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  • Writer's pictureLubomir Trizuliak, MA, MBA

Can foreigners buy property investment in UK?

Simple answer is YES.

Buying property in the UK as a foreigner is easier if you are a cash buyer and do not need to apply for a mortgage or additional borrowing. To avoid this, you can use the services of specialist lenders or international banks to get help securing a UK mortgage for residential property. Keep in mind, though, that these organisations will consider whether to lend based on various factors, including age, income, and credit score.

If you are a foreigner looking to buy property in the UK, you must fully understand the property market and have access to funds. It is also important to remember that while the Pound is relatively cheap, property prices in the UK are comparatively high, depending on the area. Find the latest house price index from Rightmove data here. Also see article here about Liverpool market.

Buying a property outright in the UK can deliver high yields from rental income, with UK property prices rising. Last year, foreign investors paid more than £33.3 billion into the London prime property market alone.

The process for buying property investments in the UK is relatively straightforward:

– If required, obtain a mortgage offer in principle, alternatively cash

– If the offer to the vendor is accepted, instruct solicitors

– Property survey, bank valuation, pre-contract searches and investigation of title

– Exchange contracts and pay deposit

– Completion by paying the balance to the vendor

– Post-completion, including paying SDLT

Foreigners can buy property in the UK. Getting professional conveyancing and tax advice is advisable before making an offer on a property. There is money to be paid in the UK investment without excessive tax.

Can foreigners buy property in the UK? Foreigners can legally buy property in the UK, whether they are classed as a resident or not. Banks might offer foreign investors less favourable mortgage terms or higher interest rates. There are also no legal restrictions on British ex-pats buying property in the UK. Foreigners and non-residents can get a mortgage in the UK. Those with less than two years of residency in the UK and without a job might face more stringent requirements, including a bigger deposit. Prefer terms would be buying a cash.

Do foreign investors need a visa to buy UK properties? A visa is not required to buy a property investments in the UK. To find out how to get a UK visa, we recommend seeking out expert advice.

What are the tax implications for a foreigner buying UK properties? The HMRC has clear tax guidelines if you are a non-resident looking to purchase UK property to rent out. You may also need to pay tax if you make a gain when you sell property or land in the UK. If you live abroad for six months or more per year, you’re classed as a ‘non-resident landlord’ by HMRC, even if you’re a UK resident for tax purposes. It is critical to understand everything you need to know about paying tax in the UK as a non-resident property owner before purchasing. There are several rules and regulations regarding taxation that non-residents need to be aware of when buying property.

What documents do I need to buy a property in UK?

When buying property, checks will be made to comply with money laundering and fraud laws. These checks will typically be conducted by solicitors, banks, and property agents.

As such, you’ll need some documentation to prove you are who you say you are.

The documentation you need to buy a house in UK countries include:

  • Proof of identity – this includes a driving license or passport.

  • Proof of address – typically via a bank statement, utility bill, or driving license.

  • Source of funding – to show where your money comes from, you’ll need to show a payslip or tax return.

You could be asked for these documents at any stage, so be sure to have them ready when called upon to make the process as smooth as possible.

Income tax consideration for foreign property investors. If a property is bought to be rented out, a withholding tax of 20% will be deducted from the landlord’s gross annual rental income from the property. This is done by the letting agent when they collect money from the tenant. To avoid paying this additional tax, the individual would need to register with HMRC under the Non-UK Resident Landlord Scheme and, once registered, would receive the gross rental income. They would have to submit a self-assessment tax return each year and pay income tax at 20% on the net rental profit.

Capital Gains Tax (CGT) consideration for foreigners From April 2015, all residential gains were brought into charge on properties valued at over £500,00. Any gain accruing from April 2015 to the date of sale is chargeable. The rules were extended further; from April 2019, commercial properties and any indirect interests in all properties are subject to CGT.

Stamp Duty Land Tax (SDLT) considerations when buying an investment All property purchases have been affected by the recent increase in SDLT. However, where a company, or what can be termed as a ‘non-natural person’ (such as a non-resident company or entity), acquires a property costing more than £500,000, there is a potential tax rate of 15%. If the entity is a lettings business or developer, exemptions are available.

Additional 3% SDLT Rate An additional 3% charge is added to the standard rate of SDLT if the UK property being purchased is an additional residential property already owned anywhere else in the world. The additional 3% rate applies on top of the revised standard rates from 8 July 2020 to 31 March 2021. This additional 3% surcharge will not apply if a foreign property investor replaces their main home on the same day. From the 1st of April 2021, the temporary reduction in SDLT will lapse.

2% Stamp Duty non-UK resident surcharge on buying a buy-to-let From the 1st of April 2021, an additional 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland will apply. This means that if a property investor purchases a UK property as a holiday home and already owns another property, they will pay the 2% non-UK resident surcharge plus the 3% SDLT charge on purchasing additional homes. Please find the SDLT calculator here.

What percentage of UK property is owned by foreigners? According to recent industry statistics, nearly 20% of all new-build sales in the UK were made by foreign investors. Another industry survey calculated that nearly 28% of all London property is currently foreign-owned.

Does buying a property in the UK grant residency there? Purchasing a property in the UK will not give the foreign investor residency rights in the UK.

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