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Frequently Asked Questions

What if I don’t have a large cash deposit ?

Our payment plans are designed to suit all of our clients’ current circumstances. Deposits can be paid across the build period, eliminating lump sum requirements.

Can I sell the property rather than keep it ?

No problem. Our lump sum purchase plan allows payments across a two-year period, where on completion the property can be traded – a great option for property investors keen to trade property yet remain at arms length from the process.

What if I don’t have any free time ?

Don’t worry, we take care of every aspect of your purchase, from property selection, management and updates throughout the build period, mortgage arrangement and full rental management.

What happens if there are any rental voids ?

Once a tenant has been found for your property the rental assurance plan will provide you with no voids in rent for 5 years.

How can I get the best deal by finding property below market value ?

Our discounts are real and proven by what is selling locally and we provide certified valuations that prove our prices cannot be beaten.

Can you help me get my kids onto the property ladder ?

Our product creates a unique opportunity for you to assist your children access discounted property offering a base for university or first-time home.

What happens if I cannot get a mortgage?

We have a range of payment options to help our clients secure their property without a mortgage if required or requested.

Will my property purchase be subject to UK stamp duty ?

As from April 2016 buy to let property purchases will be subject to stamp duty:

  1.  0 – 125,000 £ – 3%
  2.  £125,001 – £250,000 – 5%
  3.  £250,001 – £925,000 – 8%
  4.  £925,001 – £1.5 million – 13%
What protection is there in the event that the developers fail to deliver or they and or the building contractor go bust, or if the scheme is delayed or stalls as a result of unforeseeable circumstances? What is the position and is some form of insurance available? Similarly, what is the position with regard to defects liability and rectifying any major problems or just minor snagging and will the buyer be issued with an NHBC guarantee upon completion. ?

Quality wise, all our new build properties are supplied with a 10yr NHBC which provides a full warranty of build and materials for 10 yrs This NHBC / Zurich equivalent certification are issued at completion. Warranty cover can be see via this link; http://www.nhbc.co.uk/Warrantiesandcover/
 
Firstly, to provide the secure ownership Prosperity offer their clients post reservation, the property is exchanged in the standard legal way where the owners title is lodged against the UK land registry (recognized as one of the legally safest places in the world in regard land and property ownership) A clients buy 100% of the property and it is owned in the standard legal way. This means the 30% deposit is secured against the property as it is paid. with a 70% balance by way of mortgage secured in the usual way.
 
The release method of these funds lessen any risk for clients as all payments are made in line with construction in stages as follows, and only released post these stages being met and quality control has been signed off. Based on our typical contract terms, the developer is paid the following instalments once the following stages have been signed off by building control;
 
Exchange – 5%
Completion of Foundations –  5%
Completion of Superstructure – 5%
Completion of Roof Covering – 5%
Completion of fitting of windows – 5%
Practical Completion – 5%
 
*Followed by mortgage balance
*With ultimate Long Stop Date being 18 months from the point of exchange – Prosperity have penalty clauses that protect both their clients and Prosperity if the units are delayed past the contractual ‘long stop’ date by way of rental loss protection clauses.
 
Secondly, all of our development contracts are based on ‘JCT’ construction contracts which is the standard type used on any large scale development in the UK. Within these contracts there are ‘step over rights’ in place. These step over rights are in place to protect primarily the ultimate funders of a scheme when applicable (mainly the UK banks) as they require the original land owner/constructor to be able to be ‘stepped over’ in the case they cannot deliver the scheme as contracted by its ultimate purchasers. In a worst case scenario the JCT contract allows the principle lender to employ a secondary constructor to complete the scheme by collecting on the insurance built in to this type of contract.
 
In simple terms the payment plan is ultimately the clients safe guard. By structuring a purchase this way combined with these contract measures and insurance in place our purchasers only ever pay in line with the build status and assures quality, with insurance in place to complete the build to the pre agreed specification.

Rents – there is the likelihood that the proposed rental levels are not sustainable in the longer term, notwithstanding the initial rental guarantee. Can I just treble check that the developer assumes this risk and it doesn’t mean repayments are increased? How vulnerable would the scheme be if interest rates rise, as they probably will? How much headroom is there to absorb any rise without recourse to introducing an additional payment? Can the rates be fixed to good effect?

Our average client is aged between 45 and 55 so are typically looking for time horizons of between 10-15 years to fit within their desired income goals.

When looking at the financial obligations at the point of purchase we know of all the variables except one. We know the purchase prices within the local area, we know the level of discount available (so the net purchase price after your prosperity discount). We know what your 30% deposit will be and your monthly commitment (deposit divided by 24 months) so you know at the point of purchase what your commitment is over the next two years – this doesn’t change.

We know what the gross rental income level will be on completion, minus the yearly expenses providing the net rental income. From this figure we structure your loan over the shortest possible time frame utilising all of this net income. The only variable we are faced with is UK interest base rate.

If rates were to go up there would still be not further contributions required from the purchaser, if rates were to go up by 1%, based on our average loan size and average property value, this would add typically 9.6 months to a clients’ repayment term.
 
So, at no point following the 24-month payment plan will clients be required to contribute further (unless base rates go up and they wish to keep their mortgage term at the exact initial term based on current rates). 

If rates do rise (which there is a high probability they will). We also need to consider the offset effect as historically as interest rates has risen so to have rental yields – so we would expect a higher income to keep mortgage terms the same.

Capital Values – Can I double check that the apartments are readily saleable at any time and that capital values are likely to underwrite the investment and could possibly grow over time. Also in the event that one wanted to liquidate, could the property be sold with vacant possession, if this would realise a better price?

To provide the secure ownership of your specific property, offering you the best protection of your monies invested, your property is exchanged in the standard legal way with any monies paid lodged against your property. The UK land registry can confirm within usually around 10-12 weeks your name is noted on the property title. From anytime after exchange of contract clients are free to resell their properties as they wish. Six months before completion we start your mortgage arrangements. A small percentage of our clients choose to sell their property at the point of completion, these clients use the payment scheme as a savings plan and take the uplift of the discount, plus any capital appreciation as profit and to create a lump sum – in some cases to buy a home rather than an investment so this is an obvious point to resell although the point of sale is entirely up to the client. 

Rental guarantees by our partners will be leases based on standard ‘English Assured Short-hold Tenancies’. These are the standard legal contracts used for tenanting property in the UK for extended purposes. Following the initial 12 month tenancy period property owners can serve two months’ notice at any time if they wish to remove the existing tenants.

Whichever your preferred option we will be there to manage and assist the process.

Prosperity focus on providing an affordable way for clients to access UK property as an income producing tool; by clearing borrowings more quickly through guaranteed, high performing rental yields, thus creating a long term income producing asset for life. With the assurance your properties will be fully managed from start to finish, whilst providing our running commentary of key events within the build, delivery and tenancy process. We are not a fund and there is no ‘collective’ element to your investment – you own your own property directly and have title to your property day one.

 
 

Contact us now for a no obligation consultation.

 

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