London property prospers
INVESTING in prime London residential property should provide an annual yield of up to 7 per cent and offer the prospect of capital growth, the director of a UK investment company claims.
Paul Groves, of Prime Invest (London), said flats in prestigious areas such as Kensington, Chelsea and Fulham have managed to defy the slump in UK housing.
Their central location, both to London's West End and the city, also means there is strong rental demand.
Mr Grove said: 'It is an investment alternative. We renovate, furnish, let and manage the property for the owner and in most instances the owner doesn't even see the property. It is simply a highly attractive investment alternative which offers substantial income and capital yields.' The company, which was established two years ago, has arranged 35 properties ranging in value from GBP90,000 (about HK$1.06 million) to GBP250,000.
Typically the minimum term lease will be about 75 years, even though in parts of Knightsbridge this could be reduced to 30 years.
Properties considered will start from about GBP70,000 with the price being confirmed by a mortgagor valuation.
Mortgages can be arranged for the full value of the property at a rate of 2 per cent over base. There is no requirement for personal sureties or disclosure of assets and liabilities.
If the property needs a major refurbishment requiring large cash outlays then short-term finance can be arranged.
The company usually establishes repayment mortgages with a 20-year term but with the capacity for early repayment.
Mr Grove said: 'Ultimately the investor is the sole owner of the property. However, we structure the overall package to provide as trouble-free an investment as possible.
'The only contact with the client, unless otherwise requested, is by way of periodic investment reports and briefings.' The prospective yield is based upon the total cost of the property and associated charges.
Investors considering this type of arrangement should familiarise themselves very closely with all the initial and ongoing charges.
In addition to the purchase cost, investors should also expect to pay an acquisition fee of 1.5 per cent of the purchase price, or a minimum of GBP1,500.
There is also a 1 per cent mortgage fee - subject to a minimum of GBP750 - plus 12.5 a per cent project management fee for refurbishment work.
Other fees include 10 per cent of the cost of furnishing and equipping; letting charges; property management fees and costs for arranging the payment of taxes.