• Sunday, April 14, 2024
businessday logo

BusinessDay

3 things Nigerian buyers need to know about offshore property market

Offshore property investment

For Nigerians who want to invest or buy homes offshore, there are some vital information that they must have to be able to play in mature markets offshore, according to international realtors who provide assistance for such buyers or investors.

The realtors say that, basically, there are things which are unique to these markets, especially London which is the most attractive market for Nigerians. They add that, unlike Nigerian market which assures of huge profit-taking by the players, the London market is very mature.

No Buying Agent

This separates London market easily from the rest. Buyers from other markets, including Nigeria, are used to hiring buying agents who work for them and has the duty of care to support them with their purchase. The agents are always by the side of the buyers and get them in to see every property that may be of interest.

But, in the UK, the market is dominated by estate agents who work solely on behalf of the seller who are often called vendors. “As a buyer, you must register with each specific agent who has listed a property that you may be interested in seeing, and that agent can only show the stock that they have,” explained Ugo Arinzeh, Founder of London-based agency called Onyx Property.

Experts say that nothing could be better for Nigeria than this kind of arrangement given the unwholesome activities of estate agents who are there for the buyer and also for the seller, sometimes defrauding either the buyer or seller of both.

But, this, according to Arinzeh, can be extremely inefficient as busy professionals and foreign buyers must deal with many different agents and arrange viewings at different times, often based on the agent’s schedule. “In the United States, your buying agent will typically go out with you and be your consultant and fiduciary every step of the way.

“This was one of the things that surprised me most as a real estate professional when I moved to London – that people are buying the most expensive purchase of your life with no one guiding or supporting you directly, instead, you must rely on the estate agent that really works for the seller.

It’s one of the reasons that I specialize in working as a buying agent to support international buyers along with domestic buyers,“ she said.

Leasehold versus Freehold

These are different types of ownership structures in the UK. Arinzeh says that in London, there are a lot of leasehold properties as a result of the number of flats and apartments versus single-family homes.

She explains that, in a freehold, a buyer owns the land as well as the building and it is such that if a buyer owns a single-family home, he will own the freehold.

“In buildings or structures where there are multiple flats or apartments, say a block of flats or a converted house with several flats, you are more likely to be buying a leasehold which means you own your unit but you don’t own the underlying land,” she said.

Read also: 5 critical steps for buying property in Nigeria

Exchange and Completion

Arinzeh describes exchange and completion as closing process, adding that it is the area where there is the biggest difference between the UK and many other countries.

According to her, in the UK, until you exchange contracts, which can be weeks or months later, either party can walk away without recourse or penalty.

“During this due diligence or conveyance phase, prior to the exchange of contracts, is when solicitors, particularly the buyers’ solicitors, engage in title searches, surveys and valuations, and financing underwriting occurs,” she says.

She explains that during this period, either party can change their mind and decide not to proceed, leaving both parties highly exposed throughout this time.

It is only at the exchange of contracts that both parties are legally bound and the buyer will put up a deposit of 10percent of the purchase price and a completion date is set (usually a couple of weeks later, though sometimes simultaneously).

“Between exchange and completion, the bank is notified to complete the final steps on the mortgage and arrange for the funds to be available on completion day. At completion, the solicitors will arrange for the remaining monies to be paid and keys exchanged,” she said.