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Can Foreigners Buy Property in UK Areas? - Your Questions Answered

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    Buying UK Property as a Foreign Investor

    Here at RWinvest, we have helped thousands of overseas investors buy property in the UK.

    And every year, we get asked similar questions about whether foreigners can buy property in the UK, the latest tax rules, and if you can buy property without a VISA.

    This blog post is here to answer all these questions and more, so you can find out exactly how you can invest in UK property as an overseas buyer.

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      Are Foreigners Allowed to Buy Property in the UK?

      Foreigners can legally buy property in the UK, regardless of if they are a resident or not.

      Foreigners buying property in UK locations can even secure a UK mortgage but may encounter more requirements, higher interest rates, and larger deposits if they have less than two years of residency in the UK.

      Can Foreigners Buy Property in the UK Without a Visa?

      Yes, non-UK residents can buy property in the UK without a visa. However, if you want to invest £2 million or more in the UK, you may apply for a Tier 1 (Investor) visa.

      To be eligible for a Tier 1 (Investor) visa, you must:

      • Be 18 or over.
      • Be able to prove the money belongs to you or your partner.
      • Have opened an account at a UK-regulated bank.

      The visa allows you to stay for three years and four months, which can be extended and allows your ‘dependents’ to come on the same visa.

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      Can a Foreigner Buy a Property in the UK on Mortgage?

      Yes, foreigners can buy a property in the UK on a mortgage, but you may encounter some issues.

      This is because many UK lenders will not be willing to lend to a non-UK resident, which means you will have fewer options available or encounter higher interest fees or larger deposits.

      To avoid this, you can use the services of specialist lenders or international banks to get help securing a UK mortgage for residential property. Keep in mind, though, that these organisations will consider whether to lend based on various factors, including age, income, and credit score.

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        What Documents Do I Need to Buy a House in the UK?

        When buying property, checks will be made to comply with money laundering and fraud laws. These checks will typically be conducted by solicitors, banks, and property agents.

        As such, you’ll need some documentation to prove you are who you say you are.

        The documentation you need to buy a house in UK countries includes:

        • Proof of identity – this includes a driving license or passport.
        • Proof of address – typically via a bank statement, utility bill, or driving license.
        • Source of funding – to show where your money comes from, you’ll need to show a payslip or tax return.

        You could be asked for these documents at any stage, so be sure to have them ready when called upon to make the process as smooth as possible.

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        What Tax Implications Are There for a Foreigner Buying Property in the UK?

        So what foreign property taxes should you know about? By purchasing property in the UK or renting it out, you’ll be subjected to various taxes. This can include Income Tax, Capital Gains Tax, Stamp Duty Land Tax, and Inheritance Tax.

        Income Tax for Foreign Buyers

        In the UK, the money you earn from rental income is taxable.

        If you’re a non-UK resident, you’ll only be taxed on your UK income, not the income you earn elsewhere. Even if you’re classed as a UK resident for tax purposes, if you spend six months or more abroad, you’ll be classed as a “non-resident landlord.”

        You can choose to pay tax on your income in two ways.

        1. You can earn your rental income in full and then pay tax through a self-assessment tax return.
        2. You can allow your lettings agent or tenant to deduct the tax automatically.

        To take the first option and fill out a self-assessment tax return, you’ll need to apply. You can do so by filling out form NRL1i and sending it to HMRC.

        If successful in your application, HMRC will then inform your tenant or letting agent not to deduct tax from your rent.

        To get your rent automatically tax deducted, your lettings agent or tenant will deduct tax from the rent at a basic rate (20%) after allowing for any expenses. They will then give you a certificate at the end of the tax year to show how much tax has been deducted.

        Stamp Duty Land Tax for Foreign Buyers

        When buying property in England and Northern Ireland, you are subject to stamp duty land tax.

        This is a tax paid on the purchase price of a property.

        A similar system is in place in Scotland and Wales, but the tax has a different name and is paid at a different rate than SDLT. You can learn more by checking out our full guide to Stamp Duty in 2023.

        If you’re buying a second property that is not your home, you will be subjected to an additional 3% charge on top of standard stamp duty rates.

        However, as a foreign buyer, you’ll also pay an additional 2% surcharge.

        This applies to all non-resident transactions, even if you intend to live in the property, regardless of whether you already own a residential property.

        You must pay the surcharge when you buy a residential property for £40,000 or higher.

        See below for the latest stamp duty land tax rates for foreign buyers in 2023:

        SDLT Example for Overseas Landlords

        Let’s say you’re a foreign buyer purchasing a UK buy-to-let property in 2023 for £350,000.

        You will pay a 2% charge on the first £250,000 and a 7% charge on the remaining £100,000.

        This will leave you with a stamp duty tax bill of £12,000.

        You’ll then have 14 days to file a stamp duty return and pay the stamp duty fee.

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          Capital Gains Tax for Foreign Buyers

          In the UK, those who make a profit from selling property are subject to capital gains tax. This tax is only applied to the profit earned after selling your asset.

          The amount of tax you pay will depend on the level of profit earned, among other factors that will be addressed later.

          Non-UK residents are subject to non-resident capital gains tax, which you’ll pay if you’re a:

          • Non-UK resident.
          • Representative of a non-resident who has died.
          • Non-resident who is a partner in a partnership.
          • Non-resident trustee.

          From 2019, this tax is payable for both the direct and indirect disposal of UK property or land.

          You have 60 days from the date of conveyance in order to pay CGT.

          The amount of tax paid will also depend on whether you’re an individual, company, or trust and what type of property you’re selling.

          • A non-resident individual will pay 10 or 20% tax if it is a non-residential property. For residential property, you will pay 18% or 28% CGT.
          • A non-resident company will pay a flat corporation tax of 17%.
          • A non-residential trust will pay a 20% tax on non-residential property. If it’s a residential property, a trust will pay 28% CGT.

          UK Inheritance Tax for Foreign Buyers

          Another UK tax you need to consider is the potential UK inheritance tax on UK residential properties.

          The set rate for inheritance tax in the UK is 40%, with the tax only applied to properties worth over £325,000. Even in this case, the tax will only be applied to the money that falls above this threshold.

          For example, if the inherited property is £500,000, IHT only applies to £175,000 of the total cash amount.

          There are ways you can mitigate and minimise inheritance tax, so be sure to speak to an expert financial advisor for more details.

          Foreign Investment in the UK

          Foreigners from every country are welcome to buy property in the UK.

          You can still buy property in the UK as an EU citizen. The same rules apply to all non-UK residents.

          Yes, whether you’re an American, EU resident, or another non-UK resident, you can buy a house in England. However, buying property in England is easier as a cash buyer, as you could struggle to secure a UK mortgage.

          Yes, foreigners can buy property in Scotland as there are no restrictions in place to prevent foreign investment.

          Yes, foreigners can buy both land and property in Scotland. There are currently no restrictions preventing foreign investment in Scotland.

          No, buying a property in the UK does not grant residency. While some countries provide residency and citizenship when buying property, the UK does not.

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          Why Should I Invest in UK Property?

          There are many reasons the UK is seen as an ideal place to buy a property compared to other nations.

          1. Considerable Capital Growth With Growing House Prices

          Investors stand to earn significant capital growth in the UK thanks to considerable property price growth in 2023.

          Back in 2021, the UK experienced a record-breaking year that saw house prices rise to £254,822 on average in December 2021 according to Nationwide – the highest ever amount.

          Prices grew so fast in 2021, in fact, that Nationwide recorded the highest growth in 15 years.

          Factoring in further growth predictions and it’s clear that investors can expect huge returns on their investments in the coming years.

          Savills has also predicted that UK prices could climb as high as 11.7% in the North West and Yorkshire and The Humber by 2027.

          2. Rising Rent and Rental Yields

          Alongside a thriving property market, the UK rental market is also seeing incredible growth.

          According to the HomeLet Rental Index, the average UK rent reached £1,199 in April 2023 – up 9.9% compared to last year.

          This has led to some astounding rental yields in the UK, with the likes of Liverpool and Manchester known to generate returns of over 7% in certain postcodes.

          These yields are far higher than other countries in the world, with popular spots like Shanghai generating an average rental yield of just 2 – 4%.

          With so many opportunities to make high rental returns in cities like Liverpool, it comes as no surprise that buying property in the UK as a non-resident is an increasingly attractive venture.

          In a report by Savills, it was found that in the wake of the Covid-19 pandemic, more people are reconsidering what they want from a home and are choosing to rent before committing to a property purchase.

          With further tenant demand and already high rental yield figures, the future of the UK rental market certainly looks bright for both local and foreign investment in the UK property market, and focusing on high-yielding areas like Liverpool is one of the best property investment tips to consider.

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            Should You Invest in Student Property or UK Residential Property?

            Likely the biggest decision you will have to make when choosing to make a buy-to-let investment is deciding what type of property you should pick.

            There are currently several types of buy-to-let properties you can buy, including commercial property, holiday homes, and hotel room investments.

            However, for our money, the best way to invest in UK property at the moment is through UK residential property and student property, thanks to huge capital growth potential and rental returns.

            But which option should you take?

            Well, it really depends on your goals and available finances.

            Residential property offers far higher capital growth potential but is available at a premium for overseas investors, with the average UK residential property valued at over £250k.

            Student property, on the other hand, can be found for less than £100k and will generate far higher rental returns because of this. This will especially be of note if you’re buying a student property on behalf of a family member/ child.

            You can learn more about the best property investment strategies in 2023 by checking out our guide. You can also read about UK student property investment on our blog.

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              How Much Does It Cost to Buy UK Property?

              If you’re a foreign investor and don’t have the cash available to buy a UK property outright, you may be wondering how much it costs to buy a UK property when factoring in mortgage deposits.

              A buy to let mortgage deposit is usually around 25%, with a buyer also needing to cover stamp duty land tax, legal fees, and land registry fees.

              This means for a UK property worth £100,000 – likely the lowest you’ll find – overseas buyers can expect to pay an estimated upfront cost of around £31,200. This is without factoring in other potential expenses like a property survey and higher deposits charged by mortgage lenders if you’re an overseas buyer.

              You’ll also need to consider the running costs of owning and managing a rental property as a property investor.

              This can include:

              • Mortgage payments
              • Ground rent
              • Property management fees
              • Maintenance costs
              • Landlord insurance
              • Income tax

              Learn more by speaking to an advisor or reading our full guide on how much money you need to invest in UK property.

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              What Is the Best Place to Invest in UK Property?

              There are currently a few standout locations you should consider when making a UK property investment.

              Likely the top locations for both residential and student property is in North West locations like Liverpool and Manchester.

              Both cities have affordable property prices over £60k below the UK average, with each city known to generate gross returns upwards of 8%

              They also have huge young populations, with a combined 170,000 students – a key factor behind a successful rental market.

              Factoring in that the North West has the joint-highest growth predictions in the UK, and it’s clear that the region can generate massive returns in 2023.

              To learn more about each city, check out our guides to Liverpool property investment and Manchester property investment. You can also read our blog post on the top 10 best places to invest in UK property in 2023 and our guide on how to find a good rental yield.

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                How to Buy Property in the UK Property Market? Six Tips for Overseas Buyers

                Buying property in the UK as a non-resident can seem daunting. 

                To help you get started with your overseas investment in the UK, here are six helpful steps you should keep in mind on how to buy property in the UK as a foreign investor. 

                The first obvious step is to find a property. You can do this in a number of ways.

                1. You can use a property portal like Rightmove or Zoopla to browse opportunities.
                2. You can contact a local estate agent in your chosen area.
                3. You can chat with a property investment company to explore the latest options.

                While we may be biased, we think choosing a property investment company like RWinvest may be the best choice for an overseas investor.

                This is because property investment companies allow a more personal touch and allow you to get bespoke expert advice by chatting to an industry veteran within minutes.

                When picking a property investment company or choosing a property, due diligence is vital to a successful investment.

                This simply means researching your options beforehand and making sure the company you are buying a property with is reliable.

                Make sure you check out online reviews to see if a company can back up its claims.

                If you don’t have the cash available to buy a property outright, you may need to find a buy-to-let mortgage.

                This is something you could struggle with, as most UK lenders will be hesitant to provide such a mortgage to an overseas buyer – they may even charge you a higher deposit.

                For this reason, it’s best to speak to a mortgage broker to see what options you have available.

                We’ve already touched on this earlier on this page, but there are plenty of UK taxes you need to familiarise yourself with when investing in the UK property market.

                Be sure to speak to a tax advisor to understand the key taxes you need to be aware of and ways to minimise the costs.

                Once you’ve found a property you’re interested in and you feel comfortable with the UK investment process, you’ll need to reserve a unit within your development of choice.

                This is one of the biggest benefits of purchasing a new build or off-plan property, as you’ll often be able to cherry-pick the very best units with the most impressive views and features.

                When you’ve selected a unit you wish to purchase, you’ll need to pay a reservation fee/deposit to secure the investment and complete a reservation form.

                It’s important to pay your reservation fee and send over your reservation form as quickly as possible, as the property can’t be taken off the market until this has been completed.

                When buying property in the UK from overseas, the next step after finding and reserving a suitable property is to get a solicitor.

                Having a solicitor is a crucial part of the buying process, as your solicitor will be responsible for assisting you with the legal side of the investment.

                A solicitor will help with the due diligence process by researching any legal issues concerning the property and ordering a survey if needed, to make sure everything is structurally sound within the property.

                Usually, when purchasing a property through a property company like RWinvest, you will be appointed a recommended solicitor who has experience dealing with clients making similar purchases.

                Once you’ve purchased the property and you’re ready to start letting it out to tenants, another thing that you may wish to consider is hiring a property management company.

                Property management companies, also known as rental management companies, are used by investors to manage the day-to-day duties involved with owning a rental property.

                This includes typical landlord duties, such as finding tenants, responding to tenants’ queries, and dealing with any issues within the property.

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                  Who Is RWinvest?

                  RWinvest is an award-winning property investment company with 18 years of experience in residential and student property.

                  We have vast experience delivering world-class property developments to overseas buyers, with properties available in major UK locations like Liverpool, Manchester, Birmingham, and London.

                  With over 1,000 five-star reviews, RWinvest was named the North West’s Best Property Business in 2020.

                  You can feel confident knowing you’re getting unrivalled service when you choose to invest with us. Contact us today for a chat with one of our expert property agents to see what options you have available.

                  Learn more about us by reading our website today. You can also familiarise yourself with our easy sales process, where you can make a property investment in just three steps.

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                  Make an Overseas Property Investment in the UK With RWinvest

                  We hope that you’ve enjoyed our guide to buying property in the UK as a non-resident in 2023 and are now feeling more equipped and ready to make your first foreign investment in the UK.

                  If you would like to receive more guidance and information on property investments in the UK, be sure to take a look at our buy-to-let news section for articles and area guides containing further information and tips.

                  Here you can find information on all things property related, whether that’s learning how to buy UK properties below-market value, how to invest £75k for passive income, all you need to know about energy efficiency, or finding out the best way to invest 50k in property.

                  If you’re still wondering, ‘can a foreigner buy property in UK buy to let hotspots?’, feel free to contact us at RWinvest for a friendly and informative chat.

                  Here at RWinvest, we have many years of experience dealing with overseas investors and a track record of success with many popular UK developments.

                  Want a more specific guide to overseas investment in the UK based on your location? Read some more of our helpful guides:

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                  Reece Pape

                  Reece Pape is a property writer at RWinvest. Reece is passionate about keeping property investors updated on must-have information and housing market news, utilising the latest property market statistics and data.


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