Real Estate

Real estate is the property, land, buildings, air rights above the land and underground rights below the land. The term real estate means real, or physical, property. “Real” comes from the Latin root res or things. Others say it’s from the Latin word rex, meaning “royal,” since kings used to own all land in their kingdoms. The UK Constitution initially restricted voting rights to only owners of real estate.

Types of Real Estate

There are four types of real estate:

• Residential real estate includes both new construction and resale homes. The most common category is single-family homes. There are also condominiums, co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes and vacation homes.
• Commercial real estate includes shopping centres and strip malls, medical and educational buildings, hotels and offices. Apartment buildings are often considered commercial, even though they are used for residences. That’s because they are owned to produce income.
• The industrial real estate includes manufacturing buildings and property, as well as warehouses. The buildings can be used for research, production, storage and distribution of goods. Some buildings that distribute goods are considered commercial real estate. The classification is important because the zoning, construction and sales are handled differently.
• Land includes vacant land, working farms and ranches. The subcategories within vacant land include undeveloped, early development or reuse, subdivision and site assembly.
  

Residential real estate may contain either a single family or multifamily structure that is available for occupation or for non-business purposes. Residences can be classified by, if, and how they are connected to neighbouring residences and land. Different types of housing tenure can be used for the same physical type. For example, connected residents might be owned by a single entity and leased out, or owned separately with an agreement covering the relationship between units and common areas and concerns.

Major Categories

• Attached / multi-unit dwellings
• Apartment (American English) or Flat (British English) – An individual unit in a multi-unit building. The boundaries of the apartment are generally defined by a perimeter of locked or lockable doors. Often seen in multi-story apartment buildings.
• Multi-family house – Often seen in multi-story detached buildings, where each floor is a separate apartment or unit.
• Terraced house (a. k. a. townhouse or rowhouse) – A number of single or multi-unit buildings in a continuous row with shared walls and no intervening space.
• Condominium (American English) – Building or complex, similar to apartments, owned by individuals. Common grounds and common areas within the complex are owned and shared jointly. In North America, there are townhouse or rowhouse style condominiums as well. The British equivalent is a block of flats.
• Cooperative (a. k. a. co-op) – A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
• Semi-detached dwellings
• Duplex – Two units with one shared wall.
• Detached dwellings
• Detached house or single-family detached house
• Portable dwellings
• Mobile homes or residential caravans – Potentially a full-time residence that can be (might not in practice be) movable on wheels.
• Houseboats – A floating home
• Tents – Usually very temporary, with roof and walls consisting only of fabric-like material.

The size of an apartment or house can be described in square feet or meters. In the United States, this includes the area of “living space”, excluding the garage and other non-living spaces. The “square meters” figure of a house in Europe may report the total area of the walls enclosing the home, thus including any attached garage and non-living spaces, which makes it important to inquire what kind of surface definition has been used.

It can be described more roughly by the number of rooms. A studio apartment has a single bedroom with no living room (possibly a separate kitchen). A one-bedroom apartment has a living or dining room separate from the bedroom. Two bedrooms, three bedrooms, and larger units are common. (A bedroom is a separate room intended for sleeping. It commonly contains a bed and, in newer dwelling units, a built-in closet for clothes storage.)

How the Real Estate Industry Works

Real estate also refers to producing, buying and selling real estate. The real estate industry is a critical driver of economic growth. Construction of new buildings is a component of gross domestic product. It includes both residential, commercial and industrial buildings. The commercial real estate element has a market value of £1,662 billion in the UK. Commercial real estate produces a financial return for its owner, usually in the form of rent. It includes office, retail, industrial, leisure, medical and hotel properties, and residential property in what is known as the private rented sector. Commercial real estate is one of the fundamental building blocks of UK economy. It directly employs more than 1 million people and contributes over £94 billion to the UK’s economy (about £5.4% of the total).

The National House Building Council, usually known as the NHBC, states its primary purpose as raising the construction standards of new homes in the United Kingdom (UK), and providing consumer protection for homebuyers through its world-leading 10-year Buildmark warranty.

Established in 1936, NHBC is the UK’s largest provider of new home warranties. According to NHBC’s website, around 80% of new homes built in the UK each year have an NHBC 10-year warranty. NHBC is also the UK’s largest single Approved Inspector for Building Regulations. Its other activities include the provision of services linked to house building and general construction; including energy ratings, health and safety, sustainability, and training. It also provides industry statistics and benchmarking services.

The NHBC is a non-profit distributing company, so reinvests ‘profit’ in its activities to improve the quality of new homes to protect the interests of homeowners.

NHBC is authorised and regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

Real estate agents assist homeowners, businesses and investors buy and sell all four types of properties. The industry is typically divided up into specialists that focus on one of the types. Sellers’ agents help find buyers through either the Multiple Listing Service or their professional contacts. They price your property, using comparative listings of recently sold properties known as “comps.” The can help you spruce up your property so it will look its best to customers. They assist in negotiations with the buyer, helping you get the highest price possible.

Buyers’ agents provide similar services for the home purchaser. They know the local market. That means they can find a property that meets your most important criteria. They also compare prices, called “doing comps.” It allows them to guide you to areas that are affordable. Buyers’ agents negotiate for you, pointing out reasons why the seller should accept a lower price. They help with the legalities of the process, including title search, inspection and financing.

It’s a better indicator of the health of the overall housing industry than new home construction. That’s because new home builders can be overenthusiastic about future sales and overbuild. They can also cut prices to force sales. Individual homeowners must follow the market’s supply and demand. They don’t have the clout to manipulate the market.

Real Estate Investing        

Everyone who buys or sells a home engages in real estate investing. That means you must consider several factors. Will the house rise in value while you live in it? If you get a mortgage, how will future interest rates and taxes affect you?   

Many people do so well with investing in their homes they want to buy and sell homes as a business. There are many ways to do that. First, you can flip a house. That’s where you buy a house to improve then sell it. Many people own several homes and rent them out. Others use Rentmyhome as a convenient way to rent out all or part of their homes. You can rent vacation homes using fbm Holidays.

You can also invest in housing without buying a home. You can buy stocks of homebuilders. Their stock prices rise and fall with the housing market. Another way is with UK Real Estate Investment Trusts, called UK-REITS. These are investments in commercial real estate. Their stock prices lag behind trends in residential real estate by a few years.