5 MISSION-CRITICAL

CHECKS THAT
MOST PROPERTY
MILLIONAIRES DO
BEFORE BUYING
A PROPERTY IN
LONDON

BY DENNIS CHAN
 5 MISSION-CRITICAL CHECKS
THAT MOST PROPERTY
MILLIONAIRES DO BEFORE
BUYING A PROPERTY
IN LONDON
You’re thinking of buying a property in the UK?

Maybe it’s purely an investment, or perhaps you’re buying with a view to live
there in the future, or your kids to study there.

Whatever your situation, it can be hellishly confusing for an overseas investor to

understand the process. So how can I help? This guide will help you to:

• Find out the TRUTH behind all

those London property market
forecasts and reports

• 5 Step Checklist to help you

land the property of your
dreams - faster

• Why being a cash buyer might

NOT be all it’s cracked up to be

• The ONE hack that can put

thousands of pounds in your
pocket every month

• What NOT to do as a first time

buyer that will shatter your
hopes of building your empire
 LONDON PROPERTY MARKET
IS CRASHING – THEY SAY…

The London real estate market is like Marmite – you either love it or you hate
it. Look at any media reports and you’ll either see the news shouting from the
rooftops that the London property market is OVER. Or 1 more click away you’ll
find investors raving about the yield they’re achieving. So who to believe?

As we’ll outline in our checklist, it really depends on your long term investment
goals. Where do you see yourself in 5 years? No, this isn’t a job interview, but
it’s important to consider WHY you’re buying to understand if London property
is for you.

Is now the right time to invest? Let’s talk market fundamentals.

I only like to use graphs when they are absolutely necessary. This one is
powerful. London property values have quadrupled in the last 20 years.

Some lucky so-and-so’s will have made a lot of money when they bought in
April 2009. But, you don’t need a crystal ball - even if an investor had bought in
October 2007- the market peak - and rode out the crash, he will still be making
money today. My point? Trying to catch the market bottom is futile.

So let’s get down to the nitty-gritty. I’ve distilled all the questions I get from
first-time London (and UK) buyers. This 5 step checklist is mission-critical to
achieving your goal of becoming a London property millionaire.

Feb 2020:
flat/mais. £414,307

£400,000 2008 Subprime

GFC
Sept 11 & SARS & 2016 Brexit
£300,000 Gulf War II Iraq War Referendum
Dot Com
Crash 2014 Russian
£200,000 Ruble Collapse
2010
EU / Greek
£100,000 Debt Crisis

£0
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
First, let’s brush up on the key terms you might hear along the way:

FREEHOLD MEANS
DIFFERENT THINGS IN
DIFFERENT COUNTRIES –
DON’T GET IT CONFUSED!

Mortgage in principle: a statement from a lender saying that they’ll lend a

certain amount to you before you’ve finalised the purchase of your home.
Also known as a Decision in Principle (DIP), Agreement in Principle (AIP) or
mortgage promise

Completion: on completion, the buyer must, through their lawyer, hand

over all the remaining money required to purchase the property. Ownership
is transferred from the seller to the buyer by the dating and transfer of title
documents

Exchange: Exchange of contracts is the point at which a property transaction

becomes legally binding.
Both parties are contractually bound to finalise the sale/purchase on the
agreed completion date.

BTL: Buy to Let – purchase for the purpose of renting to a tenant.

LTV: Loan to Value - the size of your mortgage in relation to the value of the
property you are purchasing

Stamp Duty Land Tax: UK government tax paid on property and land
purchases.

Off-plan: purchasing a property during the construction process, with staged

payments.

Leasehold: buying the right to live in or occupy the property from a freeholder
– the case when buying an apartment (or ‘flat’ to use the English term).

Freehold: permanent and outright ownership of the property and land on

which it stands
 1
IT’S TIME TO TAKE
A LONG HARD
LOOK AT YOUR
OWN FINANCIAL
SITUATION

Before you even speak to any estate agents or attend any property events,
take a look at your bank statements to evaluate the feasibility of investing in an
overseas property.

Do you need to sell your assets – stocks, shares, properties, gold bars, or that
Porsche you bought in a heat of the moment? If so, what’s the timeline to
complete the sale - and have the cash back in your account?

This is important because you want to be able to act fast when you spot a gem
of a property.

It’s also vital that you do not overstretch yourself and have the funds to
maintain your current lifestyle. I’ve seen clients who invested all their savings
and were down to their last $. They were spending many a sleepless night
worrying about their investment, and any savvy investor should not be
subjecting themselves to such duress.
 2
FAMILY MATTERS

Investing in overseas property is a major decision and you should have the
moral, emotional and (hopefully) financial support from your family. Do your
kids want to study in London? Or is it just your own desire? It would be wise to
sit down with the family and get a consensus before you go any further.

I had a client from Dubai who had found his perfect property in Mayfair, a
beautiful 3 bedroom apartment within walking distance of Hyde Park. He’d
got all the money together and was ready to make an offer on a £5 million
apartment. But he’d forgotten one vital step.

He hadn’t consulted his wife.

His wife held back on the decision and eventually another buyer was one
step faster and bought the property.

Whether you’re happily married or even happier single, talk to your family
members and get their blessing before embarking on your London property
journey.

A journey of a thousand miles starts with the first step

 3
LOCATION,
LOCATION,
LOCATION.
You might be familiar with renowned parts of London – the West End, Oxford
Circus and Bond Street, but now it’s time to put your investor cap on. These are
the points every successful investor considers before going any further in their
search.

Is the area you’re looking to buy in up-and-coming, or undergoing

regeneration?

Look out for Waitrose supermarkets in the surrounding area. Before they
decide on a store location, Waitrose typically study the neighborhood
demographics – which is a key indicator of the resident’s affluence who can
afford their products.

Areas of regeneration such as Wembley, Battersea and Shepherds Bush draw

investors and prospective tenants for a number of reasons. These areas have
received large grants from the government and private investors to improve
the area.

This comes in the form of new and upgraded transport links, leisure amenities
such as shopping malls and sports facilities and the creation of new jobs.
Nowadays, tenant demand for modern facilities, transport connectivity and
a bustling community to live in are top priorities. When you invest in such an
area, you can command a higher rent and over the years, it will lead to capital
appreciation.

DON’T FORGET TO USE

GOOGLE STREETVIEW TO
CHECK OUT A LOCATION
IF YOU’RE BUYING FROM
OVERSEAS
TRANSPORT CONNECTIONS – is the property in
walking/cycling/bus distance to tube/train station?
Are new links planned in the area? Click to see
journey timings and for network improvements.

EMPLOYERS – are there important employers in the

area that will generate rental demand? Think multi-
national corporations, leisure and shopping centres
and civil services.

EDUCATION – are there highly-rated schools and

Universities are in the vicinity? You can
use a simple Google Map search of a prospective
area to see what’s available.
See how they are rated at Ofsted for schools and
University ratings.

AMENITIES – what shops and leisure facilities are in

the area? Look for shopping malls (with aspirational
brands like London Designer Outlet in Wembley),
gyms, parks and shared green spaces. These will
drive tenant demand, ensuring your property is never
empty and the income rolls in every month.
 4
TO MORTGAGE
OR NOT TO
MORTGAGE?

Cash isn’t always ‘King’. With UK Interest rates at a record low, the cost of
borrowing is much cheaper than you might expect. Use the cash you save as
leverage on your next property investment to build your portfolio.

Getting a mortgage can be easier than it first seems. It might seem daunting,
but let’s break it down.

A lot of people don’t know, but your local bank might be able to grant you
a mortgage on your London property purchase. My clients in Hong Kong,
Singapore, Malaysia and even the Middle East have been able to secure
mortgages from their existing banks in their local currency. Even private banks
can lend based on the amount of assets you have with them.

Alternatively, you can apply for a mortgage loan from banks in the UK. The
simplest way to do this would be to talk to a licensed mortgage broker or
specialist. Based on your individual circumstances they will be able to tailor a
loan package that fits your requirements.

Ideally, you should start the conversation with the mortgage broker after your
financial checks are in order (see point 1). This is called an approval in principal,
and will give you the confidence and clarity before making an offer on a
property.

WILL YOU BE RENTING OUT YOUR

PROPERTY? DON’T FORGET TO LET YOUR
MORTGAGE ADVISOR KNOW SO THEY CAN
SECURE THE RIGHT DEAL, OR IT COULD
LEAD TO DELAYS LATER DOWN THE LINE.
 FAQS ABOUT UK MORTGAGES
What’s the typical LTV?
65-85% depending on the property use

Typical rate?
This is variable based on Bank of England Base Rate or LIBOR rates.
Expect between 3-5%

What loan amount can I expect?

This value is based on affordability, varies between lenders with a range of
4 to 5 times income. Some banks have a minimum loan size of £250,000

Typical maximum age at end of the term?

Up to 75 years

What are the rate options?

2, 3, 5 and 10 year fixed or tracker/variable rates

Do I need a UK bank account?

No, but it is advised to receive rent payments. Your lawyer can assist you
with the process.

What documents do I need?

Passport copy
At least 3 months of bank statements / payslips to prove you can afford
the repayments

These are just a guide and subject to change, consult a licensed mortgage
broker to receive the latest information.

LOOKING FOR
AN ANSWER?
 5
LEAVE IT TO THE
PROS

After you’ve completed steps 1 to 4, you should have a clearer idea on what
you can afford and where you want to buy.

That’s great. But for most novice investors, they will naturally start trawling
Google and property portals to start looking at options. Sooner or later, they
become inundated with information, and more and more questions.

We call it ‘analysis paralysis’.

Do I buy off-plan or ready property?

What type of taxes I need to pay? Should I buy in London? Or Manchester? Or
Birmingham? or *screams internally*.

Sooner or later you’ll start to drown in all the information that’s available. You
get sucked into the daily grind, work assignments, school runs and business
travel. And before you know it, 6 months have passed and you’re still no closer
to identifying the right property.

This is what you need to do.

Identify a trusted, reputable and reliable London estate agent.

This is where they come into the picture. These professional agents do this for
a living. They live and breathe properties. They advise hundreds of clients with
thousands of varying requirements.

They’ll not only find you a property,

but they’ll hold your hand through
the entire purchase – and beyond.
For some of the larger estate agents,
they can help you find tenants,
manage your property and sell your
property at a profit in future.
I hope you found this checklist helpful in some way. Maybe you’ve got
some more questions? Or you’re ready to take the next step in your
investment journey. If you are ready to take action and speak to me or one
of my team members, please click here to schedule a mutually convenient
time for us to discuss.

About:

My name is Dennis Chan and I am

an international real estate investor.
I started buying properties in 2009
with my girlfriend (now wife) as a
clueless newbie. Since then, I went
on to buy properties in a few cities
globally and built my career with
some of the largest real estate
companies in the world. I am now
the Global Head of Sales at
Chestertons, one of the world’s
oldest estate agencies with over
200 years of history. I split my time
between London, Dubai and my
home country of Singapore.
Disclaimer:

This booklet is a general guide only and not intended to be acted upon. No responsibility can be accepted for any loss occasioned to any person acting
or refraining from acting as a result of any statement. You must seek specific advice based on full disclosure of your circumstances and requirements.

July 2020