How to Buy Property in the UK as a Foreigner

If you are an overseas investor or are shifting to the UK for work and employment and thinking of investing in real estate, you’ve made a fantastic decision! Many people are moving to the UK on a Skilled UK Worker Visa to decrease the skills shortage gap. Most UK-based businesses have also applied for the sponsor licence UK to ensure all the paperwork and documentation are in order. This excellent step in covering the shortage gap has led to better investments in the real estate sector in the UK. This shift is mainly due to the increase in international workers living in the UK with their families. 

There are no blocks or restrictions for foreigners wishing to invest in real estate in the UK. Even after the uncertainty and fluctuations of the last two years due to the Covid-19 pandemic and Brexit, the UK is still amongst the top destinations for property investments. 

Things to consider when buying a property in the UK as a foreigner

You need to decide whether you will invest in a property from your home country or migrate to the UK, work, and then invest in real estate. However, remember that applying for a mortgage as a non-UK resident will be difficult. On the other hand, the process is typically very straightforward if you have the funds ready to make a full payment for a house or a commercial property.

Apart from the yearly gains in rent, buying a property in the country can help you apply for UK citizenship should you plan to do so. 

However, you should be aware that the property market is currently very uncertain due to Brexit and pandemic issues. Having said that, many investors are taking advantage of falling house prices. Also, unlike in the US, where you get many tax deferral options for property purchases, buying a property in the UK might not get you such an option. Moreover, the UK government might introduce a new tax regime for foreign investments in real estate.

Cost considerations (apart from the property costs) involved in buying a property in the UK

• Stamp Duty – Must be paid at the time of buying the property.
• Income Tax – If, as a foreigner, you are earning an annual rent from your property of more than £150,000, then you are liable to pay 20% tax as a non-resident.
• Capital Gains Tax – Once you sell a property in the UK, you will be liable to pay an 18% capital gains tax regardless of being a resident or not.

Apart from taxes, here are some miscellaneous costs involved in buying a property in the UK:

• Mortgage fees
• Valuation fees
• Solicitor fees
• Survey fees
• Estate agency fees
• Land registry fees
• Renovation and/or repairs
• Monthly running expenses
• Council tax
• Moving costs (If buying a property as your home to stay)
• Property Management fees (if purchasing rental property)

Consider the following points while buying a property:

Budget:

The property rates differ in different locations in the UK. As per your budget, decide which part of the country you would like to purchase a property.

Property type:

Finalize how you want to use the property. If you wish to keep it for personal use, rent it out on a short or long term basis, or renovate and sell it further.

Finance:

Speak to a UK-based mortgage broker or financial advisor before searching for a property. Ensure you are eligible for a loan and keep a maximum Loan To Value (LTV) of 75%. Your EMI will be low if your LTV is low.

Property Search:

Zoopla and Rightmove are websites that can help you find a property to invest in London, or you can contact a UK-based estate agent who can help you out with your property search.

Terms and Restrictions on Property:

There are restrictions on some properties that are in listed buildings. You cannot change the buildings’ original structure for grade one or two listed buildings, and the limits apply in renovating the place.

Purchase Offer:

It is common for your first offer to get rejected for a property unless you offer the first asking price. Currently, due to the uncertainty in the market, you could have a better chance of getting your offer accepted.

Purchase Completion:

If you need a mortgage, you will need a valuation survey on the house. Also, you will need a solicitor or conveyancer to complete the legal paperwork and transfer the property deed in your name.

As a foreign investor looking to invest in London real estate, starting your journey on the UK property path is easier than you think.