Please note: Whilst Blue Alpine endeavours to help you each step of the way with commercial and residential property transactions, we are not tax or financial advisors. It is strongly recommended you speak with the appropriate professional advisers on all matters of your own personal and business tax and finance in connection with transactions. The information Blue Alpine supplies is for educational purposes only, to provide investors with an overview of information regarding investing in UK commercial and residential property. This information is not to be treated as advice; it is to be used as a reference point to further conduct your own research.
Frequently Asked Questions About COMMERCIAL PROPERTY INVESTMENT
What does a property agent do? I could do this all myself, so why use a property agent?
Some people believe that buying a property without an experienced agent will save money. However, you are more likely better off working with a professional that understands the market.
If you do not buy or sell property every day or frequently, then a professional agent can help avoid costly mistakes. The misconception of people thinking property is easy to sell or buy can be derived from the fact that it is visible, tangible and a lot of us have bought a home at some stage. Technology is also making it easier to see many available properties online and information about said properties is readily available. However, not all information is of equal value, nor even accurate. You as a buyer or seller should be cautious of the information provided on the internet because it can be out-dated or misleading.
An experienced agent has developed an in-depth knowledge of the market and honed their skills for negotiating on behalf of clients. It is essential to understand the buying process and getting the timing right. Also, please bear in mind that you need to understand the terms and conditions of the contract and knowing how to arrange finance (if applicable).
If you are interested to buy a finished or off-plan property from developers, you usually don’t get extra discount or different price without an agent involved. This is due to the relationship the agent has with the developer.
If you want to buy a resale home, then an agent tends to be the key matchmaker between the buyer and seller in this market.
What is Due Diligence?
The due diligence simply means that you conduct research about the property, lease (if applicable), background checks on the Seller/Buyer, etc. If you don’t conduct your own research and checks on the property you are buying, then there is a danger the transaction could go wrong. There are of course different levels of due diligence. To begin, you will want an understanding of the location within the UK, the property, the Seller/Vendor and the contract set-up. When considering the location, you will also consider your risk profile, the capital growth potential and income level from the property. How is the infrastructure, the transportation situation and economic growth for the area?
Regarding the property itself, check out the near-by occupiers and the neighbourhood. Is it easily accessible by car and/or train as well as the attractiveness factor?
Is the Seller/Vendor selling an unencumbered property? Does the Seller/Vendor offer long-term building guarantees and are the relevant licenses granted for the property (if applicable)?
Frequently Asked Questions by FOREIGN INVESTORS
I don't live in the UK, how can I own property there?
We have many years of experience in the UK commercial investment property and residential development markets. We help you each step of the way in considering investment opportunities. We know what to look for, what to watch out for and how to put together good, solid deals that generate strong return on investment (ROI). You tell us your investment requirements, and we hand-pick the best matches for your personal needs and assist you with the appropriate structuring of the deal to own property in the UK.
How can I know what commercial and/or residential investments to buy? Where should I buy in the UK?
We analyse investment opportunities on a weekly basis, which allows Blue Alpine to select the best-performing types of property in each location. Depending on the type of investments you are looking for will dictate the opportunities we present to you. If you are an income investor, then we will offer properties with good, steady income that come in at different price ranges to suit different budgets. If you are a capital growth investor, we will present you deals that have good value add opportunities by means of development or break-up opportunity within the short-term.
Do I have to visit the UK?
You do not have to visit the UK as all parts of the transaction can be done by email, post, web chat and/or telephone. You are, of course, welcome to visit and meet our partners and view properties and we can help arrange this if you wish.
How do you get below market value (BMV) property investment opportunities? Is there something wrong with the properties?
The properties we offer are typically bought in auction or offered to us by our network of agents or we have direct relationship with the Seller. Our agent contacts know and understand that we look for below market value opportunities or properties that can benefit for development and/or break-up to be resold for significant profit. We undertake due diligence on the investment properties we offer to investors, therefore the properties that could be problematic are not presented to clients.
How can I get a full understanding of what I am buying? I want to make sure I am not getting a run-down property.
Blue Alpine provide you with photos and/or videos of the property, so you can see it is in good condition. In the case of an ongoing development/refurbishment, we will offer before and after images, so you can see the work completed.
For development properties, you will receive all information pertaining to the warranties and tenancies, plus the security deposit/s will be transferred to your account/s upon completion.
How can I manage my investment property and tenant(s) if I am not in the UK? What if something goes wrong?
Blue Alpine can fully-manage your investment property. Simply, you do not have to worry as everything is done for you.
Do I need a UK bank account?
It is best to have a UK bank account as your income will be paid in Sterling Pounds and exchange transactions between the UK and other countries are chargeable (charges and stipulations between countries may vary).
The type of bank account you open will depend on a number of factors, including your existing bank account/s, your country of residence, your credit history and whether you wish to visit the UK to open an account in person, as some banks require your presence as well as your ID. We can help you with this.
Do I need a UK company?
You do not need a UK company and can use your personal name and accounts. Most investors with just one property use a personal account, but it might be worth considering opening a Limited company if you own a number of UK investments and/or have a large number of assets. Typically, if you are investing in between one and four properties and have less than £1 million of assets, you probably won’t need a Limited company. If you do, we can help you set this up.
How do I receive my income?
The management team will pay your rental income into any bank account of your choice, anywhere in the world.
Where do I pay my tax?
You pay your tax at source, in the UK, according to UK laws. You will not be double-taxed in your country if the Double Tax Treaty applies. Some countries will have different rules and regulations, so it is best to conduct further research and take advice. We can discuss your personal situation once we understand your nationality and country of residence, but we are not tax advisers. For example, if you are a USA citizen, you will not be double-taxed because the Treaty applies.
How do I file UK tax returns?
In the UK you pay tax on profits. This includes rental income and/or profit through sale. UK tax returns are filed annually. Typically, a ‘tax year’ is a calendar year, so your return should be filed by the 15th of the sixth month after the end of the tax year. So for a tax year ending 31st December 2019, your last filing date would be 15th June 2021. This gives you around 18 months to complete and submit your first tax return.
What happens if I want to close my investment or sell my property?
There are a number of exit strategies available if you wish to close your investment and sell your property. You can sell on the open market or sell in auction, and we can help with this.
For commercial and/or residential properties, you can sell to your tenant. For residential properties, some tenants will be eligible for standard mortgages, but others who aren’t may still be able to get a government-subsidised insured mortgage (Help to Buy). You can also sell to your tenant on a lease option. This is an agreement whereby the tenant is given the option to buy the property for an agreed price after a specified period of time.
You can sell the commercial or residential property as a performing investment to another investor, ideally one interested in a cash deal. Therefore, you would be able to avoid commission fees and chains and simply sell the whole investment as opposed to just the property itself.
You may also be able to refinance by taking out a loan (e.g. a small mortgage) on the property. This, however, will depend on your individual circumstances and the rules and regulations of the banks.
Frequently Asked Questions About BUYING IN AUCTION
What is a guide price?
The Auctioneer provides a guide price, which is used to indicate how much a property could be worth. The price achieved at auction may be higher or lower than the guide price. Guide prices can either be a single figure price or a price range. As the auction date nears, the guide price could be updated depending on the interest in a property. Interest tends to be gauged by the number of legal pack downloads and discussions had by auctioneers with potential buyers.
What is a reserve price?
Majority of properties offered in an auction will have a reserve price, this is the price specified by the Seller as the lowest acceptable bid. The reserve price is a confidential figure that is set between the Seller and the Auctioneer. For a single figure guide price, the reserve cannot be more than 10% above the guide. For a guide price range, the reserve must sit within that range and not exceed to the top end figure specified by the Auctioneer.
How do I know what price to pay?
This depends on the type of investor you are and if you are only looking for income or are you looking for value add opportunities (development and/or break-up potential). No matter what type of investor you may be, you will always want to consider the following: strength of covenant, lease expiration, yield, geographical location, vacancies near-by, occupiers near-by, size of property(s), rental income compared to rateable value (over or under rented), VAT status, break clauses, rent reviews, FR&I and review the legal pack.
The Blue Alpine auction specialist team are happy to provide an expert opinion on property valuation, please get in contact with us.
What is the addendum?
An Auctioneer will provide an addendum on any property that has revisions or additions to information provided in the auction’s catalogue or online website listing. Addendums are updated frequently, it is important that you check this information before bidding on the property.
Do I need to register with the Auctioneer before bidding on a property?
If you plan to bid on property, then you may need to register before or on the day of the Auction at the venue hosting the auction. The Auctioneer will have dedicated areas for you to register. Nowadays, you may be able to register online or over the phone with the Auctioneer. The latter is for bidding via online or phone bids, either way, you must register with the Auctioneer.
If you want Blue Alpine to bid for property(s) on your behalf, then you will not need to register. We are registered for each Auction because we are active buyers.
What happens after I make a successful bid?
Upon a successful bid, you will be required to sign contracts and pay a 10% deposit. The deposit can be paid by cheque, debit card or bankers draft. You may also be obliged to pay an administration fee, this depends on the Auctioneer’s terms and conditions of the Auction.
It is important to remember that once you make a successful bid, you are legally bound to purchase the property. For most Auctions, you will have six weeks for completion, but this could vary, so check the catalogue and addendum.
If I do not complete the sale are there any penalties?
Yes, firstly you will lose your deposit and admin fee, furthermore the Seller/Vendor may sue you for the balance owed and any further losses caused.
Can I inspect the property prior to the Auction?
In short yes, we encourage you to visit the property prior to the auction. If you are unable to visit the property, Blue Alpine can schedule a viewing in order to take pictures and videos to pass onto you. The Auctioneer provides dates for viewings in their catalogues, online listing or you can simply call the Auctioneer to enquire about dates to visit.
If you want Blue Alpine to visit the property and provide an expert opinion, please get in contact with us.
Can I buy a property prior to Auction?
Some Sellers/Vendors will consider offers prior to the auction day, it is important to speak with the Auctioneer to find out the willingness of the Seller to do so. Depending on your relationship with the Auctioneer, you may be required to submit any offer prior to auction date via email or fax. The Auctioneer will then pass on your offer to the Seller and then revert back to you with feedback. It is important to note, you must be able to exchange and pay the deposit before the auction day.
Our auction specialist team at Blue Alpine are happy to lend their expertise on valuing properties and utilising their close contacts with the Auctioneers to help secure prior to auction purchases. Please get in contact with us.
If a property did not sell during the auction, is there something wrong with it?
Sometimes properties do not reach the reserve price and therefore do not sell during the Auction. This does not necessarily mean that there is something wrong with the property. For properties that do not sell, this could present an opportunity for investors to make lower offers for a particular property immediately after the auction or the next day. The Auctioneer will continue to market most unsold properties after the Auction, so you may still purchase these lots, however all post-auction sales are under Auction terms.
Our auction specialist team are readily available to help analyse post-auction lots that did not sell and utilise our contacts with the Auctioneers to help secure a purchase. Please get in contact with us.
How do I buy a property that did not sell during the Auction?
If a property does not sell during an Auction, you can speak with the Auctioneer at the Auction or call/email the following day to enquire about making an offer. The Auctioneer will provide further information on the willingness of the Seller/Vendor to accept lower offers on the property.
Can I have the property surveyed before the auction?
Yes, your surveyor must contact the Auctioneer for access to the property.
How can I view the legal pack and contract before the Auction?
The legal pack, contract and special conditions are available to view on the Auctioneer’s website. The legal packs are uploaded to the Auctioneer’s website as and when they receive them from the Seller’s solicitor. You will also be able to inspect the legal pack on the day of the Auction; the Auctioneer will have a dedicated area for doing so.