By Stefano Sciandra
Your commercial awareness dose.
The exciting property market is an insidious world, but if you are willing to learn, you will realise it’s quite easy to understand and very rewarding. The Latin originating term – “Real Estate”, was first coined in 1666 in London. Ironically it was the same year that the year of the Great Fire of London had occurred- real estate was described as immovable property, with such a house and the land around it. Today, it has a general meaning of “possession” and it is mostly used to describe the housing market. However, it can also be used as an umbrella term for other types of properties, such as private and commercial buildings, lands, etc.
In real estate markets, there are several key players within the game. Begining with the Agent- who has a professional license to help you find the right deal. The Broker- who is generally more qualified than the agent, and the Realtor, a licensed salesperson, who is part of organisations, such as the US National Association of Realtors and the National Association of Estate Agents (UK). Other property market professionals are the listing agents, the buyer’s agents, and the letting agents.
The general steps to buying a house or property usually depend on how they can cater to your needs and lifestyle, what you can afford, credit score, finding the right estate agent, making an offer, inspecting the house, selecting the right loan, and close on the purchase. This overall process can be simplified or made more difficult, hence with more paperwork and more expensive, according to the country in which you are trying to buy a property.
In the US, you are required to provide a minimum down payment of 20 per cent for your desired property, in order to be eligible for a conventional loan. Even more so, you have to provide a good credit score, which simply means you have to show that you pay your bills and have a debt-to-income ratio of a maximum of 43 per cent. Apart from the regular home loan, you might want to familiarise yourself with the term “mortgage”, a loan secured by collateral, in this case, the house. Should you ever decided to not to continue making payments, the lender will take possession of the collateral also known as called “foreclosure”.
Meanwhile in the UK, you are asked to make a down payment of five to 20 per cent to be granted access to cheaper and more convenient mortgages. Properties are generally divided into two groups, freehold and leasehold, both very old terms derived from Medieval English property law. In much simplified terms, if you buy a freehold property, you own the building and the land on it, though if you buy a leasehold property, you only own the building and you own it just for a limited amount of years, usually 99.
Both the US, with the US Department of Housing and Urban Development and the UK Government, provide tax reliefs and more accessible loans to encourage first-time buyers to enter the property market if they meet specific criteria. In particular, first-time buyers in the UK can take advantage of the Help to Buy scheme and the Shared Ownership scheme. This allows buyers to own from one-quarter to three-quarters of the house and lets them rent the part that they do not possess, with the option to buy it discounted, at a later stage. It is important to remember that most Shared Ownership properties are leasehold.
Within Europe, there is a criteria that must be followed to prove that you are eligible to buy a property as a first-time market participant and to get granted loans easily, differ from country to country. For example, in Italy, a very bureaucratic country, you can buy a house with tax advantages only in the municipality where you hold residency. If you are a foreigner, you can buy properties in most European countries as if you were a local citizen, however, in Malta, Poland, and a few other countries, you are allowed to buy only with the approval of local authorities.
As a first-time renter, even if more flexible and less expensive than buying, renting still has its costs, risks, and requires an effort of thought into finding the right fit for your needs. In the US, rents are usually regulated at the state level and some states have laws that specifically ban municipalities from controlling and balancing prices. In the UK, most tenants do not have a right to a written nor oral tenancy agreement, and landlords/landladies are not subject to strict rules.
In Germany, the law doesn’t allow homeowners to get rid of tenants and limits their ability to raise rents. In Spain prices are lower if compared to other areas, however, the country has a huge eviction problem since lenders are reluctant to negotiate terms. In France, tenants are protected by strict regulation and the country implements a ban on evictions in winter months.
To keep up to date with the latest commercial news, click on commercial awareness to get your daily dose.
Donate & Support