Site icon British Expat Money

Can Non Residents Buy Property in the UK?

james@britishexpatmoney
carrying boxes

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:

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.

Stamp duty

personal allowance

Non Resident Landlord Scheme

Buying a house costs

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:

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.

Exit mobile version