A Brief Guide To Property Investment In The UK

  • 3 years ago
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The United Kingdom provides some of the most exquisite and exclusive pieces of real estate which can be found across the world. Whether you are looking to purchase a family home, or you are in the buy-to-let market, buying a property in UK right now is a great option especially when the exchange rate is in your favor. One of the biggest considerations though, when you buy in UK is that the process can take some time, especially if the property is not new or has sitting owners/tenants waiting in a chain. New developments provide a faster purchasing time frame though and for overseas investors this can prove to be less of a hassle. With warranties and maintenance plans included with new developments it can also mean an easier medium term investment. For those looking to buy and sell in a short amount of time, off plan properties tend to increase in value more rapidly during the construction phase. Below is a simple guide which can also serve as a checklist for property investment in the UK.


When purchasing a property, it is critical to clarify exactly what its purpose is for – whether it is to live in the property or it is purely for investment purposes. For some people it is a combination of both. A second home or holiday home provides a place to stay some time of the year with rental income potential during the months when the owner is not there. If you are looking at it from an investment stand point, you should know that tax on rental income and on any gains when the property is sold is taxable. In addition, the location where you are buying the property matters as this determines how much you are getting as returns -location is everything in the UK property market. In the UK, rental yields ranges from two to eight percent, depending on location.


Before venturing out to make a real estate purchase in the UK or anywhere else for that matter, you first need to determine if you have the needed fund to make the purchase and if not, determine whether you are eligible to borrow money. You would need to establish your credit eligibility which is often based on your gross revenue in the past twelve months leading up to the purchase and if you are applying for a mortgage plan, you must have between 15 and 25 percent of down payment available.


With the wave of investments going into the UK, mortgage lenders have discovered a market for foreign investors in need of mortgage plans at reasonable rates. All you need do in this case is look for a financial institution in your country of origin which has a good relationship with international lenders who can provide financial assistance to non-UK residents looking to borrow to invest in the UK real estate market. They will investigate the market for you and help manage your entire application from start to finish.


Although there are mortgage opportunities for non-UK citizens, it is much harder for them as banks are restricted by the Financial Conduct Authority. Decide on the kind of property you want and the nature of the repayment plan available. Whether you are buying to let or for residential purpose, it can be an interest-only mortgage plan or a 30-year repayment plan. There’s also the option of borrowing in a currency different from your local currency; this may not be a wise choice. Most of the loans available for foreign investors are buy-to-let and sometimes, residential mortgages. Also, foreign investors must note that most of the loan facilities available to them are short term to protect the financial institution in case the borrower is repatriated.

  • TAX

The location of your property determines whether you are a UK tax resident, a UK domicile or a combination of both. The tax laws in the UK changed since 2013 and are now more complicated than ever so it’s crucial you are clear on your tax status. In addition, there has been an increase in stamp duty which investors have to pay on properties which they purchase and the stamp duty fees have to be compared with what you are making from the property to know how much profit you will be making from the investment. You may have to pay Capital Gains Tax if you make a profit when you sell your property that’s not your home. This includes; buy-to-let properties, business premises, land and inherited property. If you have lived in the property for the majority of the time you have owned it then capital gains tax does not apply. The UK government website provides all the detailed information on taxes you may need to pay – www.gov.uk/tax-sell-home.

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