00. A podcast in Spanish about UK property investment (Episode in English)

En este episodio explicamos (en inglés) porque decidimos producir este programa en español, quien es nuestra audiencia. Tratando tres temas:

1. Los tres pilares del negocio (conocimiento, tiempo y dinero)

2. Por qué el mercado inmobiliario del Reino Unido ofrece un escenario en el que todos ganan

3. Por qué invertir en propiedades en el Reino Unido es tan atractivo para alguien con sede en América Latina

 

A podcast in Spanish about UK property investmen

Welcome to Bienes Raíces UK, which means in Spanish Real Estate UK

I’m your host Leo Suarez.

You may be wondering, why would someone -in his or her right mind, choose to launch a program about UK property investing or the UK market in Spanish?

Around 200,000 Spanish citizens live permanently in the UK and in total between 500,000 and 700,000 people that were born in a Spanish speaking.

Compared to around 300,000 UK citizens that live in Spain.

In this episode we cover three things:

1. The three pillars of the property business that provide a great opportunity for people that are Spanish speakers to participate in the UK property market.

2. Why UK property market provides a win-win scenario for both, the people in the UK and abroad.

3. Why investing in UK property is so attractive for someone that is based in Latin America and how you can benefit from it.

1. The three pillars of the property business

 The Property Triangle: Knowledge, Time and Money

Anyone will need three elements:

Knowledge: The technical aspects of the industry for each business model, i.e. refurbishments, new builds, or if you are managing a portfolio. You need to know the rules and regulations that one needs to comply with.

You need to know ho to manage the team of experts and have the systems in pace o that your property business is managed. The knowledge will be the key factor for you to decide if a deal is good one or not.

Time: the time available you need to have to assess potential deals, do viewings, perform negotiations, contractual arrangements and manage all of your team of experts.

Money: Without money it will be difficult, if not impossible to get into the property business.

 

2. Why UK property market provides a win-win scenario for both, the people in the UK and abroad

A Business the relationship must be balanced, not a situation where vendor and the buyer are into a zero-sum game where the gain or loss of one part is exactly balanced by the losses or gains of the other the part.

Some people in the UK talk about Below Market Price deals, where one finds a distressed seller and paying a price that is 20-30%, but I wonder how they can sleep at night.

We firmly believe that there are ways to create value that can be shared.

People in the UK complain about planning system. But at least here we have clear standards and procedures. If one follows the rules, I you know there is light at the end of the tunnel.

Although there could be complications, but as longs as you follow the rules and use common sense you will see the light at the end of the tunnel.

The UK Government has a clear objective to increase the housing supply, for different reasons it is not met and therefore demand outweighs supply and that is what makes property investment so attractive in the UK.

The solution is densification of brownfields instead of greenfield.

Planning decisions in the UK are based on planning policies that are fully supportive of development of sites that incentive the use of public transport, walking and cycling, and rail travel. Policies state that development should only be prevented or refused on transport grounds. Local policies will not permit development proposals that generate volumes of traffic in excess of the capacity of the highway network.

 

Demographics

In England in the next 25 years the number of households will increase from almost 23 million to 27 million, that is 4 million new households. i.e. over 150,000 houses per year.

Or those 4 million houses over 2 million will be for households of only one person.

On the other side of the spectrum we have an aging population.

The number of people per household is falling due to an increase in divorce rates and fewer young adults choosing to live with their parents. But there is an affordability issue. Young adults that want to leave their parent homes cannot afford to buy a place on their own, so they turn into renting.

Millennials value too much their flexibility, they want to be able to relocate, travel the world.

Build to rent is evolving in imaginable ways today the industry is worth around £10 billion and will increase to over 550 billion in 24 years.

 

3. Why investing in UK property is so attractive for someone that is based in Latin America and how you can benefit from it.

There are around 550 million native Spanish speakers in the world and that will increase to 750 million by 2050. That is the audience of our programme!

There is an interesting report about the Operational Real Estate in the UK done by Savills – one of the world’s leading property agents that can be downloaded from the following link.

https://www.savills.co.uk/research_articles/229130/283758-0

It highlights two aspects of the Operational Real Estate that is expected to grow to £750 billion

a) That it has three categories:

– Student Accommodation

– Build to Rent (expected to £500 billion)

– Retirement Living

 

b) Right now, the investment flows into the UK are:

£8.4 billion within the UK

£5.4 billion from North America

£2.6 billion from Asia

£1.9 billion from Middle East and Africa

And £0 from Latin America

 

Investors form Latin America right now are not investing in UK property, so we want to change that!

Two key aspects to successful property investment

a) The capacity to recycle our own cash

b) The availability borrowing money cheaply from the banks.

If you cannot recycle as much of your own cash it will slow down your growth.

 

The Latin America property market

The build to rent market in Latin America varies between county to county and within the cities within the same county but one can say properties yield and around 0.5% per month or 6% per year. There a property worth £100,000 will bring rent of around £500 per month or £6,000 per year.

Interest rates for an investment property in Latin America could be anything between 10-18% on a capital repayment loan.

In episode 11 we did an example of two brothers investing £100,000 each, one in a property in Colombia and the other in the UK.

The net monthly cash flows (after discounting: interest, property tax, insurance, maintenance etc) for each property are as follows:

Colombia: -£433 per month (negative cash flow)

UKL: £114 per month (positive cash flow)

The transcription and audio of that episode are available from www.bienes.co.uk/ep11

Other factors that make the UK Build to Rent market so attractive are:

• The UK’s low corporate tax rate (17% since 2020 against 25-37% in LA)

• Availability of lower interest rates for commercial loans (3-5% against 8-14% in LA)

• A safer jurisdiction

• A resilient economy (despite Brexit uncertainty)

• The double taxation agreements between the UK and several countries in LA

• The current political and economic uncertainty of several countries in Latin America.

 

 

Should you want to contact us please feel free to email me at leo@bienes.co.uk

 

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