Real Estate Investor Magazine South Africa March 2013 | Page 10

INBOX INBOX ASK THE PROPERTY EXPERTS Purchase Price In London Best Area For Capital Growth Mike Smuts Smuts and Taylor www.smutsandtaylor.com Q Debby Young asks: I want to purchase property in London and I would like to know what costs, apart from the purchase price, I will need to pay. A Mike Smuts answers: Just as when you buy a property in SA, you’ll encounter a number of fees and costs over and above the purchase price when you buy in London. The total fees (also called completion costs) payable when you buy a house in the UK are among the lowest in the world, and total between 3% and 5% for a property below £250 000. Most fees are calculated as a percentage of the cost of a property. So, the more expensive your investment property, the higher the fees you will need to pay. As a South African investor buying a property in London, you will be faced with the following fees, so be sure to include these in your budget: • stamp duty land tax; • solicitor’s or licenced conveyancer’s fees; • local authority search fees; • other search fees and disbursements; • land registry fees; • valuation fees; • survey fees; • mortgage arrangement or acceptance fees; • mortgage broker’s fees; and • buildings insurance fees. Adrian Goslett, RE/MAX www.remax.co.za Q James Carroll asks: I want to start investing in buy-to-let property, but how do I pick the best area for capital growth? What factors should I consider before I buy? A Adrian Goslett replies: When looking to purchase a rental property, it is important to take your time and do your research to ensure you buy a property that suits your needs perfectly and an experienced estate agent will be able to help you in this regard. It is imperative to gather as much information as possible, because when it comes to buying or renting property. The area in which the property is located will have an influence on the rental income it can generate. For example, neighbourhoods that are close to amenities such as schools and shopping centres will generally fetch a higher price. If you are unfamiliar with a development or neighbourhood, it would help to speak to tenants that are currently renting and living there, as they will be invaluable in providing you with important information on the area. Find out the average rental paid by tenants in the area. This will help you to estimate what you can expect to earn from your rental property each month and whether or not it is a viable option. Commercial Property Simon Black Black Pepper Online www.blackpepperonline.co.za Q Nicole Heur asks: If I want to invest in commercial property which t ype of propert y should I look at investing in for a long-term investment? What sector has a demand that an investor would profit from? A Simon Black responds: Firstly, we would need to establish an amount of money available for investment. In most cases commercial property funding loans are issued on a 10 year bond term, which can prove expensive for individual investors. The value of the investment coupled with the investor’s unique appetite to manage these assets will determine which property type is most suitable, whether it be retail, office or industrial. Things to look out for when shopping for property assets are opportunities possessing the following attributes: • The owner’s ability to re-tenant on lease termination, • Where long-term leases are possible or in place, • Where assets are in good condition and / or require low maintenance, • Redevelopment opportunities where improvements lead to increased rental yields, • Good locations or taking a view on up and coming nodes, • Suitability to specific operations / or alternatively generic features for easy use. Do you have a property question you would like answered by our experts? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email [email protected] 8 March 2013 SA Real Estate Investor www.reimag.co.za