The United Kingdom is a very popular place for buying property, as it has better real estate opportunities compared to the United States, for example. This is why around 52.8% of UK families own their own homes. This guide will show you why buying property in the UK from overseas is such a convenient option.
The property market continues to behave very well, despite the macroeconomic uncertainty and the geopolitical tensions affecting the world. Moreover, property prices have still risen substantially since the pandemic. This makes the UK a great opportunity for those wanting to buy an affordable investment property.
Buying from overseas is not that difficult as long as you have the funds and the support to do so. Global Residential can help you find the information specific to your situation, so feel free to contact us. However, there are several differences that you should know about. It mostly depends on whether you intend to stay there occasionally or plan to buy it for leasing.
If you want to buy property even if you are not in the UK, this guide is for you. Before you start reading, remember that rules may differ depending on where you are from, so you should contact us for more specific details.
Is It Worth Buying a House in the UK?
With the real estate market constantly changing in the past few years, you may be wondering: is buying property in the UK from overseas worth it right now? Well, it depends on what side of the market you are on.
While home prices are still higher than in the past decade, there has been a downtrend in the last two years – a possible result of the pandemic recession. It is forecasted that the prices will slump by 8% in 2023, making it more challenging if you want to sell a house. However, if you want to buy it, now is the time.
However, home prices are unpredictable, so investment property owners must take precautionary steps. The growing rent prices are proof of this, as homeowners increased their rent by 4.2% in the past year to keep up with the inflation. Therefore, if you buy a home on a buy-to-lease strategy, you may not reap as much from the home value. On the other hand, you may significantly benefit from the monthly rent.
Recent data shows that investors buying and selling homes in the short term may not exactly benefit from property purchases. Purchase prices fell by 0.6% in January, the fifth consecutive monthly decline. That being said, if you are buying said property to hold onto it, the chances are that you will benefit from this purchase.
The housing market has always shown fluctuations, often in repetitive patterns. And when prices go down, you can expect them to increase again eventually. Real estate experts believe that home values will eventually start going back up again. In the next five years, it is believed that the average price will go up by 6%.
This will depend on the neighbourhood, home size, house condition, the local market, etc. For example, Global Residential properties in Burton on Trent are expected to gain value shortly, as 21,300 jobs are expected to be created in the area by 2028.
If you buy property in the UK from overseas to keep it, then you can generally expect to see its price increase in value. In the meantime, you can either stay in the home or rent it out to other people in the UK. Global Residential properties in Liverpool, such as Mauretania and Aquitania, have rental yields of 5%.
Property and the Need for Visa
As someone not living in the United Kingdom, you have probably asked yourself: can a foreigner buy property in the UK if they do not have a visa? Well, this depends on how much you wish to invest. It will also depend on what you plan on doing with the house.
Non-UK residents can easily purchase a house without a visa if it costs less than £2 million. There is no law saying that you can’t. The problem only appears if you want to also stay at the property.
If you come from certain countries, usually the Commonwealth or EU, you can stay in the UK for up to 6 months as a “standard visitor.” However, if you intend to extend your stay or stay in your home for a longer time, you will need a visa.
The situation changes if you buy property in the UK from overseas worth more than £2 million. In that case, you must apply for something referred to as the Tier 1 visa, which is an investor visa.
For you to be able to obtain this visa, the following requirements must be met:
- You need to be 18 or older
- You need to prove that the funds belong either to you or your business partner
- You need to have an account open at a bank that the UK government has regulated
This visa allows you to remain in the United Kingdom for up to three years and four months. You may also extend this visa if you keep doing business in the UK. Your dependents may also come with you on the same visa, should you decide to move into one of your investment properties.
Documents Needed to Buy a House in the United Kingdom
No matter if you are a resident of the UK or a foreigner, you need to go through a series of checks when you are buying property in the UK from overseas. Institutions such as property agents, banks, or solicitors will want to make sure you aren’t going to commit fraud or engage in other unlawful practices.
For this to happen, you must provide documents that prove your identity. They need to know that you are who you claim to be. To buy a household in the United Kingdom, the following documents will be necessary:
- Identity Proof: This includes documents such as your ID card, passport, or driving licence.
- Address Proof: This includes any potential document that has an address next to your name (i.e., an ID card, driving licence, utility bill, or bank statement).
- Funding Source: Document showing where the money for the full payment or mortgage will come from (i.e., a tax return or a pay slip).
You may not be asked for the money right away, but somewhere later in the buying process. When they accept your offer or call for your documents, ensure you have all the paperwork ready. This will make the buying process much smoother to deal with.
The Process of Buying Property in the UK from Overseas
The process of buying a house in the United Kingdom takes around 2-3 months. This timeframe can be longer, depending on the seller and whether they are part of a chain or not. In some cases, you may have to wait until the property is ready.
But can foreigners buy property in the UK the standard way? More or less, yes. The process is not affected too much by your location or visa status. With that in mind, you still need to be thorough with the process.
Before you begin buying property in the UK from overseas, you need to make sure that your finances are ready for it. For instance, find out how much of a loan you can get pre-approved. If you are using your own funds to make the purchase, ensure you have enough to cover the payment. Alternatively, ensure you have enough funds to cover the deposit.
This will prevent any delays once you start searching for the property. To make a quick move and be efficient with your time, here are the steps you should follow when buying property in the UK from overseas:
- Hire a Solicitor
If you buy property in the UK from overseas, you will likely need a solicitor. If you are planning business trips in the UK anyway, you can handle things yourself. If not, you will need someone to handle your legal technicalities.
The solicitor will help you through every step of the buying process. If any potential issues may affect the value of the property, they will let you know about them. Moreover, they are familiar with the local law, something that can be very helpful for you as a foreigner. They will also prevent you from making the wrong bid on a property that could end up affecting your finances.
- Make an Offer
Now that you have your finances in order, the first thing that you have to do is to put up an offer. You can do this directly and verbally by calling the sellers themselves. Otherwise, you can do it in writing, sending them a direct letter, or using a real estate agent.
Your offer will likely not be the only one on the table, so you may need to wait until the seller makes their decision. This can take a couple of days, depending on the property’s popularity. If the seller accepts your offer, they will draw the contract up and transfer the ownership.
This is an essential step in England, Northern Ireland, and Wales, as no offer is legally binding until the contract is drawn and exchanged. Scotland is different when you are buying property in the UK from overseas – here, one may simply communicate things through the hired solicitor.
When you make an offer, you can go above or below the asking price. Here are some of the things to help you decide:
How long has the property been on the market?
- If it has been there for a long time, it means the buyer interest surrounding it is low. This scenario allows you to suggest a lower offer.
- If it’s only been on the market for a short time and already received many offers, then a higher offer will make the seller more likely to select you.
Very often, properties in the UK sell for less than the asking price. However, if you make a low bid, you have the risk of being beaten by another buyer. If you really want to buy the house, then you need to choose your bid sensibly and accordingly.
- Get a Survey
Before buying property in the UK from overseas, you should also have a valuation survey taken. This will ensure that the property you intend to buy is worth what they say it is. For instance, the sellers may say that the home is in perfect condition, but they hide the fact that termites damaged a section of the basement, or there may be other hidden costs when you purchase it.
The most common types of surveys that you need in the UK are:
- Building/Structural Survey
- Royal Institute of Chartered Surveyors (RICS) Homebuyer Report
- RICS Condition Report
Property surveys can bring about an extra cost, but this can save you in maintenance and repairs in the long term. Depending on their findings, you can be entitled to reduce your offer. As a buyer, this can significantly benefit your budget.
- Finalise the Offer and Get the Funds
If the survey finds issues with the house, you might want to renegotiate the price and make your final offer. Bear in mind that if you are changing your offer, you may also want to finalise matters with the mortgage.
If the survey says that the home is worth less than originally expected, the bank may lower the amount of money they are willing to offer you. You cannot avoid this because the lenders must know exactly how much you have to pay on the house.
Once the offer is final, you need to get your deposit and complete the mortgage. Keep in mind that if you want to pull your offer on the house, this is your last chance. Mortgage lenders often give you 7 days during which you can decide whether to take the mortgage or not. You can still cancel after you sign it, but you will lose the upfront fees.
Exchange Contracts
If things go through smoothly and you agree to the mortgage, it is time to exchange your contracts. The solicitor of the seller (often accompanied by the seller) will give you the contract, which you will need to sign.
Before you sign anything, make sure that you check the details of the contract. Discuss matters with your own solicitor and see if any amendments are necessary. If everything is in order with the contract, you may proceed to sign it.
Make sure that it includes all the necessary details, such as the price and signing date. If the sale has any special conditions, make sure they are on the contract as well.
Complete the Final Arrangement
When you are buying property in the UK from overseas, the process does not end with you signing the contract. There are also certain arrangements to keep in mind. First, you need to transfer the money for the house to the seller from the mortgage provider.
Once the transaction is completed, you will likely receive the keys to your new property. If you have any solicitor fees or outstanding mortgage fees, you will have to pay them at this point.
With the payments done, the last step goes to your solicitor. They should register your property purchase with the Land Registry and pay the stamp duty. Once the legal bill comes up, these fees should be listed there.
Upfront Costs for Buying a Property in the UK
When you buy property in the United Kingdom, you may expect two types of costs: upfront and ongoing costs. Here is what you need to cover when it comes to the upfront costs:
Stamp Duty
If you are buying property in the UK from overseas and it is over £125,000, you must pay stamp duty tax. If it’s a first property, the stamp duty will be 2-12%. If the property is a buy-to-let or a second home, the stamp duty will be 3-13%.
You may use the help of property investment professionals to determine your expected tax with our stamp duty calculator. We have the right tools to find the most cost-effective investment opportunity.
Mortgage Costs
No matter where you buy the property, there is a good chance you need to take out a mortgage. A mortgage is associated with fees such as the arrangement, valuation, and booking fees. This can add a few thousand pounds to your purchase. Note that you will be paying interest on your mortgage, so ensure you are finding the best mortgage deal possible to minimise the interest rates you’ll be subject to.
Deposit
Buying property in the UK from overseas also means that you have to pay a deposit. This will cover an upfront payment for the house. Depending on the seller or the real estate agency, most deposits can range between 5% and 40%.
Land Registry Fees
When you are transferring the legal deed of the property to another, the UK government requires you to pay a certain fee. To find out more about these fees, you can visit the government land registry website.
Legal Fees
You also have to hire a conveyancer or a solicitor to act on your behalf when you are buying property in the UK from overseas. You should do this whether you purchase the home with your funds or take out the mortgage. The legal fees for the solicitor can go as high as £1,000.
Removal Costs
If you are planning to move into the property or furnish it for leasing, then you must also consider the removal costs. The final costs will depend on how much you have to move around, but the rates revolve around £300 and £600.
Ongoing Costs when Buying Property in UK from Overseas
When you are buying property in the UK from overseas, the costs do not end with the final purchase. You also have some ongoing costs to prepare for. It doesn’t matter if you plan on leasing the property out or using it as a second home. When you put the property to good use, you will deal with these ongoing costs:
- Mortgage
You have now paid the seller the money they are due. Unless you had the entire amount saved up, chances are that you will have to pay a monthly mortgage. If you purchased the property to rent it out, make sure that the rent covers the mortgage along with other associated costs of the property.
- Insurance
Home insurance is not required by the law, but it’s highly advised to invest in. This is especially important if you purchased the property to use it as an investment. If your home gets destroyed or damaged, then all of your money is out the window.
A simple careless moment from your tenants can make you lose your investment. Insurance may take a certain monthly fee out of your pocket, but it will protect you against a disaster.
- Maintenance and Repairs
When buying property in the UK from overseas, you also need to cover maintenance and repairs. It does not matter whether you have tenants or not. If it’s not maintained properly, the house can significantly lose its value over time.
If you are not at the property yourself, you should make sure to hire a caretaker to visit the house. They should clean and check for issues regularly, making sure that the property’s value is maintained.
- Bills
Depending on whether you are staying at the property or not, you will also have bills to cover. If you purchased the property to rent it out, then you can likely delegate this task to your tenants.
If they do not pay the bills separately, you can arrange it so that they’re included in their rent.
Tax Implications for Buying UK Property as a Foreigner
Even if you are a foreign investor or property owner, you are not exempt from taxes. The most common taxes that you need to pay are:
Income Tax
If you are buying property in the UK from overseas for the sole purpose of renting it out, then you still need to pay rental income tax. Even if you do come to the UK often, if you are away for more than 6 months a year, you will be labelled as a non-resident landlord. Consequently, you will be taxed as such.
The good news is that you only need to pay the British government for the properties that you have in the UK. You will not be taxed in your country of residence, but you may want to check with your local government to be sure. These taxes can also be deducted at the end of the tax year if you are the owner of a business that deals with investment property. If not, you will be required to fill out a self-assessment tax form.
Stamp Duty Land Tax
As already mentioned, when you are buying property in the UK from overseas, you need to cover stamp duty. Residents also have to pay stamp duty land tax, but as a foreigner, you have to pay an extra 2% surcharge.
| Tax Threshold for Overseas Buyers | Rate |
| £0-£125.000 | 5% |
| + £125.000 | 7% |
| + £675.000 | 10% |
| + £575.000 | 15% |
| > £1.5 million | 17% |
Bear in mind that the tax threshold may be different based on the value of the house. For this reason, you should hire a professional to help you choose the best investment opportunities.
Ways to Finance a Property Purchase
Finding ways to finance your home purchase may be rather confusing as an expat or a foreigner. The good news is that you do not need to have the money ready at home, nor do you have to take a loan from your home country. You may just as easily obtain your financing directly from the United Kingdom. Here are your options:
Mortgages
The standard way to fund a property purchase, whether you want to be a homeowner or an investor, is to get a mortgage. This can be particularly useful if you are planning to use the buy-to-lease strategy. This way, if you set the monthly rent payment the same as the average monthly mortgage, the tenant will practically pay your mortgage for you.
Even if you are not from the United Kingdom, you can still get a loan from a UK mortgage broker or bank. International banks may also offer great variable or fixed rates. As an alternative, you can even try to take the mortgage out of your home country, as you can still use money from overseas.
That being said, it is recommended to go for UK loans. Not only will you get the same currency, but you will also get more coverage. Currencies may work differently depending on the country, but getting a mortgage in the UK can ensure you don’t end up with a big gap in the currency value, as well as the amount of money you can obtain.
Keep in mind that if you want to get a mortgage to finance your property purchase, then you have to make a deposit. If you have residency in the United Kingdom, that deposit can range between 5% and 40%. If you are a non-resident, the deposit for buying property in the UK from overseas may be higher. If you have existing assets, using them as collateral for the loan can get you a better deposit or rate.
Assistance Schemes
If you have residency in another country but have lived in the UK for at least 3 years, then you may use the Help to Buy scheme offered by the British government. For instance, let’s say that you’ve lived in the UK for 3 years, but then decided to move. That scheme could help you keep your ties to the UK, allowing you to buy a house.
This house could easily be used as an investment property. You may set the monthly payment for this scheme at the same amount as the monthly rent. Similarly to the mortgage, your tenants will practically pay your monthly payments.
Conclusion
Buying property in the UK from overseas is easier than some might think. Depending on the value of the assets, you will not even need a visa – not unless you plan on moving there. The ease of purchase makes it one of the best times to invest in UK property.
At Global Residential, we can help you find the best investment opportunities in the UK. With the UK housing market on constant expansion, we can help you get the right investment for you. Contact us and see what we can do for you!
FAQs about Buying Property in the UK from Overseas
Will buying a house in the UK allow me to obtain foreign residency?
No, buying a house in the UK as a foreigner will not automatically enable you to obtain permanent residency. To obtain residency, you need to be in the UK on a visa first, after which you earn your residency. Being a foreign investor won’t offer you permanent residence.
Can I buy a house in the UK if I don’t have UK citizenship?
Yes, there is no need for you to be a UK citizen when you are buying property in the UK from overseas. This allows many investors to buy property here, even if they don’t technically live on the land. You may get a mortgage as a non-resident purchasing in the UK, or you can buy the house through a joint mortgage. It does not matter if your partner is a British citizen or not.
Can foreigners move into the UK and buy a home?
There aren’t any legal restrictions saying that buying property in the UK from overseas is not possible for non-residents. Even as a foreigner, you should still be able to get a mortgage. However, unless you have a job in the UK and at least two years of UK residency, you may have tougher requirements to follow, along with a bigger deposit.
How much will I need for a down payment on a UK home?
In most cases, you need to pay a 5% deposit on your house, which is not always provided by the lender. However, if this is the first time you buy an investment property, then the average down payment can go as high as 15%. That being said, this will mostly depend on the home and mortgage that you choose. Ensure that you always have a solicitor guiding you when buying property in the UK from overseas.
