UK Property Investments

Overseas property investments. ERE Property Investment Experts

A complete guide for overseas investors buying in the UK

The UK property market has historically been attractive to overseas investors due to its stability, high returns, and continued growth. As a non-resident, this guide will tell what you need to know about investing in the UK. The UK property market varies in terms of prices, locations and property types, making it essential for investors to do their research before choosing a property.

You can purchase a property in your name (or with a partner), or you can purchase through a limited UK company. Both come with advantages and disadvantages, and we recommend speaking to an independent financial advisor before deciding which option is best for you.

Why should I invest in UK Property?

Demand-supply imbalance

There is high demand and an under supply of rental property in the UK. This imbalance is expected to continue for the foreseeable future, putting upward pressure on rental prices and minimising void periods. According to Zoopla, the average UK rent is £1,223pcm as of April 2024 – up 7.2% compared to April 2023.

Secure investment

Despite the occasional dip, the UK property market is known for its stability with capital values and rental prices on a continuous upward trend since records began.

Varied Involvement

Whilst some landlords manage their own properties, as an overseas investor, you will probably want to hire a property management company to manage it for you.

Growing population

According to the Office for National Statistics, the population for the UK is now more than 67 million, the highest it has ever been and predicted to reach an estimated 73.7 million by 2036. This will inevitably exacerbate the demand-supply imbalance.

Mature economy

The UK is currently the 6th largest global economy and second largest economy in Europe.

Foreign Direct Investment (FDI)

According to EY, the UK ranks 2nd in Europe for FDI, increasing by 6% last year, compared to a 4% decrease across the rest of Europe.

World class universities

According to the House of Commons Library, the UK has over 160 universities and more than 2.8 million students, including the second highest number of overseas students in the world, after the U.S. In fact, the number 1 university in the Times Higher Education World University rankings 2024 is the University of Oxford.

Willow Court development property investments. ERE Property Investment Experts

Liverpool development property investments. ERE Property Investment Experts

What are the costs of purchasing?

When purchasing any property in the UK, you will need to consider all associated costs as this will affect your return on investment and affordability. Below are the typical costs you will need to consider.

Stamp Duty Land Tax (SDLT) – SDLT is payable upon the completion of all UK property purchases. The rates vary depending on whether you are an owner occupier, investor or non-resident, and increase incrementally with the property price.

Up to £250,000 – 0%
£250,001 to £925,000 – 5%
£925,001 to £1.5million – 10%
Anything above £1.5million – 12%

In addition to these rates, if you are buying an additional property to the one you are living in (even if your main residence is not in the UK) or purchasing through a limited company, you will have to pay an additional 3% surcharge. If you are a non-resident, you will be taxed a further 2% surcharge when purchasing a property in England or Northern Ireland.

What legal fees are involved?

When buying a property in the UK, you will need a solicitor to carry out the conveyancing process (the legal process for transferring the ownership of land or property from one person to another). Each solicitor’s fees vary as well as their level of expertise, so we recommend using our preferred solicitors when purchasing with E.R.E Property to ensure you get value for money. Fees will also include disbursements not limited to:

Search fees
ID checks/ verification
Land registry fees
SDLT processing fees
Mortgage processing fees
Leasehold fees
Transaction fees

If you are purchasing a property through a limited company, there will be additional fees as part of the disbursements for company checks and additional admin costs.

What about mortgage costs?

The good news is that you don’t have to be a UK resident to get a mortgage in the UK, however, the interest rates will likely be higher and you may need to put down a larger deposit.

Income tax on your rental income – When buying in your own name (rather than through a limited company) you will need to pay income tax on the rental income from your UK property.

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What corporation tax is paid on company profits?

If you are buying through a limited company, you will need to pay corporation tax on your net profit. Finance costs are an allowable expense for limited companies, which is one of the main reasons investors choose to buy in a company name. We recommend getting advice from an independent financial advisor to help you choose which option is best for your personal circumstances.

Legalities to consider

To purchase a property in the UK, your solicitor will require notarised copies of your ID and proof of address. The criteria regarding who can certify documents may differ from one country to another, however, typical professions considered acceptable are local notaries, lawyers, or bank clerks. You will also need to show evidence of your source of funds, which is often at least 6 months of bank statements, an explanation of how the funds have accumulated (savings, sale of a property, inheritance, etc) and other supporting documents.

Portside Place Liverpool Property Investment

Conveyancing

Unlike some countries with residency by investment schemes, buying property in the UK does not automatically grant you residency or citizenship. If you decide to move to the UK, you will be required to apply for the appropriate visas and residence permits. Read our guide on the conveyancing process via the link below (opens in new tab).

The Conveyancing Process

How to purchase property off-plan

Buying an off-plan property in the UK can often simplify the buying process and has several benefits such as:

Lower initial costs and staggered payment plans

Often you will be required to pay a fixed reservation fee to hold the unit, followed by a percentage of the purchase price as a deposit. However, some developers offer staggered payments. For example, £5000 reservation fee, 15% on exchange, 15% 6 months after exchange, or 5% every 6 months until completion.

Potential for capital growth

Often developers offer discounted rates for off-plan purchases in order to meet a certain level of early sales required for lenders to allow them to drawdown development finance to build the project. In addition, the build time could be 2-5 years, enabling you to further benefit from any capital appreciation over this period.

Compliance with the latest standards

New-build properties in the UK are constructed in compliance with the latest building standards, which make them energy efficient. They also come with a building warranty to cover any structural defects during the first 2-10 years of ownership.

Long stop dates

The long stop date refers to the date that the developer is required to complete the project and hand over the keys to the investor. This date will be set when you exchange contracts and is legally binding. If a developer fails to fulfil their obligations, the buyer has the right to rescind the contract and receive their deposit back. This offers peace of mind as it enables you as an investor to release your funds if the development is taking too long and hold the developer accountable to meet promised deadlines.

Adam Yaqub – UK and Europe Property Investment Consultant | ERE Property

Are you ready to explore UK Property Investments?

If you are interested in investing in UK property, speak to one of our investment consultants today.

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Disclaimer: E.R.E Property are not financial or tax advisors and the content on this page should not be taken as advice. Before making decisions about your UK property investments please speak to appropriate professionals.

All answers to the questions stated are accurate at the time of writing, and no information should be taken as fact. Always seek your own advice from qualified professionals before making any investment decisions.

Investing in UK property as a non resident