Your guide to buying UK property from overseas.

For investors living overseas, buying a UK property can seem a daunting task but it is not as complicated as one might expect. This applies to UK expatriates based across the globe and to those with foreign passports. Purchasing UK property can be made easy by following our steps to success.

1. Assess your budget.

Let’s start with how much you can afford to spend. UK property prices are very accessible but will vary from location to location. This will also depend on whether you are a first-time investor or a seasoned one but ensuring that you stay within budget is key.

We can assist with this process and help you to select the right entry level for your savings amounts and income levels. An important step and one that should not be rushed or stretched.

Three key takeaways:

  • Don’t overstretch yourself – we never know what might happen in the future.
  • Understand all the costs involved – initial set up fees must be factored in.
  • Seek assistance to fully appreciate the milestones involved in your purchase.

2. Where should you buy?

Location, location, location. It’s an incredibly frequent statement you will hear but it’s a proven adage that has stood the test of time. This is even more critical in our opinion when purchasing from overseas. There is a strong chance that you will never even physically see this property so selecting a location with strong underlying fundamentals will greatly contribute to the success of your investment.

There is a raft of information available in the online world we live in today but this can be overwhelming and information overload often leads to the process stagnating.

We certainly urge that all potential investors perform their own due diligence process but combining that with advice from an expert is imperative.

Three key takeaways:

  • Locations with high levels of commercial activity are encouraged.
  • Try not to be governed by “hometown” bias. More importantly, identify up and coming location with excellent connectivity.
  • Remove emotions. This is an investment.

3. What should you buy?

When buying from overseas, our aim is to reduce the time and costs that will be spent on the property once you take ownership. Houses and apartments all have their positive and negative aspects so understanding the relevant factors is a must.

Does a house require more ongoing remedial works? Does it have a garden that needs maintaining? How much is the service charge for an apartment? What facilities does the development my apartment is in offer and are their charges?

All good questions and ones to be discussed with your property expert.

Fundamentally, for any investment undertaken, be that stocks/shares, property, pensions etc the one thing that must be remembered is that if the numbers add up, then the investment has the potential for success. In this instance, assessing both options of property types is just one aspect of the process.

Three key takeaways:

  • Understand the difference between freehold and leasehold.
  • Learn the pros and cons of each option.
  • Work on the numbers. This is the key.

4. Payment process

Rest assured there are payment plans that can accommodate your needs and are often flexible to appreciate the expat/foreign buyers’ requirements.

There are several ways you can purchase property from overseas and therefore, the payment process will be different from case to case. Many overseas investors will opt for brand new property that may be completely off-plan or will be already under construction. Some will opt for the second-hand market, but the majority do prefer the option of owning a brand-new property to reduce ongoing maintenance costs.

Three key takeaways:

  • Minimum deposit required is usually 20%.
  • There are monthly payment schemes that allow those without high levels of savings to invest.
  • Staged payments are readily available.

5. Expert assistance

Do not underestimate the importance of expert assistance. This is not just for the help in selecting your investment property, but a trusted expert will continue to work with you throughout the whole process. They are there to support you, to answer your questions, to help you secure any funding that may be required.

They will also help with the sourcing of your tenants and ongoing management of your property.

Three key takeaways:

  • Utilise your expert for all aspects of the purchase.
  • Ask questions – even the ones you think might be silly. No question is a bad one.
  • Speak regularly, particularly when nearing completion.

6. Mortgage assistance

Another aspect that many find daunting is the mortgage process. There are some basic fundamentals that all overseas purchasers need to be aware off when sourcing funding options for their purchase. This is not a process that we would recommend is undertaken without speaking to a broker who specialises in mortgages for overseas buyers. Timing for new developments is also imperative so liaising with an expert is critical to ensure you have the access to the best deals/rates.

Three key takeaways:

  • Most lenders will have a minimum mortgage amount of £100k.
  • A 20% deposit is often required as a minimum, but a higher deposit may lead to better rates.
  • Some expert overseas lenders will only operate via a broker.

7. UK Legal system

The UK remains one of the most popular destinations for overseas buyers due to the robust legal structures that are in place. The legal system is in place to protect all parties involved in the purchase. Ensuring that you have trusted legal representation is imperative. This is often an area that investors need assistance with, and your property expert will be able to do this for you.

Three key takeaways:

  • Solicitor representation is mandatory.
  • Trust in the UK legal system is accepted globally.
  • Your agent can assist you.

8. Handover – taking ownership.

You’ve chosen your location, selected your property, sourced your funding, and paid your deposit. Now, its time to receive your keys and formally become the owner of your property. By following the steps above, you will now be ready take ownership and either commence or expand your property portfolio. An exciting time but not the end of the journey.

You will have a trusted property agent on board to assist you alongside your chosen solicitor who will now play a major role in completing the transaction. Your expert mortgage broker will have secured your mortgage, so all is in place to complete.

Three key takeaways:

  • Not much for you to do, the hard work is done.
  • By employing the right experts, the process should complete seamlessly.
  • Start thinking about your next purchase 😊.

9. Tenant sourcing/management

Although this is placed after completion, the tenant sourcing process will start some time before. Your agent will assist you in identifying a locally based management company who will be charged with finding a tenant for you. Any prospective tenant will be fully vetted on your behalf and once rental figures are agreed, the company will also facilitate the payment of a deposit. This is designed to protect you and is held in a government approved account.

You also have the option of employing the company to manage the property on an ongoing basis for you. Please note there are varying levels of service, so it is worth discussing these with your agent before agreeing the correct path that suits you.

Our main goals here are to ensure rental income is collected on a timely basis and that your property is looked after as is depicted in the terms and conditions of the tenancy agreement.

Three key takeaways:

  • Employ your chosen agent early.
  • Discuss and establish in detail the level of service you require.
  • Ensure regular checks are conducted on your property.

10. Earning an income/capital growth

With your tenant now paying rent, you will be in effect receiving an income so reporting this from a tax perspective is a requirement. It is very straightforward and depending on your own personal circumstances, this can be performed annually online. For those with more complex income requirements, you may need to enlist the assistance of an accountant.

From an ongoing perspective, it really is now a case of allowing the property to hopefully grow in value whilst your rental income should cover the mortgage and any costs. Income surplus to that is yours to do what you will but many will either use it pay down their mortgage or save for future investments.

Three key takeaways:

  • Ensure annual tax returns are completed.
  • Keep a close eye on capital growth – releasing equity for a further purchase becomes an option.
  • Regularly review mortgage options to ensure you are on the best possible rate.

Overall summary:

The purpose here is to highlight to UK expatriates and overseas investors that purchasing UK property should not be viewed as an unattainable.

For those looking to ensure their monies are working hard for them, the UK property market has proven time and time again it can be a highly profitable component of any overall investment portfolio.

For all investors, we urge you to seek assistance from experts who will be able to help you in all aspects of the investment process. More importantly, they can also assist you with maximising your potential income and long-term capital gains.

If you would like to discuss any aspects of this process, please get in touch.

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please complete the form below and we will be in touch.


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