Non-residents buying property in the UK
The United Kingdom is a beautiful country full of diversity and amazing career opportunities. So, it is really no surprise that many people want to come, live there and buy themselves a home. The great news is that there are many non-residents buying a property in the UK, even if they do not live there. Planning to move to another country is difficult enough as it is. Add property buying to that, and you will get quite a challenge. But remember, with the right information and professional help, it is perfectly manageable.
Cash beats credit
Those who are buying property in the UK as non-residents should know that this process is much easier if you are a cash buyer. This way you won’t need to apply for a mortgage or borrow money. Keep in mind that applying for a mortgage as a foreigner is a bit difficult. It is important that you have a full understanding of the UK property market, that you have access to funds and a reliable property manager to consult.
You should also have in mind that, while the pound is currently relatively cheap, property prices in the UK are still comparatively high, depending on the location. But if you can afford to buy a property now, yields from rental income can be high, while property prices are expected to rise in the future.
Plan your budget wisely
Do research and inform yourself properly about home prices in the area you are interested in. Plan how much you can afford and account for taxes, legal and conveyancing fees. Additionally, if you apply for a mortgage, you will also need a deposit of at least 10% of the property’s value.
Although the UK is full of beautiful places, most people dream of London
In case you are buying a property with the intention to rent it later, you should know that a withholding tax of 20% will be deducted from your gross annual rental income from that property. However, you can avoid paying this additional tax, but you need to register with HMRC under the non-UK resident landlord scheme. Once registered, you will be able to receive the gross rental income but will have to submit a tax return each year and pay income tax at 20% on the net rental profit. Also, you will need to pay income tax under this same scheme.
Capital gains tax
According to ATED rules (the annual tax on enveloped dwellings), non-residents buying property in the UK have become liable to capital gains tax. Originally, this was applicable only for residential properties valued over £2 million, but unfortunately, this limit has been reduced. Now, it applies to properties valued in excess of £500,000.
Stamp duty land tax
The recent increase in SDLT is affecting all property purchases. However, for non-residents buying property in the UK, costing in excess of £500,000, there is a potential tax rate of 15%. If you are moving, buying property for your business or planning some development there, exemptions are available.
Explore the areas
In order to plan your budget, you will need to research the areas to ensure that property prices there are affordable. It will be very tricky for non-resident buyers to manage significant research, especially if they are not familiar with particular areas in the UK. Hence, overseas buyers may want to seek advice from professionals and search websites with private properties for sale.
If you love nature, search the properties in Yorkshire
Choose the place for you
Although this country has many beautiful places, most people dreaming about the UK want to live in its capital. London is a major city and, like all other big cities, has good and bad sides. Non-residents buying property in the UK, particularly the wealthy ones, often choose the area known as Prime Central London, namely Mayfair, Kensington, Westminster and Chelsea. And even in these beautiful neighbourhoods, there are some streets that are just better than others. Searching for property is time-consuming, but you need to be very studious and devoted to find the right property and avoid common traps for real estate investing.
You need to read all the local property websites, and don’t miss a single review. Because every piece of information you get is valuable. If you have friends or contacts that have some knowledge of the London property market, ask them to point you in the right direction.
Nobody really knows if Brexit will affect non-resident buyers of UK property or house prices in general. But, for now, the situation is steady, and you should take advantage of that to buy a property before a possible price rise. And if it rises after you have already bought it, that is great news for you, right?
Take a walk by the Buckingham Palace, London
Home at last
Once your offer has been accepted, you will need to consult an attorney who will begin the process of transferring the property into your name. If you have taken out a mortgage on the property, the lender will typically ask for a valuation survey. Your attorney will let you know once all the relevant searches and investigations have been completed. And once you get a firm offer from your mortgage lender, you are ready to exchange contracts.
Are you going to be one of the non-residents buying a property in the UK?
As you can see, buying a property in the UK is a complex process. But remember, information is power. Hence, with all the right information and professional legal help you can rely on, it is perfectly manageable. Finally, life is full of challenges and without difficulties, there is no success. We are all afraid of the unknown, but the solution is not avoiding it. On the contrary, by turning the unknown into known, you will eliminate the fear. Bold decisions always end up being the best ones we have ever made. So, don’t hesitate, the UK is waiting for you!