The UK property market is a reliable, profitable investment opportunity for buyers round the world. House prices are rising at their fastest pace for two years and there is much more growth to come in the future.
As we enter a new property cycle, this is an ideal time for overseas buyers to enter the market and there are many outstanding opportunities available in fast growing markets.
If you are looking to invest, it is important to understand what legal considerations you need to be aware of so that you can do it legally and securely.
Our short guide is a great place to start and answers some frequently asked questions legal for overseas property investors. However, we recommend that you consult with an independent legal expert once you have finished reading to get personalised advice.
Do you need to live in the UK to invest in UK property?
No, you do not need to live in the UK to invest in property. In fact, you do not even need to visit the country or see the property in person to become an overseas investor.
UK property investments are a completely hands-off prospect if you want them to be. For example, all reservations and contracts can be completed electronically from wherever you are based.
To do so, you will need to supply your solicitor with the following information and documentation:
- Proof of address
- Certified ID
- Proof of funds
You can also arrange a mortgage remotely through a UK lender. You will need to provide the following documentation:
- Passport
- Proof of funds
- Proof of creditworthiness
- Anti-money laundering documentation
Read more about how buying property off-plan with a mortgage can save you money.
Once the property is completed, you can hire a lettings and management agent who will take care of everything on your behalf, including:
- Administration
- Marketing
- Viewings
- Tenant checks
- Inventory and inspections
- Maintenance and repairs
- And more
From your first enquiry, through the sale, construction and ongoing management of the property – you never have to visit the UK. It is simple and convenient to get all the benefits of being a landlord without any of the hassle.
Does investing in UK property get me residency in the UK?
No, purchasing a buy to let property in the UK does not get you UK residency or a UK passport. It is not a shortcut to gaining citizenship in the UK.
While there used to be investor visas available to individuals who had invested a certain amount of money in the UK, that scheme has now also been stopped.
What is the difference between leasehold and freehold?
Leasehold and freehold are the two types of property tenure in the UK. Every property you buy will be one or the other. The differences are:
- Leasehold – Means you don’t own the land (the ‘freehold’) under the property and instead have a limited time lease on it. It is usually hundreds of years long on new properties. You will pay a specified annual rent on your lease, known as “ground rent.” Your solicitor will specify the details and make sure you understand your obligations as a leaseholder.
- Freehold – If a property is freehold if means you own the land under the property with no fixed time limit. You will not have to pay ground rent to anyone.
New build city centre apartments – often the most profitable and desirable investment properties – will almost all be leasehold. The rate of ground rent payable each year will be specified as part of the information you receive about the property.
The government’s Leasehold and Freehold Reform Act 2024 is currently going through Parliament and will remove many of the downsides of leaseholds on new properties. For example, the Act will:
- Set all new leaseholds to a minimum of 990 years
- Reduce most ground rents to “peppercorn” rates (zero financial value) on payment of a premium.
It also follows on from the Leasehold Reform (Ground Rent) Act 2022 which:
- Put an end to ground rents on most new residential properties in England and Wales.
While it is still important to know the difference between leasehold and freehold when purchasing a property in the UK from overseas, the differences between the two are being eliminated and leasehold is being phased out.
Make sure to check with your solicitor if you are unsure about any details regarding leasehold and freehold
Investing as an individual vs investing as a limited company
When you buy UK property, you can make your purchase through a variety of legal structures. The three most common are:
- Buying as an individual– You are the sole owner of the property and have full control over its ownership and use. You will be required to pay income tax on rental income and capital gains when selling the property. As an overseas buyer, you will need to sign up to the Non-Resident Landlord Scheme either yourself or through your letting agent.
- Setting up a limited company– You could choose to set up a limited liability company through which to invest in property. Doing so will require additional administration; however it can work out more cost-effective as rates for corporation tax and dividend tax rates are lower than income tax.
In all cases, please make sure you seek independent financial and legal advice to ensure that you are taking the option that is best for your individual circumstances.
Want to learn more about investing in UK property from overseas? See our latest investment opportunities in the UK’s best property markets and get in touch with the team today.
“Alliance Investments Ltd’’ give notice that:
1. They are not authorised to make or give any representations or warranties in relation to the property either here or elsewhere, either on their own or otherwise. They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statement or representations of fact.
2. Any areas, measurements or distances are approximate. Figures provided for living costs (for example, service charges) are estimates only and may be subject to change. The test, images, and plans are for guidance only and are not necessarily comprehensive. It should not be assumed that the property has all necessary planning, building regulations or other consents and Alliance Investments Ltd have not tested any services, equipment or facilities. Purchasers must satisfy
themselves by inspection or otherwise.
3. These particulars were prepared from preliminary plans and specifications before the completion of the properties. These particulars, together with any images and/or figures that they contain, are intended only as a guide. Properties may have been changed during construction and final finishes could vary. Prospective purchasers should not rely on this information but must get their solicitor to check the plans, specification and property information provided during
the sales process. Any product names referenced are indicative of the quality and may be subject to change
The summary of this article provides general information only and does not constitute financial or investment advice. Property values and market conditions can fluctuate, and individual circumstances should be considered before making investment decisions. We recommend consulting a qualified financial advisor for tailored guidance. While at Alliance Investments we strive for accuracy, no responsibility is accepted for any errors or omissions.
