Buying / investing
Below you will find a comprehensive list of frequently asked questions:
Q. Who are Belgrave Group
A. A UK based independent property Investment Company specializing in helping investors acquire residential property portfolios for investment purposes.
Q. What do you do
A. We source mainly off plan property investments that are in excellent growth potential areas and generally negotiate substantial discounts off these properties. We also provide assistance with choosing the right finance for your investments or any other area of property investment such as furnishing or renting your new investment.
We also have special arrangements in place through our finance partners with lenders who will allow you to use the discount in the property as some of the deposit. This means that you require far less capital to purchase property than through conventional methods.
We act as a one stop shop providing a comprehensive service encompassing research, negotiation, consultation, financial advice, mortgage services and engaging solicitors. We provide consultation to take you through the process from purchase to completion whether you want to sell-on or let your property on completion.
Our aim is to provide our investors with a low risk, no hassle way of purchasing investment property.
Q. How long have you been established
A. The founding directors established Belgrave Group in April 2009. Together the two directors have worked in the financial services industry and property industry for many years as professionals and investors. Between them they currently hold a property portfolio of over 2 million pounds (and growing!) and have many years experience in buying and managing property.
Q. What are the benefits of registering with Belgrave Group
A. Registering with Belgrave Group will give you the following benefits;
* Free access to e-mail/text alerts on the latest discounted property opportunities.
* Subscription to our newsletter which is packed with tips, news and views on investing in property.
* Free financial property consultation.
Q. How do I find out about the opportunities you are offering
A. Investors need to register with us to go on our investor database. Once you are on our database we will then e-mail you details of all the property opportunities that we have on offer. These e-mails will have a link to the properties available section of our website where you can download all the details. You can also just visit the properties available section of the website to view the properties that we currently have available.
Q. What types of properties do you source
A. We focus on residential new build properties, repossessed and distressed properties, and just about any type of opportunity that we are able to achieve substantial discounts from either the developer or individual owner. Typical properties that we offer are 1 & 2 bedroom apartments in city centers or outer-lying regional areas. These types of properties are often the most suitable for rental purposes. The typical tenant would be a young professional who is not yet on the housing ladder. Most of the developments that we source will be off plan (i.e not yet built) as we can obtain discounts by buying early in the development cycle. Sometimes some of the properties will already be built but are well under the current market value.
Q. How do I buy property through you
A. The process of buying property from Belgrave Group is a relatively simple one. It is best explained in a step-by-step fashion;
*We email you all the outline details of each property opportunity once an agreement has been reached with a developer; we have done our due diligence and put together an investment package. These e-mails will have a link to the properties available section of our website where you can download all the details of the properties.
*Prospective purchasers will normally speak with one of our Investment Consultants at this point to check the availability of a particular plot if they wish to proceed and pay the reservation fee and Belgrave Group’s fees (vary per development) by bank transfer or cheque. We also require you to fax back a signed copy of our terms & conditions to confirm payment and to confirm the details of your plot.
*If you are dealing with Belgrave Group for the first time, we will put you in touch with our mortgage broker partners who will then be able to give you a decision in principle on your mortgage, should you require one. Please note that it is not a condition of purchasing a property through us that you use our nominated mortgage brokers. You are free to use your own mortgage broker but we do recommend using ours as they are already familiar with our developments and will be able to get you the best finance package available.
*Next your solicitor will guide you through the legal process. If you do not have a solicitor we can give you advice on whom to use. The solicitors will require a payment from you to open a file on your behalf. The developer's solicitors will draw up the contracts to exchange/complete between yourselves and the developer. You will need to sign the contracts and any extra paperwork required by the developer and return these to the solicitor promptly.
*If the development is less than 6 months away from completion then you will need to obtain a mortgage offer from a lender prior to exchange. Our mortgage brokers will assist you in obtaining a mortgage offer. The fee for obtaining a successful mortgage offer varies but is usually between 1-1.5% of the loan amount and this is payable upon the offer being issued. If however the development is more than 6 months away from completion then you could exchange contracts with a decision in principle from our mortgage brokers and obtain a mortgage offer later.
*Upon or prior to completion our recommended letting/selling agents can sell/let the property for you.
Q. How does Belgrave Group earn its fees
A. We charge 2% of the Gross property price as a finder’s fee to you our clients for sourcing the property and carrying out all the due diligence on that property for you. We have close relationships with the developers we work with and this allows us to negotiate deals that are not normally available to the average investor, we aim to bring these deals to you and make sure the deal stacks up to your investment criteria.
Q. Why do I have to pay a mortgage arrangement/finance fee
A. As the mortgages we arrange are specialist mortgages, which are not available through high street branches of the major banks, the fees reflect the extra services being offered.
Q. How are you different to other property investment companies / clubs / associations
A. We differ from other property investment companies / clubs / associations in that we do not charge any membership fees to be involved with us. We position ourselves at the high end of the market in terms of our investment clients and we work hard to provide a clear and transparent way to invest in property. We have no gimmicks and no pushy sales people we simply let the developments we choose speak for themselves.
Q. Do I buy the properties in my own name
A. In most cases we recommend that you purchase the properties in your own name. The high level of gearing required to purchase properties using our methods is usually only allowed by lenders who will require you to purchase the properties in your own name. It is possible to purchase properties in a company name and our mortgage partners will be able to advise you of how to do this and where it is possible.
Q. What if I don't have any money to invest
A. Really you need to have a minimum level of funds to invest in property. Do you own a house with any equity By releasing the equity in your property by re-mortgaging you could use these funds to purchase additional properties. We even have some property opportunities where you do not require any funds to invest and you can earn cash back on completion of the property. However, there is still usually a minimum level of funds required to pay fees (i.e. mortgage e.t.c).
Q. How do I re-mortgage
A. Our mortgage partners can help with re-financing / re-mortgaging any existing property you own to release equity at highly competitive rates.
Q. Why do developers offer properties at a discount
A. The main way we secure discounts on the properties we offer is to sell in bulk. We commit to sell a number of properties for the developer and as such are able to negotiate a discount on the properties for our clients.
Developers are also much more likely to offer discounts as they are in business to build and sell property. Unlike an owner occupier who may be emotionally attached to selling his property for the highest possible price and who may be in a chain situation, developers need to sell property to stay in business. For example developers will often offer discounts for off-plan sales to generate capital to fund a future development. For lenders to lend to a developer on a project the developer may have to sell a number of unit’s off-plan to secure the funding. The best way to get some off plan sales is through offering discounts. The developer will often discount the first few properties at this stage simply to 'prime the pump'. It is often easier, quicker and safer for developers to sell property before completion. Sometimes developers who are nearing completion on a site and want to get rid of the last remaining units will offer various incentives such as discounts to sell them quickly. When the majority of the units have been sold, the developer has realised most of their profit from the development, and they want to wind-up the marketing and get onto the next site. When a developer is approaching their financial year end and they need to increase their sales figures they may also sometimes offer discounts. There is no set year end for developers so the time that they may offer discounts will vary from company to company. For limited companies this information should be available through Companies House, whilst most publicly quoted companies will send you a copy of their accounts on request. In regards to the repossed and distressed property we have extensive long standing relationships with various organizations which allows us to access some of the most highly sough after investment property available.
Q. How do I know that the discount and rental incomes are real
A. We usually supply detailed research on prices and rents on comparable properties with every property we offer. We will often where possible get an independent RICS surveyor to carry out a valuation on the price and rental of properties before we market them to ensure that we will not have problems with funding down the line. These valuations can be used for lending purposes.
Q. Why in some cases do I not have to pay a deposit on the property purchased
A. Some banks will lend against the valuation of the property, not the purchase price. For example if a property is valued at 100,000 the maximum the banks will lend against the value of the property is 85% of valuation i.e 85,000. If we have achieved a discount of at least 15% or 15,000 then the investor can use this discount to form his deposit i.e the property is sold at 100,000 made up of a mortgage at 85,000 and a gifted deposit/discount of 15,000. This means that the property has been entirely funded by a mortgage while the investor has not put in any of his own funds. This method means that you can build your portfolio with much less capital than conventional means. It should be noted that the investor will still have to have funds available to cover any fees which we will set out for each development we offer so that it is easy to see what the total investment required will be.
Q. What happens to my deposit when I exchange contracts on an off-plan purchase
A. Your deposit is held in a client account by the solicitor acting for you, until exchange of contracts. At this point your deposit is paid over to the developer's solicitor to be held as stakeholder until legal completion.
Q. What about changes in property prices
A. What happens if the value of my property goes down Until an asset is sold any increase or decrease in value is "paper" or unrealised. So as long as you still pay the mortgage on the property you won't realise any loss if the value of the property has gone down. Bearing in mind that the majority of the properties we purchase are discounted by at least 25%, this means that prices would have to decrease by at least 25% before starting to have a significant impact.
Property prices are governed by supply & demand for each particular type of property in its own area. In general there is an under supply of housing in the UK at the moment and for the foreseeable future. The recently published Barker report commissioned by the Treasury indicates that we need to be building 300,000 new dwellings each year for the next 10 years in an effort to reduce the huge gap between demand and supply and therefore curb house price inflation. The Royal Institution of Chartered Surveyors, along with others suggests 250,000 new properties should be built each year simply to stand still. At the moment because of backlogs in planning and the time taken to get projects approved the house-building industry is only building approximately 70,000 dwellings each year. This under supply will hold up prices for the foreseeable future.
Most investments in property have to be undertaken with a medium to long-term view. Whilst prices can fluctuate from year to year, historically, over the medium term, any value that has been lost in a fall has been regained in subsequent years. It is often said that unlike the stock market, where the entire value of a stock can be wiped out, property is a 'forgiving' investment.
Q. What if interest rates go up
A. We recommend that people do not overextend themselves and keep back reserves to cover any unforeseen costs such as increases in interest rates. However increases in rates tend to push more people into the rental market anyway which then puts up rental values.
Q. Is there growth in the buy-to-let market
A. Yes. The long term statistics show that the average age of the first time buyer in 1988 was 21 years but in 2003 it is 32 years. Most young people these days cannot afford to buy property and are being forced to rent.
We are becoming a society of single occupier households, due to numerous reasons varying from increased life expectancy to economic migration and divorce.
The rental market only makes up roughly 5-6% of the overall housing market and stories of 'saturation' are generally far from the truth.
Q. Is now a good time to invest
A. There is an ongoing repetitive cycle, which tends to show a trend of 18 years from trough to peak. Currently we are experiencing the tail end of the downturn. With an anticipated extensive growth forecast over the medium to long term. At whatever time you invest along the time cycle, residential property investment is still considered to provide an attractive return when compared with other asset classes. The key to a successful investment strategy is not to overpay for the property in the first place and to optimize the relationship between borrowing, rental yield and capital growth.
Q. Won't there be difficulties trying to rent properties in new developments all at once
A. Developments are normally phased so all the properties will not come on the market for rental at once. Also using one rental agent for all the properties can avoid the situation of everybody undercutting each other to try and rent their properties. Also a number of our investment property developments have guaranteed rental schemes so you don't need to worry about renting your property at all.
Q. Does any document require to be examined before buying a property
A. Before you buy a property, you must get a title and document search properly conducted by hiring a competent advocate. You cannot examine the documents on your own, and thus, professional assistance needs to be taken.
Q. What is meant by Carpet Area, Built-up Area and Super Built-up Area
A. Carpet Area: It refers to the area of the apartment, excluding the area of the walls.
Built-up Area: It comprises the apartment area as well as the area of the walls.
Super Built-up Area: This term is used only when referring to multi-dwelling units. It includes the apartment area, the area of the walls and the area under common spaces like lobby, staircase, elevators, etc.
Q. What documents need to be verified before making any purchase of a property
A. The following documents must be properly verified by an advocate before buying a property:
*Approved Layout Plan
*Approved Building Plan
*Title Ownership Documents
*Complete Search
Q. What is meant by Stamp Duty
A. Stamp Duty refers to charges in the form of taxes levied by the State Government.
Q. Is it the buyer or the seller liable to pay Stamp Duty
A. The buyer will be liable to stamp duty.
Q. How do you define Market Value of a property Is Stamp Duty payable on this value or on the basis of the clause mentioned in the agreement
A. The Market Value of a property refers to the price at which the property can be purchased in the open market on the execution date of such instrument.
The Stamp Duty has to be paid either on the property value stated in the agreement, or the market value, whichever is higher.
Q. Which instruments influence the payment of Stamp Duty on the market value of the property
A. The following instruments have a great influence on the payment of Stamp Duty on the market value of the property:
*Agreement to Sell
*Conveyance Deed
*Exchange of Property
*Gift Deed
*Partition Deed
*Power of Attorney
*Lease Transfer
Q. Who can determine the market value of the property
A. The Royal Institue of Chartered Surveyors, under whose jurisdiction the property is located, has fixed property values for different locales. Thus, only he should be contacted to get the market value of the property.
Q. What is meant by a Freehold Property
A. A Freehold Property refers to any plot or flat, where there is a sole proprietary ownership with no conditions under the land laws, and there is no lessor or lessee involved.
Q. How can I verify if the documents submitted by the seller are authentic
A. You might be required to hire an advocate to render his professional services for the proper examination of the authentication of the documents submitted by the seller.
Q. What if I want to buy more than one property
A. Can I get more discounts
As a rule of thumb we do not offer discounts off our fees for purchasing more than one property as we have already negotiated the best discount possible on each development and we pass this on to our clients. However depending on the development on offer we might be able to offer some sort of further discount so just ask.
Q. Will I be able to sell my off plan property prior to completion
A. This varies for each development, please check at time of purchase as a number of our developments come with "assignable contracts" which means you can flip (or sell) your contract prior to completion.
Q. How will I realise my capital gain if I sell prior to completion
A. If you sell prior to completion, you will normally receive your deposit from the new purchaser, and any capital gain that you may have achieved will be passed on to you on completion.
Q. Is it easy to sell my property and can Belgrave Group assist in this
A. Yes. We can act as a broker between clients, or alternatively can advise you of Estate Agents who can assist on the sale of a property to a third party if necessary.
Q. What happens to fees/deposits if I pay them and decide not to proceed
A. Reservation fees are not refundable once received, you should make sure you are happy with your decision before purchasing any property.
Q. What is the rental yield on a property
A. This is the annual rent divided by the purchase price of the property. It is in basic terms the rate of return on your investment. Like a bank savings account paying you 4% interest each year.
Q. What time frame should I be looking to invest for
A. Generally, we would advise that property investment should be a medium to long term investment. However, sometimes we receive excellent property trading opportunities. Whether you choose to trade property, or hold on to it for longer term capital growth, is completely at your discretion - we will advise what we consider to be the optimal strategy.
Q. Can I use my own solicitor and/or mortgage broker
A. We request that you use our specialist conveyancers and mortgage brokers who are experienced in arranging these types of transactions. However if you have your own mortgage broker that you want to use that is fine also.
Q. Will I have to pay tax on any profits
A. Unfortunately taxes will have to paid on any profits - there is no avoiding that! However, we can assist with providing property tax experts who can help you to minimise your tax liabilities.
Q. Can I manage my own properties
A. Absolutely. You are not in any way obliged to use letting agents to manage your property. We would advise that the more properties you hold in your portfolio the harder it becomes so you may want to consider using a lettings and management agent to make life easier for you. Usually managing your own property can save you on the letting & management agents fees...
Q. Can I invest in property under a company name
A. The answer to this is nearly always yes. However, since every individual circumstance is different, we would always advise you to consult with our mortgage brokers, solicitors and tax experts as to the benefits and limitations that this approach would bring.
Q. Why should I use Belgrave Group rather than going direct to estate agents
A. We have direct contact with developers to release the off plan opportunities well before an estate agent would get involved.
Also an estate agent has a duty to the vendor to achieve the highest price possible on a sale. We act for the investor by achieving the best price and yield for our investors. Therefore the very basis of our investment approach is in complete contradiction with that of an estate agent.
Q. How do I make money in property
A. Is it through rental income or capital gain
The big money is made in capital growth not rental income. As long as your investment finance is covered by the rent that it generates you will be well set to take advantage in the capital gains of that property investment.
Q. Should an investment property be purchased outright, if possible, or mortgaged
A. Your return on investment (R.O.I) will be greater using leverage or borrowing than if you purchase outright.
Therefore we recommend using borrowed funds as much as possible to maximise your return on investment.
Q. Who pays Council Tax, service charge and ground rent on these properties
A. The tenant is responsible for Council Tax on each property. The landlord must pay for the service charge and ground rent but there is no reason this can't be incorporated in the rent charged to the tenant.
Q. How much can I borrow
A. Typically, a lender will allow you to borrow up to 85% of the value of the property on a buy to let mortgage but this can vary so talk to us and we will put you in touch with our specialist mortgage partners.
Q. Can I have more than one buy to Let mortgage
A.
Yes - you can take out multiple mortgages with different lenders - but in most cases, it is only possible to have one loan per property. This is because the loan is secured on the title of each property. You can borrow in individual names, jointly or in a company name.
Q. Can 'non-residents' get buy to let mortgages
A. Yes - Non UK residents (e.g. foreign investors or non UK nationals posted to the UK) can purchase property using the buy to let loan scheme.
Q. What is the level of interest charged on a buy to let mortgage
A. Interest rates tend to be up to 1% above the Bank of England base rate - although competition is reducing this differential.
Q. Interest only or Capital and Interest
A. Typically a buy to let loan is taken out on an interest only basis.
Q. Does my personal status matter
A. In theory a buy to let loan is 'secured' on the income and capital value of the property. Therefore the income and credit status of the landlord is not relevant. In practice, these are important points. Generally, any one can get a buy to let loan - but at a cost! The higher the risk, the higher the interest rate. In other words, to get the best possible finance, you should put forward the best possible case for the lender