Whenever I talk to non-UK residents, the matter of buying a residential property in the UK often crops up.
People living outside the UK see the long-term strength of the UK property market and wonder about purchasing a property as an investment, with the aim of achieving rental income as well as capital growth.
It is something thought about not just by non-UK citizens. UK expats often look at things in terms of having somewhere to stay when visiting the UK. Expats returning to live in the UK will be looking at a permanent residence.
What are the considerations when thinking about buying a residential property in the UK?
What do you need to know? What are the key steps or action you must take?
The systems and procedures for buying a house or apartment are not the same right across the UK and this blogs looks at the position when buying in England & Wales.
1. Who can buy?
Broadly you are not restricted from buying a property as a foreigner, non-resident or non-dom.
Naturally, if you are a foreigner, the process is likely to take longer and be marginally more expensive.
2. What can you buy?
Typically you can buy a house or an apartment – known in the UK as “a flat”.
The legal title for houses (freehold) is effectively stronger, wider and better than the title for flats (leasehold), where the flat owner can be somewhat restricted by covenants and obligations in the title document known as “the lease”.
3. Securing purchase funds
It is clearly easier to purchase a UK property if you are a cash buyer – namely, able to buy without needing a mortgage.
If you need to secure a mortgage for part of the purchase price, there are lenders who specialise in providing mortgages for non-residents.
Your prospects of securing a mortgage will of course depend on your exact financial circumstances and credit status.
It is best practice to consult an Independent Financial Adviser or IFA when seeking financial advice in the UK.
FIRST TIME BUYER BASICS
My first property (basic information first time buyers must know)
Property buyer newbie (explains the key steps when buying)
Buying a property fast (practical ways to raise a deposit or down payment quickly)
4. Client identification and source of funds
You will need to engage a type of lawyer known as a conveyancer to deal with your purchase.
Conveyancers have strict obligations to identify their clients and to be satisfied that their purchase funds are from proper lawful sources with no suspicion of money laundering.
You may need to visit your conveyancer in person to prove your identity and source of funds – as well as sign the legal documents transferring the property to you.
5. Where to look
A favoured area for buyers is of course London. About a third of people living in London were born abroad.
Other popular locations include: Manchester, Birmingham, Liverpool, Bristol, Oxford, Cambridge, Cardiff, Leeds and Newcastle.
The main foreign buyers of London property are generally thought to be from:
- Western Europe
- North America
- Middle East
- Southern Europe
- Northern Europe.
Countries prominent in most lists of buyers include: China, Russia, Hong Kong, USA, Saudi Arabia, France, Spain, Portugal, Italy, Germany, Nigeria, India, Pakistan, Australia and Canada.
6. Finding the property
You can look for properties yourself by using websites which cover the whole country – such as Rightmove, Zoopla and OnTheMarket.
To help you find a property you can engage a real estate agent such as an estate agent, surveyor, property finder or property sourcer.
It is best practice to rely on a recommendation when engaging any real estate professional in connection with your purchase and you should check their qualifications, authorisation, regulation and reputation.
7. Valuing the property
Especially if you are a cash buyer, it is important for you to have the property professionally valued by a valuer or surveyor.
In some parts of the UK, property prices are currently soft or falling and as a general rule it is best not to take the word of the selling agent as to the worth or value of a property they are selling.
If you are buying with a mortgage, the mortgage company will arrange valuation.
8. Professional advice
Especially if you are a foreigner or unfamiliar with the UK property market, it is prudent to seek advice from at least one property professional before finalising your decision to buy – especially if you are purchasing for investment purposes or are looking to acquire a number of properties.
In particular you should consider the tax implications of your purchase.
The range of professionals who may be able to assist you include: lawyers, sale agents, rental agents, property coaches, property sourcers, surveyors, architects, developers and builders.
9. The legal procedure
You should instruct a conveyancer to deal with the legal paperwork once you have decided on the property you want to buy.
The conveyancer will carry out various land searches and make various enquiries of the seller before approving the contract and asking you to sign.
Once contracts are formally “exchanged”, you are legally obliged to complete your purchase – with the legal completion date normally a week or two after exchange of contracts.
With properties not yet built (off-plan), legal completion may occur many months after exchange of contracts.
Are you looking to buy a property in the UK? What questions, issues or concerns do you have? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com