Some countries have rather complicated rules when it comes to foreigners purchasing property, but luckily, the UK is not one of them. With a slump in prices expected around Q2 and Q3 before picking up in Q4, 2019 is the perfect time for foreign investors to consider diversifying their existing property portfolio, or for those looking to relocate, to get their hands on their dream property at an optimum price point.
But what are the rules around foreign real estate purchases and how does one go about it? From finding the right property, to financing, and even residency programmes, here is our guide to buying property in London, as a foreigner.
First of all, when you purchase a property in London, you need to know that there are two different ways of owning them – leasehold and freehold. In London, freehold means that you own the land and the dwelling outright – this is the most common type of ownership, outside of London.
Leasehold, however, means that you own the property for a fixed amount of time that is specified in the leasehold agreement. Most apartments and flats are leasehold properties and over half of properties in London are bought and sold in this way.
You also need to put some serious consideration and research into which area you will invest in and what kind of property you are looking for, though of course this will be influenced on your reason for buying.
Whether you are buying to rent, looking for a part time base, or relocating your family from abroad, our experienced team of local experts can provide you with advice and guidance on choosing the perfect location in London for your new purchase.
Legal Procedures
Once you have identified the perfect property, you need to get yourself a good solicitor.
The solicitor will start the process of transferring the property into your name, starting with ordering a survey to check any structural issues, as well as researching any possible legal issues pertaining to the property and its purchase.
Once the property has been given the “all clear” by the solicitor, it is time to put down your deposit on the property. This is generally non-refundable and means that you are unable to back out of the process without significant costs. At this points, the contracts are exchanged between buyer and seller and any negotiations are considered and then made. After this has been completed to the satisfaction of both parties, including legal representatives, the payment is completed, and the deeds and keys are handed over.
D&A Group can take the reigns during this process and guide you through it as seamlessly and painlessly as possible. From trusted surveyors to specialist real estate solicitors, we are here to give a helping hand.
Mortgages and Financing
Purchasing property in the UK is much easier for foreigners if they are paying in cash. Whilst loans and financing options are available to some international buyers, this can be a complicated process therefore we recommend that having access to funds is necessary before embarking on the purchasing process.
Lending conditions tend to be very different for non-citizens and investors can expect to pay bigger deposits (up to 40%) and pay higher interest rates than British citizens. You may also be asked to prove that you have the legal right to reside in the country as well as providing in depth financial information from the last few years.
We work by getting to know our clients and by assessing not just their needs but their budgets as well. We then tailor the properties we source to your means, only proposing options that benefit both your purse and your purpose.
Other Considerations
The UK Government announced at the end of 2018 that it intends on imposing a higher rate of stamp duty on foreign nationals property purchases. Whilst nothing has been finalised yet and the decision is subject to a consultation period, it seems likely that those who do not pay tax in the UK will find themselves paying a higher rate of stamp duty.
Those looking to purchase property in the UK this year are advised to move quickly and to secure a sale before any possible tax is introduced in the near future.
There are also high taxes applicable on properties that are worth more than GBP 2 million, but one way to manage this situation is to purchase the property via a foundation or an offshore company. High value properties are normally purchased by such vehicles, rather than being purchased by an individual and being transferred to another legal entity at a later date.
Residence Programmes
Those looking to invest buy property and reside in London are able to avail themselves of a number of residence by investment programmes that offer residency in the UK based on contributions to business and the economy. Whilst investing in property will not help you get residency, if you intend on living in your property more than 180 days of the year, you may need to consider one of these programmes.
After the sale is complete, D&A Group offer a tailor made property management solution to suit your individual needs. If you are renting out the property, we can oversee the whole process, or if you are planning to be out of the country for a long period of time, we can keep an eye on your assets whilst you are gone. Even Airbnb and short-term let properties don’t phase us and we are on hand 365 days a year to offer our support and expert assistance.
