According to the latest data from ONS, as of mid-2021, 9% of the UK population were foreign nationals. Therefore, the UK is stated to be one of the most popular destinations where expats prefer to reside. In the meantime, they frequently ask themselves, “Can a foreigner buy property in the UK?”. The answer to this question is “Yes, foreign buyers can purchase property in the UK”. You can even buy property in the UK on a mortgage. However, the process might sound complicated, so to provide you with a clear picture of how property purchase in the UK is, we have gathered all the necessary information in this article.
Can I Buy a Property in the UK as a Foreigner?
Yes, as a foreigner, you can buy a property in the UK. For non-residents, there are no restrictions that prevent them from buying property. The real estate market in the UK is highly attractive to investors and pretty stable, offering you potential rental income benefits or high returns.
After conducting comprehensive market research, all you have to do is follow the legal requirements and provide the essential documentation, including proof of identity, proof of funds, and a UK bank account.
Do You Need a Visa to Buy Property in the UK?
For the property purchase in the UK, the visa requirements are all dependent on what you will do with your newly acquired property. As a foreign buyer, if your aim is not to live in the UK, you may not need a visa to enter the UK, depending on your nationality. In this scenario, if you are a citizen of Commonwealth nations such as Malta, Vanuatu, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia, you will not be required to get a visa. Your passport already gives you the right to stay in the UK for up to 6 months without a visa.
However, if you are from a visa-required country, you must apply for a short-term visa before the purchasing process. The most common one is to get a standard visitor visa, which is valid for a period of up to 6 months, by submitting the necessary documentation.
On the other hand, if you are planning to move to the UK, you will need to get a residency visa. It can be via work, study, joining a family, or other visa types. Therefore, you must check which one you are eligible for. Once you find which visa type you are interested in, you need to prepare the necessary documents and submit your application. The processing times can vary.
Does Buying a House in the UK Give You Residency?
You can buy a house in the UK. However, this does not guarantee you a residency. You must apply for a residence permit separately. Even if you purchase a home, you still need to meet the requirements of a valid visa or immigration route to live in the country legally.
The UK does not currently offer a “golden visa” or investment-based residency program tied to property purchases. Therefore, if you intend to live in the UK after buying a property, you must ensure your immigration status allows for it.
Can a Foreigner Buy Property in the UK on a Mortgage?
Foreigners can benefit from taking out a mortgage in the UK while purchasing a property. However, the mortgage process can be more complex compared to that of UK citizens. Lenders mostly apply strict eligibility criteria and ask for more detailed documentation due to the potential risks. They may even offer different terms and conditions.
You must verify your overseas income, undergo a comprehensive identity check, and meet higher deposit requirements of around 25% to 40%. Despite these, many non-UK citizens secure mortgages in the UK each year for property purchase.
Property Taxes for Foreign Buyers
While buying a property in the UK, you must be aware that you have to pay taxes related to your purchase. These tax considerations are stated below.
Stamp Duty Land Tax
While buying a house in the UK, you have to pay a stamp duty land tax, which is called the buildings transaction tax in Scotland, ranging from 2% to 12% for property purchases over £125,000. In addition to stamp duty land tax, you can be eligible for 2% non-resident landlord scheme, with which you can get a deduction from your UK tax liability.
Capital Gains Tax
After buying a property, you might want to sell your house. In this case, if you decide to sell your property in the UK, you have to pay capital gains tax, depending on how much benefit you earned from the sale of the property.
Income Tax
If your aim is not to live in the house you purchase and want to rent it out, you have to pay UK rental income tax. Although there are several ways to avoid rental income tax, you can expect to pay around 20% to 45% tax.
UK Property Market
The property in the UK has a lot to offer its foreign owners, thanks to its stable and secure environment built over the years. Although property prices can change from region to region, you can still find affordable prices around the expat-populated areas. You can even find cheaper property prices in London’s specific areas, including Erith, Thamesmead, Barking & Dagenham, Plumstead, Croydon, Deptford, and Sutton.
For property search, you can prefer local estate agents as well as online platforms.
Moreover, the common property types you will see in your UK property investment journey are stated below.
1. Detached Houses
It is a standalone property that doesn’t share any walls with neighboring homes. These are typically larger, offer more privacy, and often come with gardens or driveways. They are common in suburban and rural areas and tend to be more expensive due to the space and privacy they offer.
2. Semi-Detached Houses
A semi-detached house shares one wall with another property. They offer a balance between space and affordability, making them popular with families. Being mostly common in suburbs across the UK, they often include small gardens and driveways.
3. Terraced Houses
Terraced houses, also known as row houses, are part of a continuous row of similar homes sharing side walls. They are typically found in urban areas and are often more affordable, ranging from older Victorian styles to modern builds.
4. Flats
A flat, also called an apartment, is a self-contained unit within a larger building. They can range from studio apartments to luxury penthouses and are most common in cities. Ownership may include a leasehold agreement rather than freehold.
5. Mansions
It is a large, luxurious house, often set on extensive grounds. They are rare and expensive, typically located in wealthy areas or countryside estates. Besides, they offer high-end features and significant space.
6. Cottages
They are typically small, charming homes found in rural or semi-rural areas. They often have traditional designs, such as stone walls and thatched roofs. While older ones have a rustic appeal, modern ones may blend classic looks with updated interiors.
How Do I Choose the Right Property in the UK?
To choose the best property in the UK to purchase, you have to consider the costs, rental income potential, location, property type, and condition. Depending on your needs, you have to carefully consider each factor and decide on what you really want from a UK property.
The Difference between Leasehold and Freehold
The main difference between leasehold and freehold lies in the ownership of the property and the land it stands on. With a freehold, you own both the property and the land outright. Therefore, you can fully control it. There are typically no ground rent or service charges, and you are responsible for the maintenance of the entire property.
In contrast, a leasehold means you own the property for a set number of years, but not the land it sits on, which belongs to a freeholder. As a leaseholder, you may have to pay ground rent, service charges, and get permission for major alterations. These are harder to sell or remortgage as the lease gets shorter compared to freeholds for foreign investors.
How to Understand the Conditions of the Property?
Before purchasing a property in the UK, you have to make sure that the house is in good condition. So, how can you learn it? To assess the condition of a house in the UK, you must take a home survey, conducted by a professional who is accredited by the Royal Institution of Chartered Surveyors (RICS).
Steps to Buying UK Property for Foreign Nationals
Once you decide to buy a property in the UK, you can start your purchasing process by estimating the total cost of relocating and exploring various mortgage deals and loan options. At this stage, if you do not plan to live in the UK, you do not need to calculate the cost of relocation. Then, you can start your property search in the UK that fits your needs and preferences. Property prices tend to be higher in the popular expat locations. However, you can find the cheapest places to buy a property too, including Tyne and Wear, West Yorkshire’s Bradford, and Shildon.
If you find a suitable UK property purchase, you need to schedule viewings and submit an offer. In the meantime, you need to appoint a solicitor or conveyancer by paying the necessary legal fees to handle the legal aspects. Therefore, they can help progress the sale towards completion.
Once you have the property professionally surveyed to assess its condition and key features, you need to complete the necessary steps to secure and finalize your mortgage. Then, set up the appropriate insurance coverage, such as home and contents insurance. After that, you must review, sign, and officially exchange contracts with the seller. Consequently, if you aim to move to the UK, you need to organize the logistics of your move and carry out the final steps to settle into your new home.
Property Management for Foreign Investors
Buying a property might seem like the whole process is over, but what happens after the purchase if you do not plan to live in it? Well, property management comes into play this time. As a property owner, if you are one of the overseas investors, the process can be complicated and tough. However, you can get the assistance you need from property management companies. Around an 8% to 25% charge rate per month, they can help you maintain your property in good condition.
Frequently Asked Questions About Buying Property in the UK for Foreigners
Can you become a UK citizen by buying property?
No, you cannot become a UK citizen by purchasing a property in the UK. The legal framework does not allow you to achieve this. You can acquire UK citizenship through birth, descent, naturalisation, or registration.
How long can I stay in the UK if I own property?
Even if you own a property in the UK, it does not automatically give you the right to live or stay in the country. The length of time only depends on your visa type.
How much UK property is owned by foreigners?
The Centre for Public Data reveals that 181,701 titles belong to overseas investors, corresponding to 0.7% of registered titles in 2021.
How much foreign income is tax-free in the UK?
If you become a tax resident in the UK, you can benefit from a 100% exemption from UK taxation on foreign income for four years on condition that you are not a tax resident for ten consecutive years.
