Frequently Asked Questions

Myths about UK property answered

Why is property a good investment?

Past history will show that property investment has produced consistent returns over time. Working on the basis of an 80% mortgage, the investor contributes 20% of the cost of the property to get a return on the full investment. Example: A property costs £100,000; the investor puts in £20,000 capital and borrows the balance. In a year the property appreciates by 10% giving a return on investment (ROI) of 50%, or £10,000.

Why invest in the UK?

Taking into consideration the sheer size of the UK, it has a population of circa 60 million people with one of the highest population densities in Europe. Year-on-year growth estimates are projected at 300,000 people per annum. Then take the housing market in the UK, which is outputting 150,000 homes per year - the lowest supply of housing since World War II. The Barker Report, commissioned by the UK Treasury, has established that the UK is in need of 300,000 new homes per year to satisfy the current and projected demand for housing. This acute shortage of supply that is unable to meet the UK's demand is one of the fundamental reasons for property price growth to continue long-term.

Add to this that we have the same language as the UK, property laws are similar to Irish law, are clear and transparent, and ethical standards are high, and it makes for a simple purchase process.

Most important is the fact that a UK buy-to-let property is a financial investment for capital appreciation supported by continuous letting; it is not a holiday home for seasonal letting.

What level of return should I expect from my investment?

It is difficult to forecast what capital appreciation will be in the UK over the coming years, but supply and demand are always going to determine property prices and an indicator of this is in the statistics of the number of homes finished - in 2006 the forecast for homes finished was 160,000 in the UK and 90,000 in Ireland. While the UK population is 15 times that of Ireland.

It is also worth bearing in mind that even when you take into account two periods in the 70's and 80's where there were substantial falls in UK house prices, even including these periods, property has doubled in value every 10 years fro the last 100 years in the UK.

Why is the UK rental market performing strongly?

They have a young professional mobile workforce and unemployment is at a low of just 2.7%. A high divorce/separation rate leading to more single home owners/renters. 3rd level student debt is pushing the average first time buyer age profile to 34years of age. And more people now choose to live alone in the UK.

How do I fund an investment in property?

There are a range of options available: a UK buy-to-let mortgage provided by Irish or UK banks; equity release from existing property in Ireland or abroad; Savings such as SSIA can assist with deposit or completion funds; Investment property in the UK can be purchased through your Irish pension. Cornerstone Group can tailor a funding package to your individual needs.

At what rate is Stamp Duty payable in the UK?

Stamp duty is payable at the following rates:

Purchase price of property	Stamp Duty Payable
Up to £125,000	0%
£125,001 to £250,000	1%
£250,001 to £500,000	3%
£500,001 plus	4%

What is the reservation fee if I would like to reserve a property?

When purchasing through Cornerstone Property, we require a £3,000 booking fee to take any property off our availability list and reserve it in a client's name. Following that, an initial deposit of 10% (less booking fee) is payable on exchange of contracts, within 14 days of reservation for UK property purchases.

Is the reservation fee refundable if I do not proceed with the purchase?

Should you not proceed to contract stage, the sum of £350 will be deducted from your booking fee to cover administration and legal costs ensued. After exchange of contracts, the deposit of 10% becomes non-refundable.

What kind of deposit do I need to put down when purchasing in the UK?

A deposit of 10% (less your booking fee) is required for UK purchases.

Where do my deposit monies go?

Your deposit is paid directly to the client solicitor acting on your behalf, and that solicitor holds those funds in their Sterling Client Account. After exchange of contracts, those funds are then transferred to the Developers solicitor.

How secure is my deposit?

All UK 10% deposits are secured under the NHBC 10 year guarantee. NHBC is the standards setting body for the new homes industry in the UK and has approximately 20,500 registered builders who agree to comply with their Rules and build homes to NHBC Standards of construction. NHBC is also the UK's leading warranty and insurance provider for new homes, and their Buildmark warranty covers more than 85% of new homes in the UK and currently protects more than 1.6 million homes which means your 10% deposit is secure in the event of anything happening to the developer.

What happens if the developer goes 'bust' - will I loose my deposit?

See 'How secure is my deposit'.

What happens if the development runs over schedule?

UK sale & purchase agreements should contain a 'Longstop date', which is a future pre-defined date by which time all conditions should be fulfilled (i.e. the building is practically complete and ready to be handed over to the purchaser(s)). If the development is not complete and handed over to the purchaser by this date the contract falls and purchasers may have legal recourse by way of penalty payments or the receipt of their deposit funds plus interest returned. This should be identified in the contract.

Who does my contract come from: the developer or Cornerstone?

As Cornerstone Property is proprietary in every deal it enters into, the company purchases and exchanges on every development/unit it buys. As such, your contract is a sub-sale contract between you and Cornerstone Property. In some instances Cornerstone Group may be the developer and seller of the units.

Can I use my own Solicitor?

For UK property purchases we recommend the use of a block client solicitor: Lavelle Coleman Solicitors. When dealing with approx 50 apartment sales in each development we sell, it is difficult to deal with 50 different solicitors for the conveyancing requirements associated with the purchase. Lavelle Coleman acts solely for our Irish clients at a reduced rate of £550 + vat. They are familiar with the developers, the development and hold a UK conveyancing license, which is a requirement for any solicitor acting on behalf of a purchaser in the UK.

For other European property purchases we do recommend a client solicitor, who will act on behalf of our clients at a reduced rate, however it is not essential to use these professionals.

Does the Solicitor you recommend represent the client and the seller?

No. Cornerstone Property uses a UK solicitor, Lodders & Co who act on our behalf in the first instance in purchasing the development in bulk, and secondly in drawing up of sub-sale contracts to exchange between ourselves and our clients solicitors. Our solicitor, and our client solicitors act completely independently from each other, and act for the benefit of the person engaging with them.

Who provides the rental guarantee?

Cornerstone Property offer rental guarantees on select properties. Each of these rental guarantees to date have been offered by independent serviced apartment operators. This means that they are in no way linked to the Developer and are not inbuilt in the purchase price in any way. The rental guarantees are for periods of 2, 3, 5 and 10 years depending on the operators offer for a given development.

What legal fees do I pay when purchasing a property in the UK?

Legal fees are normally up to 1% of the purchase price plus disbursements. Cornerstone Property, through economies of scale, negotiates reduced legal fees on behalf of our clients, which equal approx £550 + 17.5% VAT. Disbursements such as search fees, land registry charges, and sundries are added to this amount and appear on your final completion statement.

What other completion costs do I need to take into account?

With a UK purchase, completion costs outside of legal costs, include ground rent and service charges - which are ongoing yearly costs, stamp duty which is a once of payment, bank arrangement charges for the facilitation of your loan (where applicable) and any final deposit payments required if there is a shortfall between your mortgage amount and your deposit already paid on the purchase.

When should I start applying for the mortgage?

You should start your mortgage application at least 8 weeks prior to the provisional completion date provided to you.

What kind of LTV can I get in the UK as a non-resident?

As a buy-to-let purchasers who is a non-resident in the UK, the typical loan to value available is to a maximum of 85% or up to 90% of the contract price, whichever is lower. Each bank will have its own criteria for lending, some basing their lending on a % of the rental income achievable on the property, and others solely on the value of the property on completion.

What are the tax implications of purchasing a property in the UK?

As a purchaser of a UK property you are liable to income tax which is chargeable at a rate of 22% - however, mortgage interest relief and other deductibles can be off set against this when calculating your tax bill. On the disposal of your property you are also liable to capital gains tax (CGT) of 20% on the profit made on the property. Renovations and furnishing costs can be deducted from the profit, prior to calculating your CGT payment.