The first bit of good news for American investors is that there are no restrictions on ex-pats and non-UK citizens buying property within the UK, and there are a few additional taxes and charges you need to worry about.
However, the process of buying a property is somewhat different to the US, and there are some notable elements you should be aware of as a foreign investor. You’ll need to be rigorous in your research and conduct due diligence to make sure your investment is a solid one.
In general, the purchase process of buying a house takes longer in the UK than it does in the USA, so you need to be patient.
If you want to live in the property you are buying, you will likely need a visa, however, if you are buying with the sole purpose of investing then this is likely not required.
There are two kinds of ownership in the UK, freeholds and leaseholds. Freeholds are when you own the land the property is built on, whereas a leasehold is when you sign a long-term lease for the land and only own the property.
Many high street lenders will not offer buy-to-let mortgages to those who are buying from overseas, so you will likely need to find a specialist mortgage broker who may charge you higher interest rates.
To avoid the expenses that come with buy-to-let mortgages, try looking into off-plan property. Off-plan means developments that are not completed yet, which means they are often sold for below-market-value prices. This means you can avoid needing to pay interest on a UK mortgage.
Once you have made the decision about if you need a BTL mortgage or not, you need to find an investment property suitable for you. You can research this by contacting estate agents, searching property portals like Zoopla and Rightmove or contacting property investment companies to see what properties they have available to their clients.
You should be looking for properties in areas with high tenant demand such as major cities that are affordable and have high rental yields.
Once you have found a property that fits your criteria, the next step is to hire a solicitor and make a formal offer on the property. You may find, especially with private sales, that the asking price is higher than they expect to pay, so some negotiations could take place.
Unlike in the US, contracts are not drawn up until very late in the process, and you will have to rely upon a ‘gentleman’s agreement’ for much of the sales process. Once the contracts are drawn up though, then the solicitors of both parties will go over them to make sure there are no mistakes or inaccuracies.
You will need to go through some identity checks to ensure you are who you say you are, which will likely require you to travel to the UK to meet in person.
After this, the next step is to pay a deposit on the property, which is normally around 25% of the agreed-upon price of what you are buying.
Once the deposit is paid, a completion date will be set where the buyer pays the remaining amount of money while the solicitors ensure everything is air-tight one last time.
On the completion day, the money is handed over and the contracts are signed, and then you can finally say you are the proud owner of an investment property in the UK!
As you can see, the process of buying UK property from the USA is fairly straightforward, but it is a process that takes some time.
