The United Kingdom and the United States are two of the most popular countries in the world for overseas property investment. While the two countries do share some history, they could not currently be more different if they tried.
Beside the obvious legal and taxation differences, there are some interesting cultural and regional differences when it comes to the housing arrangements and features between the two countries.
Apartment units cannot be purchased. Instead, apartments are typically owned by a developer’s corporation and are purpose-built to be leased to individual tenants. Simply put, you cannot buy an “apartment” in the US.
Apartments are common in new projects where developers build both apartments and condominium units, selling the condos while keeping the apartments for rental purposes. However, apartments are generally built to lower specifications compared to condos, thus attracting a different tenant pool that does not necessarily compete with apartment investors.
The Co-Op / Cooperative
Co-ops are owned by a corporation. This means that when you buy an apartment in a co-op building, you are not actually buying real property like you would in a condo building. You are, in fact, buying shares of the corporation. These shares entitle you to a proprietary lease, which positions your relationship to the building similar to that of an investor rather than being the outright owner of your specific unit as would be the case with a condo.
The approval process for co-op buildings is significantly more intensive than in condominium buildings. Co-op shareholders, unlike condo residents, pay a monthly maintenance fee to cover building expenses and upkeep like heat, hot water, insurance, staff salaries, real estate taxes as well as the mortgage debt of the building. Assessments on the building can also be incurred and can sometimes drastically affect the value of the property you are considering.
The infamous co-op board sets its own standards in terms of the approval process as well as how the building is managed. Seeing that everyone owns shares in the building, the community as a whole is more concerned with who the building does or does not allow into it. Co-op boards also require an interview (or interviews) to meet you and ask any questions regarding the information you provided. They can approve or deny any applicant as they see fit. Additionally, the co-op selling process can be tricky, therefore most investors normally focus on condos.
The Condo / Condominium
Condominium apartments differ from co-ops in that you will ultimately own real property. Think of purchasing a condo like purchasing a house in the suburbs: the purchaser is given an actual deed to the property. Seeing that you own real property rather than shares in a building, each individual apartment will receive a separate tax bill from the city rather than compiling taxes into monthly maintenance fees as seen in co-ops. Condo owners are required to pay monthly common charges similar to the maintenance fees in a co-op, however these tend to be lower than in co-ops because there is no underlying mortgage in a condominium building.
The straightforward process of buying a condo combined with the fact that in some cases you can finance up to 90% of the purchase price and sublet your apartment at will makes this form of ownership a preferred choice for flexibility, especially among investors, foreign buyers and parents purchasing for their children. That being said, there are significantly fewer condos to come by; the majority of the New York City real estate market takes the form of a cooperative. For a crash course comparison of the American and British real estate markets — we haven’t even touched on ‘flats’ after all — find out more in this infographic below.
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