A foreigners’ guide to buying property in the UK

The UK has plenty of housing opportunities. With over 300,000 new homes being built every year, it’s easy to understand why even foreigners look to this country as their next investment choice. And while you may think that buying property in the UK while living abroad is impossible, know that this is far from the truth. Thanks to the country’s laws, anyone can become a property owner in the UK. The whole process takes a bit of time but is, however, not that complicated. Here, we will cover everything you need to know prior to acquiring property in the United Kingdom as a foreigner.

A complete guide to buying housing in the UK

You’ve learned that purchasing UK property is, indeed, feasible, but now what? Where to start? Who to contact? These are all questions that you need to figure out. But don’t worry! This guide will answer all of them. After you’ve adequately informed yourself, you’ll be able to relocate with your entire family hassle-free. Even international moving with kids can become easy if you’re well prepared.

Begin by making a decision

Should I live in the UK or invest in a property only to rent it? Ask yourself these questions and make up your mind before you start dealing with anything else. If profit is your only goal, beware. Taking out a mortgage as a non-British resident may prove a bit troublesome.

On the other hand, if you choose to reside and work in the country, you’ll have a higher chance of lenders ruling in your favor. Of course, if you have sufficient funds at your disposal and require no loan, there’s no need to worry. The whole procedure is simple, provided you’ve got some legal help.

Know the advantages of your investment

If your finances are in good standing or if you happen to acquire a mortgage, buying property in the UK will undoubtedly be a great investment opportunity. Over the recent years, the British real estate market has seen some pretty significant growths. Being a homeowner in this country could potentially prove quite profitable as your property’s value could rise anywhere from 2 to 5 percent on a year-to-year basis.

If you are looking to make Great Britain your permanent home, perhaps selling your current home is the right choice. By doing so, you’ll ensure you have enough funds for a cash down payment and avoid dealing with banks altogether.

UK properties bring investors quite profitable rental revenue, as well. Depending on the type of property, the payment method, and value, you could expect up to 12% of yearly rental income.

Hunting for the perfect asset

Before you begin house hunting, it’s essential to understand the difference between freehold and leasehold properties. The majority of UK houses are freehold. At least those outside of major cities, that is. But what exactly does that mean? Essentially, owners of freehold properties own not only the home but the land, as well.

On the other hand, if you own a leasehold property, you own the dwelling, but not the land. You have permission to use it for a certain amount of time, presuming that you pay the ground fee. A better part of flats sold in big cities, such as London, are leasehold properties.

Once you’ve familiarized yourself with the pros and cons of both types, you can start thinking about buying property in the UK. Naturally, being a foreign resident means that you aren’t all too knowledgeable about UK real estate. Instead of doing the hunting on your own, do it with the help of a real estate agent from the area. They can provide you with all the necessary information regarding prices and neighborhoods. They can answer any inquiries you might have, as well.

Taking care of the paperwork

After you’ve found the perfect property, it’s time to hire a reliable solicitor. A solicitor will take care of the legal aspects of the process. These include transferring the deed into your name, resolving any potential legal issues, and arranging a survey of the dwelling. The latter is necessary to ensure there are no damages to the object.

Following a thorough inspection, you will be required to put down a, usually, non-refundable deposit. By choosing to carry on with the purchase and making a down payment, you will present yourself as a serious buyer. It’s during this time that negotiations begin. If all parties are satisfied, contracts are finalized, deeds are transferred, and keys exchanged.

Dealing with financing

Buying property in the UK by taking out a mortgage isn’t the easiest option for a foreigner. As mentioned previously, paying for it without a loan is advisable. Still, if you don’t have other ways to finance the purchase, acquiring a loan is achievable. Bear in mind that such a venture can be pretty costly. Depending on various factors, you can expect to pay a deposit ranging from 5% to 40%. The interest rates will also be higher, and you may be asked to submit some additional documentation, such as a residence permit, as well as other financial documents.

Dealing with taxes

No matter where you’ll be acquiring housing in the UK, your property will undoubtedly be subject to taxes. Foreign nationals are responsible for paying the same property taxes as UK residents. Upon purchasing a property worth above £125,000, all buyers are required to pay a so-called Stamp Duty Land Tax (SDLT). The rate ranges from 2% to 12% for a first home and from 3% to 13% for the second.

If you are renting your assets, bear in mind that you’ll be subject to Income Tax. If your yearly revenue is higher than £12,500, that is. The rates are progressive, capping at 45% if the gain is higher than £150,000.

Capital Gains Tax of up to 18% is also a thing, but it only takes effect if you decide to sell.

Conclusion

Contrary to popular belief, buying property in the UK isn’t all that difficult for foreigners. If you are genuinely interested in moving houses and can finance the purchase, the process is relatively straightforward. If you are looking to invest in housing solely as a business opportunity, you are also in luck! The UK real estate market is constantly growing, so you surely won’t make a mistake by investing your money here.



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