5 Myths About Property Investment in the UK For Overseas Residents

Over the years, the UK economy has seen some turbulence, to say the least. Despite these uncertainties, the property market has proven its resilience and has become one of the most stable investment assets, which has long been enticing investors from around the globe. That said, investing in an overseas market can often come with some worries and concerns, especially considering the many myths surrounding the property market.

To help non-UK residents on their buy-to-let journey, we’ve busted through some of the most common myths about overseas property investment in the UK.

Myth #1: The UK property boom will be followed by falling property prices

Truth: It’s no secret that the UK property market has been on an upward trajectory for the best part of 15 years, but over the last two years, property prices have risen significantly. Despite rising mortgage rates, base rate hikes and soaring inflation, property prices have managed to increase by over 22% over the past 4 years alone, with the supply and demand for new homes underpinning this continued rise in prices.

With the government consistently failing to meet their 300,000 net new units target, the UK property market has been overwhelmed by house buyers and investors searching for available properties. As a result, demand for property has increased by 20% compared to last year.

This trajectory of property price growth fuelled by increasing demand is set to continue. By 2028, JLL expects UK property price growth to reach 14% in total, with 2025 set to average a 3% increase, followed by 4% in 2026 and 4.5% in 2027. After another 5% rise in 2028 and 4.5% increase the following year, property prices will have seen incremental growth over the course of four years. With most experts forecasting continued growth in property prices, a market crash continues to look unlikely, which will only increase the appeal of property investment in the UK.

Myth #2: Off-plan property investment is too risky

Truth: Off-plan is generally considered to be ‘riskier’ than completed property as you’re investing in a development that is either at the beginning – or in the middle of – the build phase. This means you will have already paid the deposit, but you won’t be earning any rental income from it – although it’s worth remembering the capital growth of off-plan property can pay dividends if you’ve invested with the right developer.

The most common concerns surrounding off-plan property is that the build won’t complete, or the developer goes bust. However, if you’ve carried out your due diligence, researched your developer’s track record and have regular communications with them, you can avoid these worries and make off-plan property a potentially lucrative asset in your portfolio.

One of the most attractive parts of off-plan investing is the prices – good developers will usually offer these properties at below-market value. While it can be easy to get wrapped up in the deal, it’s crucial to stay objective. Make sure you carry out thorough research into the developer, as well as the development itself – were their previous developments completed on time? Do they have testimonials? Have their properties increased in value over the years? If the developer can answer these questions with the proof to back it up, there’s more chance they’re a reputable developer.

Related: Should You Buy Off-Plan Property?

Myth #3: Tax and Stamp Duty is too high/complicated

Truth: Regardless of whether you’re a UK resident or an overseas buyer, property investment in the UK comes with a wealth of considerations. However, there are tax advisors and wealth managers available for a reason, so by finding a trustworthy partner, these taxes won’t be too detrimental to your long-term returns.

Generally speaking, the main three taxes you’ll need to be prepared for are Stamp Duty Land Tax, Income Tax and Capital Gains Tax (if you decide to sell the property further down the line).

The first port of call is Stamp Duty Land Tax. This is a necessary payment for anyone (except for UK based first time buyers) purchasing property in the UK worth over £125,000, with several bands determining how much you stand to pay. As well as the standard Stamp Duty payment, there is also a 3% surcharge for those purchasing an additional property – this is then stacked with the 2% tax for overseas investors.

While this is immediately a 5% tax bill without the standard Stamp Duty Land Tax payment, it’s crucial to remember that property investment in the UK offers both short- and long-term returns. Not only could your monthly profits from rental income eventually cover these additional payments, but with the UK’s history of property price growth, you could soon make back your initial outlay.

Related: 5 Things Hong Kong Investors Should Know About Property Tax in the UK

Myth #4: There are hidden fees that no one tells you about until you’ve already invested

Truth: Providing you’ve carried out your due diligence and are investing with a trustworthy property developer, there shouldn’t be any hidden fees and the process should be fairly straightforward.

That said, the fees can differ for overseas property investments in the UK due to the added costs of running a buy-to-let. It’s common for overseas investors to use a property management company, especially if they don’t intend on visiting the property frequently. From fees for finding a good tenant to administering the correct paperwork and managing the property, this can cost around 10% of the monthly rental income.

Of course, there is the option to manage the property yourself, but it’s recommended that you have someone on hand to deliver local market knowledge and assist with tenant emergencies and maintenance.

Myth #5: You can’t get a mortgage on UK properties

Truth: In terms of purchasing property, a cash investment will always be the easiest option. By having the cash upfront, you won’t need to apply – or wait to be approved – for a buy-to-let mortgage, meaning it is a much quicker process. However, for those who will be investing with a mortgage, there are several different options for overseas residents considering property investment in the UK.

It might seem logical to go to the standard high street lenders, but more often than not, these are catered to UK buyers. It’s often best to cast your net further afield, and instead, look for specialist companies who are more familiar with overseas property investment in the UK. More often than not, these companies will offer you a step-by-step guide to your investment and accurately advise you with any questions you may have along the way.

While choosing a company that specialises in overseas lending is the better option, it’s best to manage your expectations surrounding the length of the process. For non-UK residents, obtaining a mortgage for a property investment in the UK is usually a lengthy process, and it’s possible that the loan-to-value (LTV) ratio could be lower than in the UK.

Additionally, when searching for a specialist lender, you should consider the length of their mortgage terms as this will determine your repayment amount, and subsequently, the rental yield you’ll achieve. This can be a lot to take in for overseas investors, but a wealth manager or the property development company themselves will usually be able to suggest trusted brokers who will recommend the best lenders for your situation.

Overseas property investment in the UK comes with many responsibilities and considerations, but generally speaking, it’s nothing a reputable developer and esteemed wealth manager can’t help with. From taxes to managing the property, the opportunities that come with property investment in the UK more than compensate for these additional costs.