The madness of buying and selling a proprty in England

Despite the rising popularity of crypto, property still remains the safest investment for many. Worse come to worse, if you lose everything, you still have a roof over your head. For some, it becomes an accidental investment, when you decide to leave the country to travel and rent out your place for a bit of extra cash. That has certainly been my case. Property investment has served me well in the past few years and has enabled me to live off the rental income. Don't get me wrong, I don't have a massive portfolio of property, in fact, I don't even have anything that I can call a portfolio. It's just that single property.

I'm currently in the process of selling my property and buying another one, and today I received a bunch of document from my solicitor for my purchase. I've had a quick look at it, it's mainly the lease for the property, some plans, and a bunch of information regarding the financials of the management company that manages the property, and certificates regarding the general upkeeping of the property.

In UK, there are two main types of property ownership, freehold and leasehold. Freehold means you own the property outright including the lands it sits on. Those are mainly houses. And leasehold means you own the property, which is normally a flat for a set number of years only. You lease it off the freeholder who owns the entire block and the land it is built on. The duration of the lease ranges from 999 years to under 100 as time goes by. Once it gets below around 80 years, your leasehold property becomes fairly difficult to sell as you will have no right over it when the lease expires.

My property is a leasehold flats. Flats are becoming more and more popular in England as property prices are getting more expensive, and many people can't afford to buy a house. Me included. The other reason, flats are a bit easier to rent out because many young couples can't afford to buy a house and have to rent. The place I'm buying has an existing tenant and that is perfect for me as I will be renting it out anyway. Having an existing tenant means I wont have to go through the hassle of finding tenants, and I'll get rental income as soon as I own the property.

Another interesting and often annoying thing about the property market in England is the outdated legal process. Normally property transactions in England take around 3 or 4 months, that is if you're lucky and everything goes according to plan, and the solicitors don't go away for long holidays during summer or Christmas. Once the paper work is completed, we get to a stage called contract exchange, and a couple of weeks later contract completion. That is when the transaction is complete.

The problem is the long period from when you agree to buy/sell the property to contract exchange. There is no legal obligation from either party to go through with the transaction, and they can pull out at any time without paying any financial penalties to the other party. It is estimated that 1 in 3 property transactions fall through in England due to various reasons. Under English law, if I verbally agree to buy something from someone, I immediately create a legal obligation to do so, and if I change my mind, technically the seller can sue me. This does not apply to property transactions. Mad, considering buying a property is one of the biggest purchase one makes in their life. Do you have similar silly legal process in your country when buying or selling a property?

In the meanwhile, I guess I'll be busy this weekend going through this pile of document to get ready to buy my new one.

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