point. Beyond charging points, what else do you need? Do you need a garden or a two-car garage? Will you need your new house to be in a good school district? Thinking about these things before you start searching will help you to find a house that’s right for you. A lot of people make the mistake of trying to come up with their needs after they start searching.

4.    Considering the Location

Location is everything. If you buy a house in a bad area then your life will be plagued with crime and chaos. Avoid deprived areas if you can. If you are on a budget then you can find a house that’s not in an impoverished area by buying rurally. Rural properties tend to be significantly cheaper than urban ones. When you buy a rural property you need to make sure that you are getting one in an area with good transport links, however. Otherwise, you could end up being completely cut off from the town or city where you work.

Electric Charging Points

Moving away from how to find the house that’s right for you and onto how electric charging points can boost your home’s value (because they most certainly can); the first thing you need to think about is installation. Installing electric charging points is by no means cheap, as stated already. The installation of charging points can cost thousands of dollars. Individuals who’re on tight budgets can still get them installed by paying for them on credit. The vast majority of contracting firms accept credit.

Why can electric charging points increase your property’s value, you might be wondering? As mentioned earlier, in the near future, fuel-powered cars are going to be illegal in many countries, including the United Kingdom. Further production of them is going to cease in other parts of Europe. In the United States no definitive plans have been drawn up yet, though climate advocates and people who’re very passionate about the environment are arguing for them to be banned. Installing a charging point on your property somewhere will mean that if in the future fuel-powered cars get banned where you live, people will be more interested in buying your house.

Installing electric charging points is by no means cheap.

If everybody’s driving electric cars then everybody’s going to need charging points. However, because charging points are only going to get more expensive as demand increases, the average person isn’t going to be able to afford to install them at their homes. By installing them now while they are reasonably affordable (or while credit is a possibility) you will be able to avoid high future costs and boost your property’s resale potential. Make sure that you hire a professional team of contractors who have received good online reviews to install charging points for you.

Electric Vehicles

Electric vehicles are much better for the environment than cars that use fuel. Studies show that if all of the world’s countries collectively begin using more electric vehicles then global carbon emissions will fall exponentially. It should be noted that at this time the production of electric cars is not exactly good for the environment and the batteries used in these vehicles can be very harmful. That being said, electric cars are a lot better than petrol- or diesel-powered ones. Beginning to use them could be your way of contributing to the environment and fighting climate change.

Electric vehicles are very expensive but analysts predict they are only going to rise in price. It’s theorized that in the future people will not own cars but instead, they will rent them, mainly because of how expensive they are. If you are somebody with a lot of disposable income right now then you might want to buy yourself an electric car so that in the future you can guarantee that you own one. Make sure you conduct a lot of research and find a reliable company to buy from like Tesla, so you can get a car that’s going to retain its value and perform well in the future.

Increasing Property Value

Interior Design

One of the first things you should do if you want to boost your property’s value is to redesign its interior. A lot of people’s homes look terrible inside. The main reason so many people’s houses look awful within is that they have absolutely no knowledge whatsoever of how to design a house. The average person’s idea of what a good house looks like is a design copied straight from an interior design magazine. Your house should be a reflection of you. A house that’s copied from an interior design magazine will look hollow and empty. A house you design based on your interests will look characterful, warmer, and more desirable to homebuyers.

One of the first things you should do if you want to boost your property’s value is to redesign its interior.

If you have no idea how to redesign your house and are not confident decorating it yourself then instead of attempting to do it independently, hire an expert interior designer. Interior designers are not exactly cheap but can be very helpful and can add a lot of value to your house for you. They may also be able to make suggestions about other areas of your house like its façade or the backyard.

Landscaping Yard

Your home’s backyard should be one of your main focuses if you are interested in upgrading it and improving its value. A lot of people overlook the fact that a landscaped and cared-for backyard can add significant value to your property’s sale price. Landscaping is not something the average person can do on their own, however. Instead of attempting to landscape your yard yourself, you should hire an expert to do it for you. A professional gardener will be able to add trees, flowers and plants to your backyard that improve its appearance and of course its value.

You also need to think about your home’s façade. A lot of people make the mistake of thinking that they only need to worry about their properties’ interiors but this is not true. Your home’s façade can have just as much impact on its value as its interior can. Do not be one of those people with an immaculate house inside but a horrid one outside. A good way of improving the outside of your house is by repainting it. If you do not have the skills to repaint an entire house then you can hire somebody to do it for you.

Smart Gadgets

Another highly effective way of boosting the value of your house is to invest in smart gadgets. A lot of people underestimate how much money they can add to a house’s sale value. Smart gadgets are great because they work fantastically with electric charging points in that the same people who’re interested in investing in charging points and who have electric cars tend to be forward-thinking, technologically savvy individuals. Investing in smart gadgets for your house can be a good way of making it more desirable.

If you are unsure what gadgets you should be adding to your house then ideally they should be ones that improve its general functionality. Many smart gadgets today can be connected to smartphone apps and you can operate home appliances from your mobile device. Security gadgets are great investments too. Do not make the mistake of thinking that your house will protect itself. Fraud and crime are through the roof right now. Investing in gadgets designed to look after your house while you’re not there like smart locks, alarms, and cameras can make it a much safer place for your family and for the families of people who buy it in the future.

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Timing Sales

If you are planning on selling your house in the future then you need to try and learn about market conditions at the time that you are selling. The property market is constantly fluctuating and changing; people who have never sold houses before underestimate how complicated the process can be. A good way to learn about how the market’s currently performing is to read guides or blogs. If you do not have the time or energy to read realty guides then hire a professional realtor and ask them to help you sell your house. A realtor will be able to work with you to figure out when’s the best time to sell it.

In addition to knowing what market conditions are like in your country or state, you can also use realty platforms to find out how many houses are selling in your area. Getting an idea of current sale prices in your area will help you to figure out how much you can sell yours for. Make sure you factor in the additions you have made to your house when you are working out a price you want to list it for.

Electric car chargers can add value to your house but so can the other things mentioned here. Individuals who’re interested in selling their houses need to spend a lot of time improving and upgrading them so they can get the best price possible. Never sell your house without making a profit on it.

The sheer size of the property market in the UK and the high value of property assets means that extremely large amounts of criminal funds can be “cleaned” in a single transaction. Joy Ighade, Founder and CEO of Alexander Jon Compliance Consultancy, which specialises in financial regulation, general compliance, and financial crime, gives her thoughts on why money laundering is so prevalent in the UK property industry and what steps it can take to tackle it. 

What is the impact of money laundering on the property industry and the wider UK economy?

In reality, the full scale of money laundering throughout the UK property sector is unknown. However, Transparency International UK has been collating information on questionable funds being invested in UK property since 2016 and believes this figure currently stands at £6.7bn.

Transparency International have identified 513 properties in the UK that have been bought with suspicious wealth - three of those properties have a combined value of more than £5bn. This is just a small proportion of the total proceeds of crime invested in UK property.

Information obtained and affirmed by Pandora Papers, which comprised circa 12 million documents exposed secret dealings and hidden assets of the world’s richest and most powerful, in particular the revelation of secret owners of more than 1,500 UK properties with an estimated value in excess of £4bn worth of property assets purchased via offshore companies.

This is just the tip of the iceberg.

Why is the property industry so attractive to money launderers?

Traditionally, property has always been viewed as a reliable form of long-term investment, and despite the current economic outlook, it remains a popular choice of investment – particularly for wealthy individuals with excess cash.

Aside from genuine wealthy individuals, UK property attracts sophisticated criminals who need to disguise their proceeds of crime. Buying property is an easy way and means of money laundering while enabling criminal networks to continue to thrive.

UK property can be bought by using offshore companies. Whilst Companies House now requires a certain amount of due diligence and information to be provided on the beneficial owner, this does not seem to be the case for companies registered overseas and especially in countries with well-known secrecy jurisdictions. The flip side to this is that the true purpose and origin of financial transactions remain unclear.

Proper and accurate due diligence on property buyers must be conducted to ensure firms and banks know who they are dealing with and know the true origin of the funds. It is clear also from the number of fines meted out by some of the UK Money Laundering Supervisors that institutions are still falling short in this area.

HMRC recently revealed that almost half of those falling foul of AML regulations are property firms. Why is the industry failing to meet their AML obligations?

In direct response to the HMRC October 2022 headline - it focused on Estate Agents who either failed to register with the HMRC for AML purposes or the firm had registered but had failed to put in place adequate risk assessments and other relevant policies and procedures to ensure the firm met its required AML obligations.

These offences attracted numerous fines and in one particular case a sentence of 120hrs unpaid community service.

Until August 2022, it was perfectly legal for offshore companies to purchase property in the UK without providing details of the beneficial owner, which effectively allowed the beneficial owner to remain anonymous.

However, the new Economic Crime (Transparency and Enforcement) Act 2022 requires overseas firms with property in the UK to register with Companies House by 31 January 2023.

Aside from the above, there is a blasé attitude from a number of property firms that they believe they will never be caught out and therefore prefer not to engage in the required resource to ensure they abide by the UK AML regulations.

Where such an attitude does not exist, it is usually a simple case of the firm not having the financial capability to employ the right individual to carry out the role or the firm believing they have adequate policies and procedures in place as well as the personnel - even if a little lacking.

Traditionally, property has always been viewed as a reliable form of long-term investment, and despite the current economic outlook, it remains a popular choice of investment – particularly for wealthy individuals with excess cash.

Is the government doing enough to support the property industry, and if not, what steps should it be taking?

Firstly, it is important to be clear on the facts – the UK has in place Money Laundering Regulations which, depending on the type and category of the firm, it expects all firms to act in accordance with these regulations. The Regulations are UK statutes and therefore penalties are issued for non-compliance. The onus remains on each firm to ensure it operates within the regulations.

These regulations alongside industry-wide guidance provide a framework within which firms are expected to conduct its business. The UK Government has recognised the need for further specific regulation where it is clear that the current regulation does not cater for certain scenarios or loopholes.

To this end, the government has introduced a plethora of legislation and reforms and property firms should avail themselves of this information by employing competent personnel to ensure they are operating within the regulations.

Many companies are investing in AML technology. Is it an effective solution for ensuring customer due diligence, record keeping and the reporting suspicious activity?

Technology is positively impacting the economic world globally, and in most industry sectors it speeds up operations and efficiencies without impacting accuracy.

Anti–Money Laundering technologies can play a valuable role in enabling property firms to tighten their policies and in flagging potential criminal activity, but such technology can only work effectively alongside experienced Compliance Professionals who have the capabilities to spot the warning signs and other potential red flags.

The client due diligence process has come a long way in terms of digitisation. This is only set to improve and ensure every aspect in the CDD process is fully electronic. However, it seems that the young, disruptive and innovative financial institutions and firms are more successful in ensuring the CDD process is almost 99% electronic.

In relation to record keeping, a lot of firms have automated their processes and have sought to go paperless where they are able. However, there are instances where it is still not fully developed and therefore firms should still make adequate arrangements for records that are not yet fully electronic.

Many firms have sought to improve their own internal suspicious activity reporting moving from a more manual process, however, the ability to do this has depended on the firm’s financial resources to implement such electronic systems.

In conclusion, there are many benefits in investing in AML technology, however, the scale to which this can be done will always depend on the scale and resources of the individual firm.

If a property company is concerned that they are not doing enough to meet their AML obligations, what would you advise them to do?

The first steps are recognising and acknowledging that there is an issue that needs to be rectified and that it is brought to the attention of the Board and Senior Management.

The Board and Senior Management must ensure that it hires a dedicated Compliance Professional with sufficient seniority and independence to carry out the role effectively.

The firm must ensure the Compliance Professional is competent. The firm should seek to hire a competent individual / s who will carry out a number of tasks including ensuring there is a robust Financial Crime Framework & Compliance Strategy developed and implemented.

However, accepting a cash offer for your home simplifies the process as there are fewer parties and less paperwork, and the timeline is significantly shorter. Below are ways you can prepare your house for a cash sale.

Evaluate The Condition Of Your Home

If your home is in a pristine condition, you can study similar properties that have closed in your neighbourhood but ensure the size and trim finish matches your property. Once you arrive at the correct figure, subtract the average costs of selling the home, and then add a discount figure that matches the benefits to get a rough estimate. However, this will depend on your situation.

For instance, a person facing foreclosure or vacant property is likely to value the speed and benefits of the cash more than someone who wants to get a bigger home. If the estimated repair cost exceeds what you are willing to bear, you can sell the house as is. However, the upgrades can be worthwhile if the house only needs minor repairs that will help you get a better deal.

Check Your Home's Value

Cash buyers offer unmatched convenience to home sellers, including short closing time, higher certainty, and the option to sell a property 'as is' to save money on repairs. Typically, the amount you can get for your home depends on several aspects, including the condition of your home and market competition. It's vital to get a rough idea of the current value of your home on the market so you can determine if you are getting a fair deal.

Homeowners can get a free home valuation from online tools that use algorithms to price properties. The tools gather data from multiple sources to deliver instant property value estimates. While online property valuation may not have the same accuracy as a real estate agent CMA, it's fast and free.

Get Your Documents Ready

A property sale is a legal contract that involves various documents, and it's best to have everything ready. Title issues can delay closing since a title search is mandatory when closing the sale, whether a buyer is paying cash or through financing. Details like pending taxes, active mortgage, liens for previous renovation work, and outstanding child support can show up on your title, and hold off the sale process until everything is cleared.

However, you can be proactive and order a preliminary title so you can handle any issues. In addition, you should get your disclosure documents ready depending on the disclosure regulations in your area. If unsure, an attorney can provide the proper disclosure documentation for your locale.

Endnote

A property sale transaction can be stressful for sellers and buyers alike. Cash offers can ease the stress since the process is shorter and involves less paperwork. If you are selling your house, consider the potential benefits and convenience of a cash offer. It's best to prepare early to avoid surprises. 

Our experts have found that the top 10 equity release companies have made it foolproof for customers to get scammed and ensure property and release plans are in the right hands. 

Are those options safe? Let’s take a look. 

Is Equity Release A Scam Or Rip-off?

No, equity release is not a scam or a rip-off. According to our equity release expert, Jason Stubbs, equity release has many lucrative advantages. You can pay for education, a holiday or pay off old debt. There are no limits to how you can spend your money. 

What Is the Difference Between Equity Release And A Lifetime Mortgage?

An equity release is money released from your home, which weakens your property value and decreases the amount of money your beneficiaries receive once the property is sold to recover the costs. A lifetime mortgage allows you to live in the home until you die, and your beneficiaries can decide to sell the property on their own or pay back the money with other financial means. 

Are You Interested In Equity Release But Concerned About Value For Money?

If you are concerned about equity release or value for money, it is good to note that the amount you get for your equity release plan is lower than what you would have received on the open market. There are also interest rates between 3 - 7% attached for life. If you want to avoid high costs and choose the wrong lender, you could be stuck. 

How Do I Know If Equity Release Is Right for Me?

You will know that an equity release is suitable for you if you have your home evaluated and agree to the amount you will get. If you are happy with the outcome of your evaluation and the means to get equity fits your standards to your lifestyle, then you can manage both. 

If you need to cover the outstanding debt that has become too high or cannot afford to take care of yourself independently but have a home worth equity release, then it is right for you. 

Where Can I Get High-Quality Equity Release Advice?

Fact Find is a great way to determine if you should release equity from your home. It will give you an idea of what you may need the money for and if you could do without an equity release mortgage. Financial advisors also help you understand if you need to release equity to cover any outstanding costs or just need a better lifestyle plan. 

What Are The Risks and Pitfalls Of Equity Release?

The risk in equity release is that you will get a smaller amount paid than you would have received if you had sold your house on the open market. Your beneficiaries stand a chance to lose their inheritance if you default on your repayments. You will have to pay whatever the interest rate is for the rest of your life. 

Common Equity Release Questions 

1. What Is Fact Find For Equity Release? 

Fact find is advice on equity release, lifetime mortgages, retirements, and much more. It is a way to get clarity on taking out equity releases before deciding to go through with it. 

2. What Do I Need To Qualify For Equity Release?

To qualify for equity release, you will have to do the following:

• Have a good credit record
• Be a resident of the UK
• Be 55 or older
• Have the property in your name 

Conclusion 

Although equity release is not a scam, it is still advisable for you to seek financial advice about your choice to release equity. 

You want to make sure that you can repay the money and that your family is aware of the risks that you are taking. They may stand to lose their inheritance if you opt for a home reversion plan and may stick with the repayments if you choose a lifetime mortgage. Either way, it is better to seek advice and to be sure before releasing equity. 

1. As-Is Sale

When you sell to a cash buyer, it’s easier to sell your home as is. This is because the buyer will take the property in its current condition without any repairs or renovations. For many people, this is a major selling point. It allows them to avoid the hassle and expense of making repairs or upgrades before putting their home on the market. Since cash buyers are typically investors, they are often more interested in the property than its curb appeal. 

2. Fast And Easy

Cash buyers are investors who specialise in buying homes quickly and without fuss. Since they are not reliant on bank financing and are different from mortgages, they can close the deal in as little as seven days. In addition, since they are not concerned with making cosmetic improvements, they will often pay a fair price for your home in its current state. If you're looking for a fast and easy sale, selling your home to a cash buyer may be the right option.

3. Can Help You Avoid Foreclosure

Facing foreclosure can be a daunting experience. Not only does it threaten your financial stability, but it can also damage your credit score and leave you with fewer choices for the future. If you're struggling to keep up with your mortgage payments, selling your home to a cash buyer may be the best way to avoid foreclosure. Cash buyers can close on a deal quickly, often within weeks.

This means you won't have to worry about making monthly payments or dealing with the stress of showings and open houses. In addition, you have the negotiating power, and with the right research and skill, you should sell at a reasonable price. It's also a great way to get your finances back on track. 

4. Get Rid Of Unwanted Property

Selling to a cash buyer can help to get rid of unwanted property. For example, if you have inherited a property you don't want to keep, selling it to a cash buyer can be a quick and easy way to get rid of it. Cash buyers are also often willing to buy properties that need significant repairs, which can be a great option if you don't have the time or money to make the repairs yourself. 

In addition, selling your home to a cash buyer can help you avoid the hassle and expense of listing your home on the open market and a complicated closing process. If you're considering selling your home, explore all of your options and consult with a reputable real estate agent to get the best possible outcome. 

5. Cheaper And Less Stressful

When you sell your home to a cash buyer, you eliminate the costs associated with commissions, repairs, and showings, among other methods involved in traditional property sales. This is because you sell directly to the buyer without needing a real estate agent. 

You also do not need to repair your home before selling it, as the buyer will likely take care of any necessary repairs themselves. Finally, you do not need to stage your home or hold open houses, as the buyer will be able to see your home as-is. As a result, selling your home to a cash buyer can save you a significant amount of money. 

If you're thinking of selling your home, consider working with a cash buyer. They offer an easy, fast transaction and are likely to buy your home. Cash buyers are experienced investors who can help you avoid costly repairs and mistakes.

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After the unprecedented frenzy of the past two years in the property market, 2022 dawned amid expectations of a period of relative calm. Instead, the UK housing market as a whole has significantly out-performed any such predictions of settling down.

Indeed, the UK housing market recorded its strongest start to a year since 2005, according to Nationwide, with annual house price growth rising to 11.2%. And while the wider market’s headline-generating buoyancy may have overshadowed Prime Central London’s (PCL) stoic resilience, 2021 marked something of a return to form for the capital’s most prestigious postcodes. Knight Frank reported six consecutive months of PCL price growth – the first such extended growth since the Brexit referendum. In turn, Savills has predicted 8% growth in PCL for 2022, alongside an impressive 23.9% growth for the next five years. 

With travel restrictions easing and the race for space continuing to drive up demand, London’s prime property market is well placed to become a buyers’ playground, with a few emerging trends likely to spell the difference between modest and accelerating growth.

A race for more prime space

The desire for more space driven by changing lifestyle priorities, which was so prevalent throughout the pandemic, is set to continue causing ripples at the very top end of the property market. Data from Savills showed the average value of prime property across London increased by 3.2% in 2021, more than double the 1.2% seen during 2020. However, their data shows the strongest performing market over the past 18 months has been larger homes in prime west London, with the price of a six or more bedroom house rising by 10.4% during the past year and by 15.1% since March 2020.

Further, the estate agent recorded 522 £5m-plus sales across the capital in 2021, the highest number for any year since 2013. The total value of these transactions was £5.54 billion, 48.1% higher than in 2020, a strong indication that confidence in London’s most prestigious postcodes remains strong. With stock levels remaining low, this is likely to accelerate the market’s recovery.

Looking ahead, the city pied-à-terre is also expected to have a revival over the next few months as high-earning professionals make their way back to the office, which could also drive up prices.

Stamp duty reforms

Given the undeniable influence of the Stamp Duty Land Tax (SDLT) holiday on property demand, and the need to raise funds for a wider economic recovery, we shouldn’t rule out the possibility that further reform to the system of property tax could be on the horizon. 

It’s worth noting that prior to the last Autumn Budget, there was considerable anticipation for changes to the SDLT surcharge on second home purchases – from 3% to 4%. Naturally, this could have some consequences for transaction volumes and interest levels in the prime market, with buyers facing higher prices at the point of purchase.

Indeed, a recent study commissioned by Butterfield Mortgages Limited, taking in the views of more than 1,000 UK homeowners, revealed a majority (58%) felt SDLT to be an outdated mode of tax and hoped to see reform. 

Rising interest rates

Another trend that is likely to influence PCL property – though less directly – is rising interest rates. Following a sustained period of historic low rates, the Bank of England has started increasing interest in line with growing inflation pressure across the economy. Most recently, they were hiked from 0.25% to 0.5%, with further increases anticipated throughout this year. 

Consequently, buyers will be wary of the spiralling cost of financing a purchase. While lenders, particularly in the premium end of the market, can be agile in adapting their offering to circumstantial change, this could have an impact on buyers’ spending power and restrict the volume of transactional activity.

International investment

Naturally, given global travel restrictions implemented throughout the pandemic, there has been limited potential for international investors to invest in the UK. Now, as travel corridors have broadened, we should anticipate a return of international investment – and in the best case, a release of bottlenecked demand which could further intensify transactional activity across the upper echelons of the London market.

Furthermore, the London market remains distinct in the eyes of investors, having retained its global reputation as a safe destination for property investment capital. Knight Frank, for instance, have labelled the capital as an opportune ‘global city’, with ripe conditions for significant economic growth in the future.  As such PCL holds an innate advantage, which could prove lucrative and beneficial if the market itself retains its attractive investment conditions.

The past few years in property have underlined the importance of not trying to predict the future. Indeed, further headwinds such as unexpected changes to the tax system or the emergence of a new and restrictive variant of Covid-19 could impact the PCL market as dramatically as anything listed above. However, with all remaining well, the return of international investment and the ongoing race for space across prime addresses should prove crucial trends in keeping PCL’s recovery going strong.

About the author: Alpa Bhakta is the CEO of Butterfield Mortgages Limited, a London-based prime property mortgage provider with a particular focus on the needs of UK and international HNWIs. 

Butterfield Mortgages is authorised and regulated by the Financial Conduct Authority (FRN:119274). 

Butterfield Mortgages Limited is part of the Butterfield Group and a subsidiary of The Bank of N.T. Butterfield & Son Limited.

1. Consider Your Finances

Most people can get a home loan from most lenders as long as you provide at least a 5% deposit from the house’s price. In general, though, you want to have at least a 20% deposit since the deposit amount impacts your loan-to-value ratio (LVR). From a lender’s perspective, LVR makes up your risk as a borrower and your borrowing power. 

Other than the upfront costs of buying a home, you also need to make sure you can pay your mortgage loan repayment. Thus, it’s important to evaluate your finances before you invest in a property. Do you have enough cash to make a down payment or can you afford to take on the cost of repaying your mortgage? You’ll also want to keep an eye on the interest rates. The impact of your mortgage interest rates will depend on the type of loan you get.

For instance, if you choose a floating-range mortgage, the size of your monthly payments could fluctuate alongside the interest rates. Meanwhile, a fixed-rate mortgage means your rate is locked in, regardless of which direction the interest rates move. Any small differences in your mortgage interest rate can add up quickly, which might cause you to spend too much or save a lot.

Make sure to check for mortgage rates in the area. If you’re looking for a house in New Zealand, then you can compare NZ rates here. Lastly, it’s better to talk to a home loan specialist or your lender about your options and help you find out how much you can borrow. 

2. Check The Market

Depending on current economic situations and other factors, the real estate market can move either to the seller’s or buyer’s favour. A buyer’s market means that there are more houses for sale than buyers. A seller’s market, on the other hand, occurs when fewer homes are on the market than buyers. 

These market conditions can determine how much room you have when making an offer. Talk to a real estate agent who can help you understand the real estate market in your area and how it’s currently affecting buyers. 

3. Think About The Location

Whether you’re moving to a different country or staying in the same neighbourhood, you need to research before spending your hard-earned money. 

Most people want a home close to school, a shopping district, or their workplace. Consider if you’ll have easy access to the main roads and check for traffic flow. Some people want proximity to the city, while others prefer a more peaceful, suburban life. The location also has an impact on the price of a house. For instance, houses in city areas tend to be more expensive than those in the suburbs. Most locations have their own unique advantage. So, make sure to research what suits your needs or budget before deciding which property to settle in. 

4. What Are Your Lifestyle Needs?

Your lifestyle can also help in determining the kind of house you want and can afford. Do you need extra space for accommodating an elderly relative who can’t live alone? Is there a new baby on the way? Do you love to cook? Then you might need a home with a larger kitchen. Meanwhile, getting a home with a bigger backyard can satisfy your habit of planting your own food or accommodating your pets.

In addition, your lifestyle can also impact your budget and mortgage payments. Do you need to take a weekend getaway every month? Do you have a gym membership or maybe working out with a personal trainer? Do you love collectible items? 

In general, you need to give yourself a little financial room by subtracting the cost of your expensive activity or hobby from the payment you calculated. If the balance is not enough to buy the house of your dreams, then you need to cut back a bit or start thinking of getting a more affordable home. 

Endnote

If done right, buying a house can be both a good investment and a smart purchase. It is a contradicting experience of stress and excitement. As a result, it’s important that you keep in mind the above factors before closing a deal on a new house.