Property in the USA
The British have been entranced by the idea of living and working in the USA for 400 years and the appeal shows no sign of wearing out. It’s the place to start a new life where ambition and hard work are rewarded and where they really know how to have fun! In the USA, to quote PJ O’Rourke: “There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences.”
The biggest draw in recent years has been central Florida, where a modern villa with pool, in year-round warm weather, a short drive from the world’s greatest theme parks can be yours for as little as £125,000. How much would the family love that?
There is so much more to the USA, however. Even within Florida, what about an ocean-view apartment in Miami, the “Capital of Latin America”? Other highlights include California, where the sun shines all year and the future is being forged in the workshops of Apple and Google. It has rural beauty too, in the winelands of Napa and the ski slopes of Tahoe. Property in the USA can be pricey – hardly surprising given that so many want to be there.
The central states haven’t seen so many UK buyers, but just saying the names Wyoming, Montana and Kansas is to be transported to a romantic new life owning a ranch house with the pick-up truck in the drive and a stars and stripes in the front garden. It’s a radically different culture to ours, but speaking English we’re halfway there.
For many British people, New York is the perfect city and the most glamorous place on earth, where you could be drinking whisky in a bar with Mad Men (and women) while swapping witticisms with Woody Allen. Don’t forget the rural idylls of New England – it may look and feel familiar but there are mountain lions and black bears running wild – or the states of the eastern seaboard where you’ll find that picture-perfect cottage with veranda and a white picket fence, close to NYC, Boston or Washington DC.
The USA also has astonishing investment potential, if you go about it the right way, with buy-to-let properties starting from just £10,000. The buying processes are secure, simple and in English, with so much online information that it’s hard to go wrong. All with year-round budget flights that, apart for the jet lag, make it as easy to reach as many a Mediterranean island.
Where to Buy Property in the USA
The great land of opportunity across the Pond remains a place where many British people would love to emigrate to “live the American dream” and make a lot of money. There are now over 678,000 Brits who have moved permanently to the US, and that’s without all the second-home owners.
It’s relatively simple to buy property in America - there are no restrictions on foreign ownership, we speak the same language, they have a well-regulated, easy to understand property market plus a sophisticated internet infrastructure (MLS) that lists every property for sale and every bit of data you could ever want to know about an area.
There are plentiful flights throughout the year, wonderful roads and welcoming people. It’s all very easy to do – especially if you can pay cash - and it’s a huge and fabulously diverse country.
Across the US, property prices have generally recovered from the global downturn, with hotspots such as Miami, New York and Orlando at the forefront of the resurgent markets – some of the hardest hit have bounced back the fastest.
The vast majority of us will head south to Florida for the year-round sunshine to join all the other North European “snowbirds” escaping the freezing winters back home. Whether it’s Disney, shopping, boating, beaches or golf it’s got everything, even thriving art centres such as Miami and Sarasota.
Florida is a huge and diverse state but prices went up on average of 11 per cent year on year so it’s definitely on a steady upward curve. The average British buyer spends around £250,000 in Florida and most interest is in the Orlando area, where you can find a three-bed villa with a pool for that in popular (but not super prime) locations. For Lauderdale, Naples, St Augustine and Tampa Bay area are also popular areas.
Some of us might prefer California and especially the resurgent Los Angeles – another popular but slightly less accessible area for buyers; although historic New England or Georgia, the Colorado ski resorts of the majestic Rockies, glamorous Las Vegas and Lake Tahoe are all niche markets for second-home owners.
New York is a buzzing market in 2016 and many investors are looking there for capital growth in several of the downturn areas that are currently undergoing a reinvention. Prices are strong in the Big Apple, which frequently appears in the Top Five most expensive cities in the world for residential property. New York State is also sought-after for wealthy Brits relocating for work, and a few even buy in The Hamptons, the summer playground for wealthy New Yorkers on Long Island.
How to Buy Property in the USA
The situation in America is slightly complicated by the variety of state laws, though the lack of a language barrier makes it seem easier, and the industry is well regulated and very transparent (all properties are listed on a nationwide database, Multiple Listings System or MLS, of which all agents have access).
Once the property is chosen, the agent working for the buyer prepares an offer to purchase a property. Once signed by the seller, this becomes a binding contract, and the buyer usually pays a deposit into an “escrow” account of 10 per cent for residents, as much as 20 to 30 per cent for non-residents.
The buyer will usually instruct a licensed home inspector to perform a detailed inspection of the property to identify any issues, or repairs that may be needed. An appraiser will visit the property to give a detailed report of the home’s market value. A title search is performed to ensure the property is free and clear of any charges and all building permits have been closed.
So long as the protections were written into the contract, should there be issues resulting from the searches and survey the buyer can still pull out. Otherwise, a real estate transaction can then be “closed” by an attorney or title insurance company.
Documentary stamps to record the deed with the local authorities cost 0.7 per cent of the purchase price and can be paid by the buyer or seller.
The title insurance policy is a one-off payment of approximately 0.75 per cent of the purchase price – again, this is payable by the buyer or seller so part of the negotiation!
Attorney or title company costs to close the transaction are usually around $700, split equally between buyer and seller. The buyer may be required to pay home owner association fees and building insurance in advance and this may be paid at closing.
So, overall, budget up to 2.5 per cent for cash purchases and up to 7 per cent if you are getting a US based mortgage. You'll also need to find the most cost-effective, safe and easy way to move your money to the USA to complete your purchase. Bank charges and fluctuating exchange rates can both have an impact on your overall cost - but you can save up to 4% of the cost by working with a specialist currency firm.
Buyers Need to Know
When buying a condominium, buyers need to thoroughly investigate the financial health of the condo association. Ideally the association will have reserves in place for major items such as roof replacement or road resurfacing.
Ask how many home owners are in arrears with their monthly fees – a high percentage should ring alarm bells as it indicates an increase in the monthly fees may be inevitable to cover the shortfall.
Beware of past condo or homeowner (HOA) fees that may be demanded after you buy a house or condo.
Some good news: when buying a new-build you can save on insurance costs – up to half if you are buying a brand new home versus a 15-year-old home. New-builds also come with a 10-year building warranty, but do make sure you know what fixtures or fittings are included in the sales price.
Alan Harding provides some important property tax and mortgage pointers for anyone thinking of buying in Florida
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