UK property is a reliable, lucrative investment for buyers from around the world. It has plenty to offer investors, and a long list of compelling reasons that make it a better investment option than many alternatives like stocks and shares.
But how does it work?
If you live overseas and want to buy UK property to make the most of the new property growth cycle, read our step-by-step guide and discover everything you need to know.
Finding the right property
The first step is working out where you want to invest and finding an appropriate property. Location is all important for several reasons. You want to find a place with:
- A growing population
- A growing economy
- A shortage of available housing
- Large-scale regeneration projects
- A vibrant culture
- Great connectivity to the rest of the UK and the world
- Strong universities
If you can find a place with all of those, you are giving yourself the strongest possible chance to secure high and growing rents, with a large pool of potential renters.
Manchester is a great example of this. The city’s population is growing fast and the construction rate for new properties can’t keep up. It has all the connectivity of a big city, approximately 100,000 students and major public and private investment into the city.
As a result, its property market is growing fast and Manchester is the ideal place to invest as an overseas buyer.
Buildings within a short walk of the desirable city centre like Uptown are perfect for owner occupiers – and investors. Learn more about Uptown and contact one of our investment experts today.
Paying the deposit and understanding the sales process
Once you have found the perfect property and decided to buy a UK apartment, you will need to pay your deposit and arrange your finances.
Reservation fee £5,000 – this secures your plot
Following this, you will undertake the exchange of contracts within 28 days of reservation. This involves appointing a solicitor to confirm that the purchase is correct and that you can proceed safely.
The stages of exchange are as follows:
- The selling agent’s solicitors will send a contract to your solicitor
- Your solicitor will raise any queries with the selling agent
- When you are satisfied, you will sign the contract and pay any monies due on exchange
- Once you exchange, the purchase becomes legally binding
As an overseas buyer you will need to provide your solicitor with some information at this stage, including:
- Proof of address
- Certified ID
- Proof of funds
From there, each scheme will have a slightly different payment plan. For example, sometimes you will have to pay further sums during the course of the build if the property is bought off-plan.
Always make sure to speak to an independent financial advisor before entering into a contract. If you need this service, please contact the Alliance Investment team who will be able to recommend an expert.
Can overseas buyers get a mortgage in the UK?
Finally, the balance is due on completion of the property. Unless you are paying cash, that means getting a mortgage. UK lenders are more than happy to arrange a mortgage for overseas buyers. There are certain checks that you will have to go through and documentation you will have to provide, including:
- Proof of identity
- Proof of funds
- Proof of creditworthiness
- Anti-money laundering documentation
However, it is a simple process and our After Sales team can guide you through it.
If you are buying a property off-plan, using a mortgage can actually save you money thanks to falling interest rates and the likelihood that they will keep decreasing over the construction period.
With all mortgages and financial transactions, we recommend that you also consult and independent financial advisor and an independent mortgage advisor to ensure you are getting the appropriate advice for your unique situation.
What tax do overseas investors have to pay?
All overseas investors need to be aware of the taxes that comes with their purchase. All taxes are subject to change depending on government policy, but these are the main ones to be aware of as an overseas investor in the UK:
Income tax for overseas property investors
This is a compulsory tax paid on your monthly rental income and the rate changes depending on how much income you are receiving from rent:
- Up to £12,570 – 0%
- £12,751-£50,270 – 20%
- £50,271-£125,140 – 40%
- £125,140+ - 45%
You will also need to enrol on the Non-resident Landlord Scheme if you are residing outside the UK.
Please also be aware that not every non UK resident individual is eligible to claim the UK personal allowance of £12,570. Only residents of certain countries who have Double Taxation Agreements with the UK are eligible to claim the personal allowance, and therefore pay 0% tax on the first £12,570 of income.
Please speak to an independent tax advisor to get the right information for your specific circumstances as everyone’s tax liability will be unique.
Alliance Investments can recommend a trusted advisor who can offer a free, no obligations consultation. Please get in touch with the team if you need this service.
Capital gains tax for overseas property investors
This is another compulsory tax paid on the profits you make from the sale of a property. In other words, when you sell your investment, if it has increased in value you will have to pay tax on that increase.
Full guidelines to help you understand whether you property qualifies, and how much you will need to pay, can be found on the government website.
Stamp Duty Land Tax (SDLT) for overseas property investors
Stamp Duty is a tax payable on all properties in the UK worth more than £250,000. The amount of tax depends on the exact value of the property and increases on a sliding scale.
While first-time buyers get relief on Stamp Duty, non-resident buyers are not eligible for this as they will not be occupying the property. That means you must pay SDLT even if you have never bought a property in the UK before.
Following the recent Budget, the rates of Stamp Duty are as follows:
The higher rates from 31st October 2024 to 31st March 2025:
- Up to £250,000 – 5%
- The next £675,000 (the portion from £250,001 to £925,000) – 10%
- The next £575,000 (the portion from £925,001 to £1.5 million) – 15%
- The remaining amount (the portion above £1.5 million) – 17%
The higher rates from 1st April 2025 onwards:
- Up to £125,000 – 5%
- The next £125,000 (the portion from £125,001 to £250,000) – 7%
- The next £675,000 (the portion from £250,001 to £925,000) – 10%
- The next £575,000 (the portion from £925,001 to £1.5 million) – 15%
- The remaining amount (the portion above £1.5 million) – 17%
In addition, overseas investors have to pay a small SDLT surcharge on top of the normal rates for domestic investors.
We recommend that you consult with an independent financial advisor if you are unsure at any point or require additional advice regarding taxation.
Buying through a limited company
It may be more tax efficient to purchase UK property through a limited company, though this will depend on your personal circumstances.
If this is something that interests you, we recommend you consult an independent tax advisor and an independent financial advisor for more information.
Property management
Finally, once you have bought your property and it is completed, you need to think about the ongoing management. As an overseas investor it will be complicated to stay on top of all the duties of a landlord, such as:
- Marketing the property
- Carrying out viewings
- Completing paperwork with your potential tenant
- Dealing with maintenance issues, often at short notice
- Carrying out inspections
- Understanding the local rental market for rent reviews
And much more. The easiest and most effective way to make sure that your property is tenanted, maintained and kept secure is to employ a lettings and management agent. Get in touch with a member of our expert team today to find out how we can help.
For a small percentage of the monthly rent they will take care of everything and make sure that you can enjoy all the benefits of being a landlord with none of the hassle.
Many developments will have an in-house management team and lettings agent that you can use. However, if that is not the case our After Sales team can recommend you a reliable agent during the sales process.
Each investment from overseas will be slightly different, but these are the most important things to understand as an overseas property investor buying in the UK.
As you make your way through the buying process all of these points are likely to come up and understanding these will make the process seem much less daunting. Fortunately our aftersales team are on hand to guide you through the process every step of the way
If you need more information or want to discuss the UK market further before investing, contact our expert team who will be able to walk you through all aspects of the UK investment process.
“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.
