Purchase and sale process of dwelling immovable property in England.

Purchase process of immovable property in England can take from one to three months depending whether you make a mortgage application for immovable or not.

   The whole process consists of several stages:

 Offer

   When you determine the choice of a house or a flat, you make an offer to the Seller. As a rule, if the immovable property is sold with the help of Agenсy, you make offer through the Agent. Offer is usually made orally and does not presuppose any obligations in law.
   According to National Association of Estate Agents, Agent is obliged to pass your offer to the Seller as well as other offers of potential Buyers of this property, Agent will always recommend the most advantageous variant for the Seller. In case if one and the same object interests few Buyers and they make the same offers, Seller may use gazumping (gazumping- making price for a house higher compared to initial agreed price), thus choosing Buyer who offered maximally high price. If your intentions are serious, in some cases we will recommend to conclude Antigazumping Agreement with Seller which usually lasts for a small period of time. After offer has been made to the Seller, immovable property object becomes the subject of purchase and sale and has a status "Under offer" (offer had already been made and is being considered by the Seller).

 Offer acceptance

   If the Seller accepts your offer, the next step is legal implementation of Conveyance. At this stage lawyers, instructed by the Buyer and the Seller, agree Contract terms as well as Fixtures and fittings. Lawyers of the Buyer also make all necessary procedures concerning making different inquiries for immovable property (Local Search, Land Charges Search, Drainage Search, Land Registry) and after deal closing they will draw up Stamp Duty. At this stage the status of immovable property will be classified as "Sold. Subject status".

 Mortgage Application

   If the Seller needs the deal financing, he/she addresses to the corresponding Lenders. Mortgage Application can be realised directly or through a mortgage broker. As a rule in England Lenders are banks and building societies. Mortgage application is realised in two stages: agreement in principle of the bank and direct transfer of money for the account of Buyer's lawyers. The second stage starts after estimators will make cost estimating and favourable conclusion.

 Survey

   Buying immovable property is one of the most expensive purchases we make. A recipe for a successful purchase is a good quality of goods. Survey of immovable property is made with the aim to find existing and potential problems. As a rule, one of two kinds of expertise is made: Homebuyer's Report- optimal variant if building is not older than 30 years and Building Survey- is made in case of atypical construction of building, presence of replanning or extension and also for buildings which are rather old.

 Contracts Exchange

   Buying immovable property is one of the most expensive purchases we make. A recipe for a successful purchase is a good quality of goods. Survey of immovable property is made with the aim to find existing and potential problems. As a rule, one of two kinds of expertise is made: Homebuyer's Report- optimal variant if building is not older than 30 years and Building Survey- is made in case of atypical construction of building, presence of replanning or extension and also for buildings which are rather old.

Purchase process of immovable property in England can take from one to three months depending whether you take a mortgage for immovable property or not.

Tenure in Great Britain.

   Freehold- form of ownership when land and building located on it belong to an owner. Owner is obliged to make a maintenance of the building regularly. Owner freehold also bears risk of accidental loss of the object.

   Leasehold is immovable property bought on rent rights. As a rule rent may be long-term from 120 to 999 years. Leasehold is more widespread while buying flats. In this case owner leasehold is obliged to make payment to owner freehold for ground rent and also maintenance fee. Owner leasehold has a right to extend a rent term when it comes to an end and also to redeem share of freehold. This process is called enfranchisement.

   Commonhold is relatively new ownership form for flats. It was brought in since September 2004 and is aimed at replacing leasehold one day. The main advantage is absence of temporary restrictions and necessity to extend rent. The right freehold in this case belongs to owners' association within a dwelling house.

English mortgages.

Part one..

   For the last time Buyers from Commonwealth of Independent States (hereinafter called CIS) are interested in how not only to buy immovable property but also how to make it maximally effective from financial point of view, that is with the help of mortgages and with low percent rate. There is an open secret that percent rate of foreign banks is much lower than that in commercial banks of Russia, Kazakhstan and Ukraine and credit conditions are more favourable. That's the main reason why many Buyers would prefer to buy immovable property using mortgages even if they have enough their own money for a purchase. However mortgage process in a foreign bank for many people from CIS seems to be something incomprehensible and inaccessible.

   Nevertheless, what are the variants of mortgage purchase for those who have Russian, Ukrainian or Kazakhstan passport, enough money for deposit, regular mortgage payments and, of course, desire to buy immovable property in London?

   If you are a foreign citizen and is not a resident of Great Britain but you are going to buy immovable property on its territory, than the deal for 99% may be financed only by one of offshore banks. As a rule, these are daughter banking organizations of world-famous banks registered on offshore territories such as, for example, Gibraltar or Jersey. Thus, such bank as Barclays has daughter organizations Barclays Wealth and Barclays International, bank HSBC Offshore Banking registered on Isle of Man. The reason why banks work with foreigners only through offshore departments is simple enough-it is more simplified regulation of financial activity, accounts and, of course, reasonable taxation. The point is that all banks registered in Great Britain, get financing from the Central Bank (Bank of England) and Financial Services Authority. The essence of control is that banks must maximally reduce and insure its risks. Foreign citizens find themselves in high-risk group, especially under the circumstances of financial unstable situation in the world. That's why local English Banks do not want risk their reputation by lending money to foreigners. Besides, local banks are more oriented towards demands of local clients- average Englishman. At the same time many offshore banks have during many years formed a high capital aggregation which must also be somehow used. Moreover, offshore banks can get financing from banks of other countries in foreign currency and introduce the so-called currency mortgages. Thus, due to drop in rate of US dollar towards a pound, mortgage in US dollars five years ago at the present moment may cost two times less.

   Despite the fact that offshore banks are more flexible in work with clients and they are less controlled, it does not mean that they just wait for a person who to lend money. These banks also follow the rule "know your client". Despite the fact that mortgages are received on the security of immovable property, bank is not practically interested in realisation of this security in case of non-payment and also in an expensive legal procedure.

   What are the demands of offshore banks? Let's start from the main ones. A bank wants to understand fully client's occupations to be sure that he/she is able to make mortgage payments. Don't forget that mortgage relationship is a long-term "family unit" of the bank and client for many years. That is why bank wants to be sure that their "honeymoon" will never ends. In cases when client can show the presence of large amount but he/she can not prove the legal sources of this amount and that it will appear in the future with a stable regularity, bank will not treat such client seriously. Not all the offshore banks meet clients from CIS countries "cordially" even if they have unblemished reputation. For example, a branch of Barclays Wealth, office of which is situated in London in Knights Bridge district, according to Steve Blunt, specialist in an International mortgage have in principle refused to work with clients from Russia.

   While considering a mortgage application, bank as a rule requests the following information:

   Personal CV containing information what is a client, place of employment, how much time he/she works there, what are the conditions of his/her employment (Labour Agreement, Contract, personal business, shareholder).

  Notarized copy of foreign passport, two types of translated and officially notarized residence place Confirmations for the last 6 months (for example: bills for mobile communication, utility bills, cablecasting bills)

  If a client is an employee at an International Company- Employer's letter in English which confirm position in this Company, salary, period of working there and personal reference

  If this client is a businessman/ corporate entity- letter from an internationally recognized Auditor Company (PWC, KPMG, Ernst & Young) confirming incomes/ net profits of the client for the last 3 financial years.

  Confirmation of presence and origin of a deposit

  Bank statements from client's personal account showing transactions and translated into English

  Letters of recommendation addressed to creditor bank by personal accountant and client's bank characterising client from the point of view of decency and reliability and also duration of cooperation.

  Confirmation of financial state (immovable property), attested by a certified accountant

   For the last time offices of world-famous Auditor Companies in CIS-countries open departments on the work with individuals. Their services include preparation and examination of correctness and filling in tax returns, declaration of incomes and paying taxes for individuals. The fact that tax return is made by International Auditor Company and consequently reflects real incomes of its client is very important for a bank.

   Offshore banks in average are ready to lend foreigners amount 3.75 times exceeding their annual income before paying taxes and up to 75% of immovable property value. The more confirmations of a regular incomes a client can provide, the higher the credit of trust to him/her of the bank will be and the more money bank will agree to lend. Moreover, appropriately made documents will make the process of a mortgage taking considerably quicker, up to one month.

   Before starting to search a desirable house or flat on "Misty Albion", a client will have to get a principal consent of the bank for mortgage. As a rule all the procedure takes from one to three weeks. A request and also all accompanying forms are handed in the bank, these documents are examined by employee of insurance and mortgage security department. Authenticity and significance of these documents are checked. In fact the bank makes a decision whether the activity of the client is transparent for it or not, whether the bank trusts him/her or not. In case of a favourable decision the bank issues "Agreement in Principle" for the client. In this Agreement the amount which the bank is ready to lend as well as terms and time for your search of immovable property will be indicated. As a rule this time covers 3-6 months. As soon as the immovable property is found, the bank officially makes a "Mortgage Offer" for the client and if the client agrees, contractual relationship arise between the bank and the client.

   The second part of the article will contain information about types of offshore mortgages, their terms of repayment and refinancing, percent rates and peculiarities of taxation for non-residents.

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