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Why Invest in UK property?
Should you still invest in the UK? After the challenges of Brexit and a global pandemic, is it still a good idea for international investors to invest in UK real estate?
The short answer is yes. Low interest rates, growing mortgage availability and increasing growth forecasts are highlighting key regional areas for investment in 2022 and suggesting exceptional returns.
Demand continues to be at an all-time high for buy-to-let property and supply is still dwindling in these key cities. For international buyers, there’s never been a better time to consider investing in UK real estate, with plenty of opportunities to add ‘hands-off’ hassle-free developments to your portfolio.
At the same time, property price forecasts continue to suggest a bright future. Property prices are expected to rise by 21.5% across the entire UK, while key regions such as Birmingham are forecasting increases as high as 24%.
Where Should You Invest in the UK?
It’s the most important question to ask yourself before you start investing in UK real estate – where should you invest in the UK?
Every region in the country has been seeing price rises throughout 2021 and records are being broken every day. Demand continues to rise with seemingly no end in sight, driven by undersupply and the potential for above-average returns within the buy-to-let sector.
That means in 2022, there’s plenty of markets to choose from for investors. While regional cores continue to beat traditionally popular markets, we answer the question: where are the best places to invest in UK property in 2022?
Featured Development
Lockside Wharf
Birmingham
Stunning Off-Plan Investment Opportunity
- Off-plan apartments – estimated completion 2023
- City-centre location just 3 minutes from Brindleyplace
- Unique waterfront living in Birmingham
- 24.5% price growth expected by 2026 (JLL)
- Top location for London leavers – forecasting yields above 5%
Prices From
£Sold Out
UK Property Tax for Overseas Investors
If you’re investing in the UK property market, you need to understand the tax implications that come with a UK investment.
For international buyers this is especially important. Stamp Duty Land Tax, Capital Gains Tax and Income Tax can all change depending on where you’re investing from, making it important for you to get right.
If you’re investing in UK real estate from overseas, here we run through the UK property tax overseas investors need to consider, although we advise any investor to seek specialist advice on any property tax matters.
Everything You Need to Know About Expat Investment
Are you interested in expat investment? Discover our complete guide to investing in the UK as an expat.
Whether you need information regarding how to invest as an expat or the best UK locations for expat investment, we’ve got you covered.
Frequently Asked Questions on Overseas Investment
Can international investors buy property in the UK?
UK property has long been a safe haven for overseas investors, and in recent months, the number of overseas landlords in the market has reached an all-time high.
According to research, there are around 184,000 international landlords with UK properties, which has increased 19% in the past five years alone.
While the process of purchasing UK property from overseas is generally a longer process and comes with more considerations, the returns often compensate for these. For overseas landlords purchasing additional property in the UK, a 3% charge will need to be paid.
This 3% will also be stacked with the 2% Stamp Duty Land Tax surcharge that applies to overseas investors.
How does buying UK property as an overseas investor work?
The UK is unique in that overseas investors must conduct their due diligence before they enter into any form of a binding contract. Typically this will involve:
- Checking the title of the property
- Obtaining a survey
- Carrying out searches of local authorities
- Obtaining information from the buyer
- Agreeing a terms of contract
All of this is usually done through a solicitor, which should be appointed locally in the UK. If the property is being financed through a mortgage, then an offer from the lender is also needed.
When both parties are ready to proceed, each then signs a separate but identical contract. Your solicitor will then agree with the vendor that contracts are binding, a process called ‘exchange of contracts’. At this stage, the buyer pays a deposit of between 5 and 10%.
Completion can take place on the same day as exchange, but usually there is a relatively short intervening period for legal and practical matters (usually no longer than 28 days). On completion, the balance of the price is paid, the title is transferred to the buyer and you can then take full possession of the property.
Working closely with a property investment company is one way to take some of the hassle out of the buying process. At Joseph Mews, for example, we work with investors buying off-plan property to guide them through the entire process, helping with mortgage applications, appointing advisers and maximising returns.
Can overseas buyers get a UK buy-to-let mortgage?
The most common ways for an international investor to buy a property is either through cash or by using a specialist buy-to-let product.
In the current market, there’s plenty of mortgage products available including specialist products for non-residents and expats. The most important thing? It pays to shop around as speaking with an expert can usually result in you finding the ideal product to suit your needs.
Whatever option you go for, you’ll be expected to produce several instances of paperwork for the application, these include:
- Passport
- Proof of creditworthiness
- Mortgage affordability
You’ll also need a deposit (upwards of 25%) and demonstrate that you’ll be generating enough rental income from the tenant to cover the mortgage interest.
The amount you can borrow depends on how much rent the property can generate. Lenders will typically need your rental income to meet 125% of the monthly interest payments on the loan.
Can I attain residency through buying a UK property investment?
No, buying a house in the UK (to live or for buy-to-let) as a non-resident does not give you the right to live in the UK.
You will not receive any immigration permissions for buying a UK property and if you are interested in acquiring permanent residency, there are other routes you should take.
You can, however, apply for an Investor Visa which is one way of gaining residency in the UK.
How many UK taxes are there?
In the UK, there are several taxes to consider. From Income Tax to Inheritance Tax and Capital Gains Tax, living – or investing – in the UK comes with a variety of different responsibilities.
For property investors, the key taxes to be aware of are: Income Tax, Stamp Duty Land Tax, Inheritance Tax and Capital Gains Tax. For those who have plans of staying in the market for a long period of time, it’s crucial to be prepared for every one of these taxes.
While Stamp Duty Land Tax will need to be paid when purchasing the property, any rental income will be subject to Income Tax. Additionally, Capital Gains Tax will need to be paid on the sale of the property and estates worth over £325,000 will be subject to Inheritance Tax.