Guide to buying or renting a property in the UK

Guide to buying or renting a property in the UK Developed for NatWest Global Employee Banking in association with Ten

When you make the move overseas, it is vital that you feel settled as soon as possible so that you can concentrate on enjoying your new life in the UK. There s a lot to think about and plan prior to moving and arranging accommodation is one of the most important aspects. We recommend that you do this as soon as possible. Firstly, decide whether you would like to rent or buy a property. It s important to take into account the length of your assignment, your future plans and your investment strategies. There are pros and cons to both options. Renting will allow more flexibility and fewer financial outgoings upfront and you could move into a fully furnished property, meaning that there s less to ship overseas. Buying a house or a flat can offer more stability and is a great investment should you wish to rent out the property when you leave the UK. When you have made this decision, it s time to look for an area that you d like to live in. Finding an area When researching the area in which you want to live, it is recommended that you look at the quality of the local schools, public transport links, distance from work, variety of local leisure facilities and public spaces, medical facilities nearby and crime statistics, which are available on the local police websites. All of these factors will affect the area s property prices. Whenever possible it is advised that you visit the area and speak with the locals to get an idea of the general atmosphere and quality of life. Setting up a UK bank account Whether you re interested in buying or renting a property, it is crucial that you have a UK bank account. NatWest can arrange a sterling current account that will allow you to make rental and mortgage payments. When renting and buying in the UK, to secure a property, a deposit will be expected. This amount is usually one month s rent in advance, or if buying, approximately 20 per cent of the property value. However, this varies from lender to lender. There will also be administration fees and other charges applicable. These are all outlined in the guide below.

Guide to renting In the UK an increasing number of people are renting properties, particularly in the major cities, and the standard of rental accommodation is better than ever. Renting offers more flexibility than owning, which is a major benefit for those staying in the UK on a temporary basis. There is also less to deal with than if you own a property, as the general maintenance and financial aspects are handled by the landlord or estate agent. In this section we take a look at how to find the perfect property and the practicalities of securing a tenancy agreement. Finding a home First of all, it is important to think carefully about the type of property you would like to rent which will best suit your lifestyle and budget. The options range from onebedroom studio apartments to multi-room houses with gardens and parking, and monthly rental prices vary accordingly. Once you have chosen your desired area and the type of property you would like to live in, you will need to investigate the average rental prices in the local area. Websites such as www.rightmove.co.uk and www.zoopla.co.uk list properties to rent across the nation and local estate agencies will all have websites to consult. Types of rental In the UK, tenants have the option to rent a property directly from the landlord or through an estate agent acting on behalf of the property owner. We outline the differences below. Estate agents Finding a home through a letting agent has many advantages. It can give you a much wider choice of properties, provides the tenant the right to redress through the property ombudsman should disputes occur and allows you to move into properties quickly. However, agent fees can be expensive and almost all will charge administration fees for checking your references and credit history. Private landlord It is often more difficult to find a property managed directly by the landlord as they do not have the advantage of advertising their properties through an estate agent. However, there are many benefits, including a reduced fee for admin and reference checks and a quicker response time when requesting repairs. Some landlords belong to bodies such as the Association of Residential Letting Agents, which has a code of practice that members must subscribe to. Visit www. arla.co.uk for a list of member agents.

Understanding your rights as a tenant Before you start searching for a property to rent, it s important to understand the legal aspects of being a tenant. When you become a tenant, you take on certain responsibilities in exchange for certain rights. The law entitles you to some basic rights as a tenant. These include the landlord maintaining the structure of the house, as well as things like ensuring your boiler and water supply work properly. You are also entitled to quiet enjoyment of your property, meaning that your landlord can t visit without notice. They also will be responsible for dealing with general repairs and maintenance. In return, tenants have a responsibility to pay their rent on time and to treat the property with respect, reporting all faults or breakages. The tenancy agreement will typically be between four and five pages long and very detailed. It lists your responsibilities, so read it carefully and don t hesitate to contact the landlord or estate agent with any queries or amends. For a full overview of your rights, visit www.gov.uk/ private-renting/your-rights-and-responsibilities. Securing the property you want When you have shortlisted a selection of homes that you would like to rent, you will need to schedule viewings, either with the landlord or through the estate agent. Good properties get rented and taken off the market quickly, so here are some tips on securing the property that you want: Start viewings in advance. A lot of property to rent won t be available to live in for at least four weeks, so arrange a time to look around the house or flat as soon as possible. Many estate agents and landlords require a holding deposit to secure the property. Make sure that you have funds available to be used as a reservation fee. Have copies of references from your employer and previous landlords ready, together with your bank details and documents proving your ID and full address with postcodes for the past three years the agent will need these for the reference and credit checks. For overseas visitors, credit checks and references will be taken from previous overseas addresses. Be ready to sign a tenancy application form. This will allow the agent to check your references and run a credit check. The rental price is often negotiable, so always be prepared to offer slightly below the asking price. However, if the landlord or estate agent receives a better offer from other interested parties they will normally rent the property to those offering the highest price. Tenancy agreements The tenancy agreement is one of the most important documents you will sign during the renting process, so it s important to read it closely and examine each clause carefully. It is most likely to be a six or 12-month assured shorthold tenancy (AST) agreement, which will outline the landlord s and tenant s obligations, include information on possession and notice periods and state the monthly rent. When you sign this you will be expected to pay at least one month s rent in advance as a deposit, as well as the first month s rent and all administration fees charged by the estate agent or landlord.

Important things to remember Contents insurance Your landlord will have insurance on the building itself, but this does not cover your possessions, nor does it cover damages if you accidentally break a window, for example. Contents insurance is relatively inexpensive and it is highly recommended. Some landlords and estate agents may even require that you have insurance before renting the property, so be sure to enquire about this. Fire, gas and electricity safety All flats and houses should have working smoke alarms. Some will also have carbon monoxide detectors or fire extinguishers. If so, make sure that you know where they are and how to use them. If they don t and you want the extra safety, see if the landlord would be willing to provide these devices. There should also be clear escape routes and fire-safe furniture if the property is furnished. All electrical equipment provided must be regularly checked and a gas safety check should be presented before moving in. Useful contacts Estate agency associations National Approved Lettings Scheme Telephone: +44 (0)1242 581 712 www.nalscheme.co.uk National Association of Estate Agents Telephone: +44 (0)845 250 6001 www.naea.co.uk Landlord associations Association of Residential Letting Agents Telephone: +44 (0)845 250 6001 www.arla.co.uk National Landlords Association Telephone: +44 (0)207 1840 8900 www.landlords.org.uk General advice Citizens Advice Bureau Telephone: +44 (0)207 833 2181 www.citizensadvice.org.uk

Guide to buying The maze of legal work, negotiations, dealing with surveyors and solicitors and finding a good mortgage deal, on top of actually hunting down your new home, can make buying a property a lengthy and complicated business. Home-buying in Britain can be a drawnout process and it generally takes about 12 weeks to complete, which is about twice as long as in many other countries. Luckily there is a lot of good advice available from organisations and government bodies which can make your home-buying experience as easy and problem-free as possible. In this section of the guide we have outlined the process for securing a property in the UK. Buy-to-live or buy-to-let? Depending on your circumstances, you will need to decide whether to purchase a property as a home to live in or as an investment opportunity. The UK housing market has seen meaningful recovery in recent years and mortgage lenders are witnessing increased investor confidence. If you decide to buy to let, it can be a great medium or long-term investment opportunity and with careful planning a property in the UK can be a very manageable asset, even from overseas. Anyone looking to purchase an investment property will need a specific buy-to-let mortgage and lenders will be able to talk you through the details. Getting to know the area in which you wish to purchase is vitally important as the property market in the UK differs from region to region. You should carefully research the market in the area you are focussing on and this can be done by a specialist letting agent. It is also crucial to identify the type and size of property you want to buy, as this will determine its rental value and the type of tenant you re likely to attract. Once you have completed the purchasing process as explained in this guide, you will take on many responsibilities as a landlord. Landlords have a legal obligation to maintain the property, ensure the safety of all gas and electrical appliances and meet fire safety requirements. On top of this you will have insurances to pay and you will also need to take into account the tax implications from the second income. Most of the work can be done by estate agents acting on behalf of the landlord, which is a particularly desirable option for those living abroad. For more detailed information, visit www.gov.uk/ browse/housing/landlords.

Leasehold or freehold All properties in England and Wales are either freehold or leasehold. Freehold means that the buyer fully owns the property and will have full responsibility for the maintenance and repairs. Finding a mortgage agreement Leasehold means that you own the property for as long as specified in the lease you are essentially granted the right to live there by the freeholder. The majority of leases are originally granted for up to 999 years, but existing leases on properties are usually shorter. The lease stipulates who is responsible for maintaining and repairing the property and any conditions you must meet as a resident. This is particularly common in apartment blocks, where a service charge is payable for maintenance of communal spaces. Be sure to check all these extra payments if you are considering buying a leasehold. It is vital that you secure a mortgage with a lender before starting the house searching process. This way, when you find the right property, you will avoid being beaten to it by another buyer and you will also be in a much stronger position to negotiate on the price. Generally, the best mortgage deals are available to those who place the highest deposit possible. The lender will then supply the final balance. A mortgage broker will be able to search the market and find the best available deal and help maximise your buying power. NatWest provides very competitive rates. Make sure you find as much information as you can about the different mortgages on offer to non-uk residents and start thinking about whether you want to opt for a fixed or variable rate deal. Once you have put in an application for a mortgage it can take up to 10 weeks to be processed. Hiring a solicitor The legal process of buying a property is called conveyancing. Conveyancer is the generic term given to either a conveyancing solicitor or a licensed conveyancer. All solicitors practising law in England and Wales must also be registered with the Law Society and when buying a property their role is to take care of all legal aspects on behalf of the purchaser. Their duties include: Dealing with the Land Registry Stamp duty charges and payments Collecting and transferring money during a house sale Providing legal advice and recommendations Drawing up, assessing and exchanging contracts Apart from the conveyancing work there is also the mortgage lender s legal work to be done. Your conveyancer could act for the lender, which should save money; however, some mortgage lenders insist on using their own legal teams. The principal task is to draw up a mortgage deed, which sets out the conditions of your loan. The lender will hold this and the title deeds of your property until the loan is paid in full.

Additional costs Stamp duty Stamp duty is essentially a land tax administered by the Inland Revenue that must be paid on all properties exceeding 125,000 in value. Stamp duty rates vary from zero to five per cent of the property value. It must be paid within 30 days of completing the house purchase. For a full breakdown of rates visit www.hmrc.gov.uk/sdlt/intro/ratesthresholds.htm. Land Registry The Land Registry is a government department which looks after the ownership records of all registered properties in England and Wales. It charges a fee for transferring the title to the new owner. This fee ranges between 40 and 800 and is charged according to property price. Making an offer on a property When you find a property that you like and which suits your budget, it s time to make an offer. Before you do so, try to glean as much information from the estate agent or landlord as possible. Ask how long it s been on the market and if the seller wants a quick sale, as this will determine how much to offer. You will also have to receive an Energy Performance Certificate (EPC) from the seller or their estate agent. This shows how energy efficient the house is and gives an estimate of the energy bills per year. Once you have received the EPC, you can make an offer to the agent or landlord over the phone, at their offices or in writing. Many buyers initially make an offer below the asking price and then negotiate a price that satisfies both parties. Once this has been agreed, ensure that they take the property off the market immediately and agree a provisional timescale to work towards for completing the purchase. In some instances, the landlord or estate agents may only accept offers in excess. This means that the seller is expecting to receive a sum higher than the asking price. There is no set rule as to the amount you should offer and this is where solicitors can advise you, bearing in mind the market conditions at the time. In either case, ensure that the price you re offering is subject to a survey and getting a mortgage, so that after your offer is accepted there is still the opportunity to revise the amount you pay.

Surveys and valuation It is essential to get a survey carried out when you have an offer accepted on a property to find out about the condition of the building and make sure that it s worth the price you have offered. This can help negotiate money off the offer price if there is costly work that needs to be done and also help you budget for future repairs. Most buyers tend to rely on the mortgage lender s valuation, which is simply a check to ensure that the property is worth the money being lent. Although it will highlight any serious defects that will affect the value of the property, it won t give you a real picture of the building s condition. For this you need a more in-depth survey. There are four types of survey a buyer can purchase: Building survey Valuation report This is the simplest survey and is all the mortgage lender will require. Its purpose is to reassure the lender that the property is sufficient security against the loan it is offering. It takes a short time and contains a summary of the general condition, with comments on general faults, and recommendations on further checks to be carried out. This may be all that is needed for a newly built property. Homebuyer s report This covers structural safety and highlights problems such as damp and damage to structure, as well as anything that doesn t meet current building regulations. The surveys are carried out by an independent expert, take between two and four hours and provide a full valuation. This is used for older properties and those of nonstandard construction, such as timber-frame houses. It gives a detailed report on the condition of the property and highlights issues that need investigating before the purchase is completed. It does not include a valuation and takes up to one day to complete. New-build snagging survey This is a specialist survey for new homes that will pick up mistakes such as defective plumbing, poor paintwork and finishing touches. The independent inspector will arrange for the developer to fix all problems. This does not include a valuation.

Finalising the mortgage and exchange of contracts Once an offer has been agreed, it is time for the solicitors to complete the contract and agree a completion date. There is often a lot of correspondence between the two solicitors at this stage, so finalising the draft contract can take some time. You will also have to arrange a formal mortgage offer from your lender and your solicitor will send you a mortgage deed to sign. The formal mortgage offer which you obtain at this stage is distinct from an agreement in principle, which you would have obtained at the beginning of the process. Once you and your solicitor are satisfied that everything is in order, the contracts are exchanged and the deposit is paid. You sign a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which you receive. Once contracts have been exchanged (normally by the two solicitors) both parties are legally bound to follow through with the transaction. Once contracts have been exchanged your solicitor prepares the draft transfer document. This document transfers the title of the property from the seller to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller. Your solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale and the property is yours. Your solicitor will talk you through this process in greater depth. Administration and documentation For the process to run smoothly it is crucial that you have all relevant documentation on hand for the solicitor and the mortgage lender. Here are the essentials: Personal details: passport, driving licence or birth certificate and your National Insurance number. Accommodation details: proof of your address(es) for the past three years, such as utility bills or bank statements. Employment details: employer and contact number. Financial details: documentation of proof of income, for example pay slips, a P45 or accounts if self-employed. Documentation of your outgoings, debts, loans and so on, and your past three bank statements. Detailed breakdown of assets, such as other bank accounts, properties and investments.

Moving in utilities and insurance Once you have a confirmed move-in date it is time to start planning the move and there are certain things which you need to remember so that everything goes smoothly when you start living in your new property. Utilities and council tax It is vital that you set up accounts with utility companies to supply energy and water. In the UK there are a number of suppliers for gas and electricity, all offering competitive rates. It is worth researching their prices and environmental policies. Other important utilities include television, telephone and internet. Visit www.money.co.uk/ utilities.htm to compare the best available rates. You will also be required to pay council tax, which is a monthly charge levied by local authorities to raise money for their services, such as refuse collection and road maintenance. The fee varies according to the value of a property and each local council will publish its rates on its website. For further information visit www.gov.uk/browse/housing/council-tax. Insurance It s important that you take out insurance to protect your home. Often referred to as home insurance, it s usually split into buildings and contents insurance. Building insurance covers you financially for any damage to your property. Ensure that you look at the level of cover as well as the cost of the policy. Most mortgage lenders will insist on seeing your insurance documents before completion. Contents insurance covers everything in case of damage and theft, including furniture, TV and audio equipment, all electrical goods and appliances, clothing and jewellery. This is not essential but it is highly recommended. It is also worth thinking about a mortgage payment protection plan to cover your payments should you become ill, unemployed or injured.

Useful contacts For information on mortgages Council of Mortgage Lenders www.cml.org.uk/cml/consumers For details of Energy Performance Certificates Energy Performance Certificate Register www.epcregister.com For details about Stamp Duty HM Revenue & Customs www.hmrc.gov.uk/sdlt Land Registry HM Land Registry www.landregistry.gov.uk Surveyors The Royal Institution of Chartered Surveyors www.ricsfirms.com www.surveyline.com Independent Surveyors Association www.surveyorsweb.co.uk House prices Land Registry House Price Index www.landregistry.gov.uk/public/house-prices-and-sales Insurance British Insurance Brokers Association (BIBA) www.biba.org.uk Property search websites Right Move www.rightmove.co.uk Prime Location www.primelocation.com Zoopla www.zoopla.co.uk Tepilo www.tepilo.com Home.co.uk www.home.co.uk