General country information

Although the USA is well over twice the size of Europe, most interest from UK property investors is currently centred on Florida, home of the Everglades, Orlando, Key West, Miami and Disney World.

Although this state has a tropical climate and extensive coastline that passes from the Atlantic via the Florida Straights into the Gulf of Mexico, it is also prone to hurricanes during the late summer and early autumn. Notwithstanding, it is a popular holiday and retirement destination with good letting potential.

The US as a whole has a mostly temperate climate (excepting Hawaii and Alaska) and offers a comprehensive range of conditions and scenery including the Grand Canyon, Death Valley, and the Rocky Mountains. There are also various natural hazards to consider including volcanoes and earthquakes around Pacific basin, tornadoes in the mid west, and forest fires in the west.

The US economy is the largest and most technologically developed in the world and provides Americans with the highest living standards in the world. However the latest OECD assessment is that US expansion has lost some momentum, in part as a consequence of energy price increases. These have already held back real disposable income gains and, with household savings near zero, are likely to weigh on consumption.

Accumulation of debt and continuing deficits have helped to drive the value of the dollar against the pound downwards over the last few years – from just over 70p in late 2001 to its 2005 value of around 52p. The movement has made US prices, including property prices, appear inexpensive to European investors.

Meanwhile the domestic housing market has remained strong, although the National Association of Realtors recently said it expected the pace of house price increases to moderate this year.

‘After setting four consecutive record years, the housing market is due for a breather. As mortgage interest rates creep up and home sales slow a bit, we should see a better balance between home buyers and sellers and that will take some of the pressure off of home prices’, said NAR’s chief economist David Lereah.

NAR is predicting the 30 year fixed rate mortgage to climb to 6.7 per cent before the end of the year and average house prices to move up by about 5.6 per cent (to £102,000 for existing properties and £119,000 for new properties).

Most overseas investors will find they are able to visit the USA but that moving their permanently is impossible or at the very least involves a tortuous process. However, homeowners can usually stay for extended periods on a special visa.

Property transfer laws vary from state to state but most have disclosure laws that make it illegal for sellers to lie or try to cover up defects in their properties.

In Florida a Contract for purchase and sale or Purchase and sale agreement provided by a real estate agent becomes binding when signed. Although usually pre-printed it is not an official document and can be varied by agreement.

When buying, the full cost of the property purchase will be set out in a payment schedule agreed as part of the contract. Some states require escrow accounts to be set up during the buying process to be held in readiness for completion of a deal. Legal fees and other costs are likely to be around 2 per cent of the price of the property. If a mortgage is needed (foreign nationals can generally raise up to three quarters of the price by way of a mortgage) there will be further costs of about 4.5 per cent of the purchase price.

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