Can Non Residents Buy Property in the UK?
Can non residents buy property in the UK? That’s the question we are asking this week.
Spoiler alert: Some can. In fact, approximately 250,000 properties in the UK are owned from overseas.
In this article, we’ll tell you who can buy UK property. Whether you can use a mortgage if you live overseas. And we outline the all the steps involved in the house buying process.
Let’s get into it.
Do you need to be British?
Non residents don’t need to be British to buy UK property.
In fact, as a non Brit, you may find it easier than a Brit. It will depend on what kind of non resident you are.
What kind of non resident are you?
Not all non UK residents are equal. Let me explain.
Are you buying a home you will live in or are you buying an investment property? Homes are usually easier.
Will you be using cash or will you be using a mortgage? Cash is usually easier.
It it easy to prove where you got the money from? Working for a big international company usually makes thing easier. Working for yourself from your laptop could be a bit trickier.
Do you live in a country with a high financial standing? If you do, you’ll probably find things easier. (See Basel Index below for more on this).
All else being equal, a Brit working for a big international company, living in say Australia, using cash to buy a home that they will eventually live in is probably the benchmark but another nationality in a similar situation will probably be able to purchase UK property pretty easily.
However, that doesn’t mean you can’t buy UK property if that’s not you.
British as well as other nationalities from all over the world in all kinds of situation buy UK property every single day.
Why the Basel Index is important
The UK property industry, particularly anything to do with mortgages like safe bets.
You should find it easier to prove your source of funding and income requirements for mortgages if you live in a country with a high financial standing.
High financial standing here means a country that is deemed low risk financially speaking.
In other words, a country whose residents tend to repay their debts in a timely fashion.
There are various ways of assessing this, but one popular among non resident lenders is the Basel Index.
In short, it scores countries based on financial risk. The lower the score the better. As an example, at the time of writing the country with the lowest and so best Basel score is Finland with 2.88.
Here are a few other noticeable countries to put things in perspective:
- Finland 2.88
- France 3.52
- UK 3.63
- Australia 3.65
- Canada 4.25
- Singapore 4.28
- United States 4.32
- Japan 4.7
- Hong Kong 5.05
- Thailand 5.81
- China 6.69
- Vietnam 7.04
Just to be clear. According to the Basel Index the chance of getting your money back from residents is greater in Finland than it is in Vietnam.
Whilst I’m not overly shocked to discover that the Fins are a trustworthy bunch, I’m always surprised by how much better the UK’s score is than our cousins across the pond in the US.
Just in case you are wondering, as part of the research for this article, I contacted a few expat lenders and asked them where the cut off was. The consensus seemed to be about 6.
However, I’ve subsequently been told by those in the know (specialist mortgage brokers) that there are lenders out there that will lend to clients in countries with a score higher than six providing you meet their other criteria.
(The index is continuously being updated. You can see the latest version here).
Is buy to let still worth it if you live overseas?
Any non residents intent on buying property as an investment should be aware that all UK property investment is subject to tax.
And whilst this may be reduced or avoided if you are buying a home, it won’t be if you are buying investment property aka Buy to let (BTL). And this is especially true if you live overseas.
In short, you pay stamp duty when you buy. You pay capital gains tax when you sell. And you pay income tax on your rental income.
You may be eligible for personal allowances if you have a British passport, but even then some taxes such as stamp duty are nearly always going to cost more for you than a British resident would pay.
Not to mention the fact you’ll usually need a letting agent to manage your property for you and that will add to your costs.
The key to all this is simple. Know what your costs are going to be before you buy so that you can include them in your calculations.
Here are a few more topics related to this you may be interested in.
Can I use a UK mortgage?
The fact that the big UK high street banks don’t usually lend to non residents doesn’t mean you don’t have options.
There are UK lenders out there that provide loans to people living overseas no matter whether they are British or not.
As with property buying in general, all else being equal a Brit should find it easier, but that isn’t necessarily the case.
If you meet a lenders criteria they should loan you the money.
The trick is to speak to a specialist mortgage advisor experienced in non resident lending.
We’ve looked at three of the best here, if you haven’t yet found one.
Key steps you need to take to complete a property purchase from abroad
Here is a quick summary of the steps involved:
- Find your property – Use an online property search website to find a property you like. (We like Rightmove or Zoopla)
- Contact the estate agent – Get in touch with the agent selling the property with any questions you have. All the agents contact details should be available on the property search website ie Rightmove or Zoopla.
- Arrange a viewing – Some investors skip this step without running into any trouble. However, it is probably best to get somebody to view the property on your behalf if you can. If you know somebody in the area ask them to visit the property for you. If you don’t, you can either ask the estate agent to do a virtual viewing or pay a company to do it for you. (Viewber seem to be the most prominent player in the space).
- Prepare your funding – If you need a mortgage, now is the time to arrange it. Although, you can approach banks and lenders yourself. It’s usually better to use a dedicated expat mortgage broker (If you haven’t yet found one, we’ve taken a look at three of the best here. ).
- Make a formal offer – It is best to state in writing how much you are offering. Email or text messages work great for this. Whether you offer under, on, or at the market price is entirely up to you.
- Instruct a solicitor / conveyancer – Conveyancing solicitors do everything needed to purchase the property on your behalf. If you don’t have one already you can ask the agent to suggest some for you. (JMW, MS Law and Starck Uberoi seem to be popular with non residents)
- Leave it to the professionals – You can then leave everything in the hands of the lawyers and agents. They will contact you when they require information and you can contact them for updates.
- Get your property – At some point in the future you will be contacted to say the property is yours.
- Deal with taxes – If you are letting your property out, don’t get fined by HMRC! Make sure you sign up to the Non Resident Landlord Scheme (You can read more about that here).
The Bottom Line
Non-residents can buy property in the UK and thanks to online platforms like Rightmove and Zoopla everything from choosing the property to dealing with agents and lawyers can be done online remotely from wherever you are.
