Should I buy an apartment in London?
Buying property in England: practical tips
"Your own four walls" versus "My Home is my Castle"
Your own house is at least as important to the British as it is to the Germans. Nevertheless, the mentalities are quite different. The local house builder (there is no equivalent for this term in English!) Dreams of building his house according to his individual ideas in the dream location of his choice, then living there in an idyllic place with his family for the rest of his days and finally moving it over keeping death in family ownership beyond. This rarely succeeds, but it is the dream of many, which is also evidenced by the daily TV advertising of various building societies (by the way, building society contracts are also such a concept that is difficult to make a British or American understand). Quite different in England:
Hardly anyone builds there themselves. Houses have either been around for a long time or they are being built and sold by property developers. Very few Britons come up with the idea of planning and building their private house together with an architect. Second, the English tend not to have the idea that they are buying a house (or an apartment) for the rest of their days. Rather, real estate is selected according to the needs of the respective phase of life (and of course according to the financial possibilities) and it is completely normal to sell a house again after five or ten years in order to move into a larger (if children come) or smaller (if the children are pulled out). A typical example of this: British brokers quite naturally use the phrase "That's a first time buyer house". So the mentality is: if I can afford it, I'll swap the object for a bigger one later. A broker in Germany, on the other hand, will rarely speak of a "first-time property buyer". Here the mentality is more like: an acquisition for life. Third: The British see buying real estate (even more so than the Germans) as an investment that is expected to increase in value. The transparency of house prices seems strange to a German: On websites such as www.rightmove.co.uk or www.myhouseprice.co.uk you enter any address and get astonishingly precise information about when a certain house was sold and at what price. A German real estate owner would probably not be very enthusiastic if his real estate agent enters the transaction price in such a portal as a matter of course. Even the state publishes a "House Price Index Report" every month.
So much for the different mentalities. But how does a property purchase in England work?
In England there is a central land register "Her Majesty's Land Registry", but it can only withstand a comparison with the land register system in Germany to a limited extent (details here). The registration is still incomplete. The legal obligation to officially register properties (compulsory registration) has only existed since 1990. And this obligation only exists if a house is sold or a land charge (mortgage) is encumbered. As a result, around a quarter of the country in England and Wales still does not appear in the Land Registry. The owners of these unregistered plots of land can only (as before) prove their right of ownership by means of the deed, which should not be lost. As an introduction to the subject, the "Frequently Asked Questions" section on the Land Registry website is recommended.
There is no notary in England in the German sense. The technical process of the real estate transaction is therefore somewhat more complicated (here is a graphic overview of the process of buying a house in England). While in Germany all threads come together with a notary who draws up the land purchase agreement, advises both parties, then notarizes and finally controls or monitors the process (reservation, purchase price payment, entry in the land register), this coordination function is missing in England. Here the contracting parties have to regulate this themselves, together with their respective solicitors. The most important prerequisite for a smooth process of the real estate transaction is therefore to have a knowledge of the topic of property transferConveyancing) to hire an experienced and well-organized English lawyer, whereby one should also make sure that his law firm works reasonably modern (email!), which is not a matter of course for all solicitors.
Since there are no general legal regulations on real estate law, mortgage, land charge, right of residence, usufruct etc. (which in Germany are all regulated in the property law of the BGB) in England, everything must be detailed and precise in the contract - as always in countries with a common law tradition be managed. You cannot refer to any legal text. What the solicitor forgets to regulate does not exist.
A description of the process of buying a property (conveyancing) with checklists and various additional links can be found on the state information portal Direct.gov.uk
It would go beyond the scope of this article to describe all the details of the property purchase. But it is essential to know and differentiate between two terms: Freehold is the most comprehensive law and roughly corresponds to German real estate. It means that the owner (proprietor) has sole ownership of the house and the property; although the property can of course be encumbered with a mortgage (mortgage, land charge). As freely available property, a freehold property can be transferred to an acquirer along with the land. Leasehold corresponds roughly to the German heritable building right, so here ownership of the building and ownership of the land fall apart. With a leasehold you are (only) the owner of the house, the property itself does not belong to you, but is only leased - usually for a long period of time. Leasehold houses can be sold at will, but without the property on which they stand. In England, leaseholds are much more common than long leases in Germany, and condominiums in large cities are also often sold as leaseholds. Which again confirms the initial thesis that the Briton can make friends with the idea of a temporary property much more easily than the German, who obviously needs the feeling that the property will still belong to him in 200 years.
A list of Explanations of further technical terms to buy real estate can be found on the website of the London broker Harrison Ingram (here).
Speaking of brokers. What are the costs? In our experience, the commission for an estate agent in England is surprisingly low and is usually below the margins required in Germany. Solicitors usually charge by the hour, although it is also common in conveyancing for lawyers to offer a flat rate or an upper limit (depending on complexity and house value between £ 900 and £ 2,500 plus VAT). There are also some mandatory government fees: the required extract from the mortgage register and other documents costs around £ 1,000 in total. Registration in the Land Registry costs around £ 200 upwards, depending on the house value. Then there is - yes, also in England - the real estate transfer tax: properties under £ 60,000 (but only exist in theory) are still tax-free, for properties between £ 60,000 and £ 250,000 the tax is 1 percent, between £ 250,000 and £ 500,000 2 percent and 3 percent for properties over £ 500,000. And finally, an Englishman pays council tax, which is determined and levied by the municipalities.
And when everything is done, as the proud owner of an English property, that's what you keep Country Certificate, common Deed called, in hands (here an anonymous example as a PDF download). Further legal explanations can also be found there.
If you need legal support for a specific real estate transaction, the firm's German lawyers are at your disposal Graf & Partner as well as the firm's English solicitors Lyndales gladly available. Your contact is Bernhard Schmeilzl, Lawyer & Master of Laws (Leicester, England), phone +49 (0) 941 - 463 7070.
Further articles on the topics of buying real estate in England and the USA and drafting wills for assets abroad can be found here:
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Graf & Partner, founded in 2003, has a department for British-German litigation (GP Chambers) Specializes in cross-border legal cases, in particular in German-British and German-American business disputes, divorces and inheritance cases. The team of experts from German and English lawyers and tax consultants regulates international inheritance cases and handles estates for heirs in Germany, the USA, England and other common law legal systems.
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