As an international investor, you may often wonder, can international investors buy property in the UK? After all, the UK property market is one of the most stable and transparent in the world, and remains an attractive place to invest and do business.
However, navigating the process of purchasing UK real estate may seem complicated, especially when you’re not a citizen or resident. Before you embark on finding your ideal UK investment property, it’s essential to understand the legal requirements and processes involved to avoid headaches and ensure a smooth transaction.
This guide offers proper knowledge and guidance, so you can feel confident investing in property in the UK as an overseas buyer.
Can International Investors Buy Property in the UK? (Breaking It Down)
The short answer is yes; international investors can buy property in the UK. However, there are a few essential factors to consider before purchasing an investment property in Britain as an overseas buyer, such as prosperous regions, types of properties, legal requirements and financing options.
There are limited restrictions on an international investor buying property in the UK; you have about the same legal rights as UK citizens when buying property. Still, as a non-UK resident, you’ll likely need help navigating mortgage options, and we’re here to assist you. As experts in UK property investment, API Global can help you secure a mortgage through our trusted partners, making your UK property investment dreams a reality.
Location is key. While international investors face no legal barriers to buying property in Britain, some regions are more suited to overseas buyers seeking promising rental yield and capital growth.
It’s best to focus your search on major cities and towns close to transportation hubs, education centres and employment opportunities. Up-and-coming areas with solid growth potential, like Birmingham, Manchester, etc., are ideal for maximising your return on investment. The API Global team has extensively researched locations that tick all the boxes, saving you the hassle.
Consider using a property investment expert when buying a house in the UK. For international investors, navigating the British property market and legal system can feel challenging and time-consuming. On the bright side, API Global is a UK property investment expert specialising in helping overseas buyers find, finance and purchase residential property in the UK We handle everything from start to finish, allowing you to invest confidently.
Types of Properties International Investors Can Buy
There are several types of properties you can consider as an investor from overseas buying property in the UK, and they include the following:
A. Residential Properties:
- Freehold houses: You own the property and land indefinitely. It’s the most common option for international investors.
- Leasehold flats: You own the flat for a fixed period, typically 99 or 125 years, up to 999 years. You pay an annual ground rent to the freeholder who owns the building.
- New build homes: Often come with incentives like help-to-buy schemes or rental guarantees. May have higher capital gains potential.
B. Specialist Properties:
- Student accommodation: Often comes fully furnished and benefits from steady demand.
- Care homes: Purpose-built homes for the elderly or disabled. Receive rent and funding from local authorities.
Note: While API Global doesn’t offer these two property investment options, they remain viable routes for getting into real estate investment.
As experts in UK property investment, API Global can guide you through your options, help evaluate the pros and cons, and determine which investment best matches your investment goals. The key is finding a property in an up-and-coming area with strong potential for capital growth and high rental demand. With a well-thought-out investment, international investors can earn competitive returns in one of the most stable property markets in the world.
4 Popular Locations for Overseas Property Investors
Several locations currently garner significant interest when buying a property in the UK. For a non-resident, these areas are ideal as they’re poised for strong capital growth and solid rental returns in the long term.
The following sections outline these promising UK regions.
Birmingham is England’s second-largest city and a central commercial hub. Its over 863,000 residents population makes it an ideal target for buy-to-let investments. Average property prices in Birmingham are well below the national average (£239,016 vs. £286,000), yet its economy is thriving with significant employers in sectors like banking, manufacturing, and technology. Check out our guide on why you should invest in Birmingham property for more insights into this region.
Liverpool is on the upswing, attracting young professionals and students to its historic port city vibe and cultural destinations. Property values in Liverpool have increased by over 40% in the last decade, signalling its status as an “up-and-coming” area for growth. New developments along Liverpool’s iconic waterfront allow investors to tap into the city’s popularity. This guide explains more about why you should invest in Liverpool property.
Manchester is a leading Northern city for business, education, and entertainment. Significant infrastructure improvements like the expansion of Manchester Airport and redevelopment of Manchester Piccadilly train station are driving further investment in the city. Areas like Ancoats, New Islington, and Salford Quays offer waterside living at more affordable price points for investors.
Learn more about this city and why you should invest in this guide.
Located in the East Midlands region of England, Nottingham provides an attractive combination of lower property prices and solid rental demand from its large student population. New developments around the redeveloped Nottingham train station are revitalising the south side of the city centre. Nottingham’s location in the centre of England also provides easy access to other UK cities, making it particularly appealing to students and professionals. Learn more about why you should invest in Nottingham properties in this guide.
As with any investment, there are risks regarding the market and local economy uncertainty in each location. However, these areas have demonstrated promising potential for growth and stability, appealing to astute investors seeking opportunities outside of London. By partnering with qualified property advisors, overseas buyers can gain valuable insight into the UK property market and locate the best opportunities for their investment goals.
2 Options for Financing Your UK Property Purchase
As an international investor, e.g., a US citizen, buying property in the UK, securing financing for your investment is crucial. While various options are available, the process can be challenging for those outside the UK. As experts in UK property investment, API Global can guide you through your financing options and help facilitate the mortgage application process.
Here are two top options for overseas investors buying UK property:
1. Bank Mortgages
The most common way to finance a UK property purchase is through a mortgage from a mainstream bank or lender. To qualify as an international buyer, you typically need a minimum deposit and prove you can afford the monthly repayments. The lender will evaluate your income and credit history to determine if you qualify and what interest rate they’ll offer.
As specialists in the UK property market, API Global has relationships with lenders accustomed to working with international buyers and can help you find a competitive mortgage.
2. Specialist Lenders
If you don’t qualify for a standard mortgage, specialist lenders that focus on international or expatriate buyers may be an option. However, they may require a larger down payment of the purchase price and charge higher interest rates to account for the perceived additional risk in lending to international investors.
While the terms may not be as favourable, specialist lenders provide a means for determined international buyers to finance their UK property purchases. API Global can help determine if a specialist lender suits your needs and compare various options.
To kickstart your UK property investment, API Global requires a reservation fee of £5,000 and a 20% deposit for our development opportunities. The remaining balance can then be financed through a mortgage from a mainstream bank or specialist lender. As experts in the UK property market, API Global is here to guide you through your financing options and help you purchase your investment property.
2 Legal Considerations for International Buyers
You must look into several legal aspects before buying a house in the UK as an international investor. Under UK law, international investors are permitted to buy residential property. However, there are regulations around taxation, financing, and ownership structures that you need to understand fully before proceeding with a purchase, as we’ll see below.
1. Tax Liabilities
International investors are subject to capital gains tax in the UK, currently at 18% or 28% of profits, when they sell the property. You’ll also pay stamp duty land tax when purchasing a property (more on this later). The amount depends on the property value and your citizenship status. Work with a tax specialist or investment advisor to determine your obligations.
2. Ownership Structures
The most common ways for international investors to own UK property are as follows:
- Freehold: You own the property outright with full rights. Most common for residential property.
- Leasehold: You own the right to use the property for a fixed period, like 99 or 125 years. It’s more common for apartments, and you pay an annual ground rent to the freeholder.
- Company Purchase: This involves buying through a UK limited company. It can provide certain tax benefits but is relatively more complex, requiring forming and managing a company.
- Trust Purchase: This entails using an irrevocable trust to purchase and hold the property. It provides certain legal protections but is relatively complex to set up and run.
As you can see, while the UK openly welcomes international investment in its property market, there are many legal and financial issues to consider seriously before purchasing. Working with professionals specialising in assisting international buyers will help ensure your transaction goes smoothly and your interests are protected under British law.
Tax Implications of Buying UK Property
When investing in UK property from overseas, you must understand the tax implications of your investment.
Outlined below are the several taxes you need to be aware of:
- Stamp duty land tax
- Capital gains tax
- Income tax
- Inheritance tax
1. Stamp Duty Land Tax
When you purchase a property in the UK, you’re required to pay Stamp Duty Land Tax (SDLT). This tax is calculated based on the purchase price of the property. The rates range from 5% to 12%, depending on the property value (more on this later). API Global will calculate and handle paying this tax on your behalf.
2. Capital Gains Tax
If you sell your UK property in the future at a profit, you may be subject to Capital Gains Tax (CGT) on the gain. The current CGT rate in the UK is 18% or 28% for residential property. However, as an overseas investor, you may qualify for Non-Resident Capital Gains Tax (NRCGT). Again, API Global will determine if you qualify for NRCGT and handle the reporting and payment of this tax.
3. Income Tax
Any net rental income you generate from your UK property investment may be subject to UK Income Tax. As long as your income exceeds £12,750, the rates range from 20% to 45%, depending on the income level. As your investment advisor, API Global will deduct any income tax due before paying you your rental profits. We handle all necessary income tax reporting to remain compliant with HM Revenue and Customs (HMRC) on your behalf.
4. Inheritance Tax
If you pass away while still owning UK property, your beneficiaries may need to pay Inheritance Tax (IHT) on the property’s value. The current IHT threshold in the UK is £325,000; mounts over this threshold are taxed at 40%.
Some certain exemptions and reliefs may apply to reduce or eliminate any IHT due. As experts in UK property investment, API Global will advise you on any opportunities to mitigate IHT and handle all reporting in the event of your passing.
While several taxes are involved with buying, owning and selling property in the UK, API Global aims to simplify the process for you as much as possible. Our dedicated tax team handles the reporting, filing, and payment of the appropriate taxes on your behalf. That way, you can have peace of mind that your investment remains fully compliant while you reap the rewards.
3 Tips for Choosing a Reputable Property Management Company
Choosing a reputable property management company is crucial when investing in UK property from overseas. As an international investor, you want to work with professionals who understand your needs and can guide you through what can be a complicated process.
Consider these three tips when selecting a UK property management company:
- Research thoroughly.
- Ask about their credentials and experience.
- Discuss fees upfront.
1. Research thoroughly.
Do your due diligence on any company before deciding to work with them. Check online reviews from other investors and see what services and areas they specialise in. Look for property companies that have experience helping international investors manage their UK property. They’ll be well-versed in legal requirements and able to anticipate any obstacles.
2. Ask about their credentials and experience.
Don’t hesitate to ask direct questions about the company’s credentials, experience, and track record with overseas investors. Reputable companies will be transparent and willing to provide client references upon request. Be wary of any company unwilling to disclose its history, qualifications, and team details.
3. Discuss fees upfront.
Reputable property management companies will be transparent about all fees involved with their services. Discuss both sales and letting fees and any additional charges like administration or legal fees. Ensure you understand what is and isn’t included before signing any contracts. Hidden fees are unacceptable and a sign the company may not be trustworthy.
For example, our letting and management company, Redstone, only charges 10% of the rent for their service.
What Are the Costs of Buying a Property in the UK?
When considering buying a house in the UK as an international investor, it’s vital to understand all the associated costs to determine if it aligns with your investment goals.
Here’s a summary of what you’ll spend money on when purchasing UK property:
- SDLT costs
- Legal fees
- Financing costs
- Ongoing costs
1. SDLT Costs
Stamp Duty Land Tax (SDLT) is a tax levied on purchasing property in the UK. Rates are tiered based on the purchase price of the property. As an international investor, you’ll typically pay the standard residential rates.
The current SDLT rates for residential property are:
- Up to £250,000: 0%
- £250,001 to £925,000: 5%
- £925,001 to £1.5 million: 10%
- Over £1.5 million: 12%
These rates apply regardless of whether you’re letting out the property or living in it. However, in addition to the 3% surcharge paid if you’re obtaining an additional residential property, non-residents are taxed an extra 2% surcharge if purchasing a residential property in Northern Ireland or England.
SDLT is payable on the day of completion in addition to the purchase price. Ensure you understand how much you’ll owe based on the property value to avoid unexpected costs.
2. Legal Fees
As in most countries, legal fees in the UK include solicitor and conveyancing fees. At API Global, we only charge a £5K reservation fee on all our development, and we handle both SDLT tax and other legal fees for you.
3. Financing Costs
If you require a mortgage to finance your property purchase, you’re required to pay various fees such as an application fee, valuation fee, and possibly broker fees. UK interest rates are typically variable or fixed for 2–5 years. As an international buyer, you may face higher interest rates and fees, so check out different banks and mortgage lenders to compare. At API Global, we require only a 20% deposit and can help you with a suitable mortgage without stress.
4. Ongoing Costs
Other ongoing costs to keep in mind include insurance, maintenance, utility bills, and council tax, which funds local government services. Council tax, in particular, can vary significantly based on the property value and location, ranging from around £1,000 to £3,500 per year or more. However, when you partner with API Global, you needn’t rack your head about how to cover each of these additional costs as we handle everything on your behalf — contact us now to get started.
Frequently Asked Questions
Can non-residents buy property in the UK?
Yes, non-residents can buy property in the UK. The UK has no specific restrictions on non-residents purchasing property, and they have the same legal rights as residents regarding property ownership.
Does buying a house in the UK give you residency?
No, buying a house in the UK doesn’t automatically grant residency to the buyer. Property ownership alone doesn’t confer residency or immigration status. The UK has immigration laws and requirements for individuals seeking residency, such as obtaining visas or permits through appropriate channels.
Owning a property in the UK may have specific benefits or considerations for residency applications, such as providing evidence of accommodation or meeting financial requirements. Still, it’s not a direct pathway to residency.
What documents do I need to buy a house in the UK?
When buying a house in the UK, you typically need the following documents:
- Proof of Identity: This can include a valid passport or national identity card.
- Proof of Address: You may need to provide utility bills, bank statements, or other documents that confirm your current address.
- Mortgage Agreement in Principle: If you require a mortgage to purchase the property, you’ll need a mortgage agreement from a lender.
- Proof of Funds: You must demonstrate sufficient funds to cover the purchase price and associated costs. This can include bank statements, investment statements, or a letter from your solicitor confirming the availability of funds.
So, can international investors buy property in the UK? Yes, they can.
As an overseas investor looking to purchase property in the UK, do your due diligence and fully understand the opportunities and obligations before proceeding. While the UK remains open and welcoming to international buyers and investors, work with reputable property investment experts and advisors to find a suitable investment in an area poised for solid rental yields and capital appreciation.
Buying investment property in Britain can be very rewarding if you have realistic expectations about costs, taxes, and responsibilities. Investing with an expert like API Global can save you several hours of stress and thousands of pounds. Moreover, our meticulous property vetting process means you can enjoy a lucrative yield on your investment far into the future. Contact us now to get started.