Can foreigners buy property in UK towns and cities?

james@britishexpatmoney

Can foreigners buy property in the UK? Spoiler alert. Yes, they can.

This week we take a deep dive into what’s required when buying British property from overseas.

Let’s get into it.

Can foreigners buy property in the UK?

Buying UK property from overseas is absolutely doable. Many people successfully complete the process.

In fact, thanks to the internet a house has never been easier no matter where you are.

Large property portals and the fact the entire industry has moved online means the house buying process for people living overseas isn’t complicated. In fact, it isn’t very different to the one people living in the UK go through.

Since Covid 19 made virtual viewings and viewing companies a thing, the biggest difference foreigners face is the fact it takes their documents a little bit longer to arrive in the post.

Yes, the legal side of things still requires real documents and real signatures. But even then many companies will take action based on digital copies whilst the actual paper documents are in transit.

In other words, buying property from abroad is pretty similar to buying property as a UK resident.

Here’s a quick summary of the steps involved when buying UK property from abroad:

Steps involved for foreigners buying UK property

Decide how much you will spend (mortgages, cash & stamp duty)
Find a property (using property portals & Google)
Contact estate agents (property portals have contact details)
Arrange viewings (virtual, friend or company)
Pick your property
Confirm funding (Mortgage In Principle)
Make formal offer (Email or text beats phone calls)
Recruit a solicitor (Estate agents can give you contact details for them)
Keep in touch with solicitor and agent to keep things progressing
One day in the future receive key from estate agent

Money matters

Buying property from overseas usually begins with establishing the maximum price you can pay for a property.

This in turn will help to narrow your search to certain types of property in certain areas.

And even if you are paying cash it usually pays to get an idea of the fees you are going to have to pay.

We’ve gone into a lot more detail about house buying costs here, but here’s a quick summary:

Deposit
Stamp Duty
Conveyancing
Survey

But those assume you aren’t using a mortgage.

If you don’t have enough cash to buy outright or you are a property investor, you may need to secure additional funding.

In other words, a mortgage.

But then the question becomes, can a foreigner use a mortgage to buy property in the UK?

And fortunately the answer is yes. We are covering this in a bit more detail below, but if you are using a mortgage you should also plan to include the following fees in your cost calculations:

Mortgage interest
Mortgage broker fees
Mortgage arrangement fees
Mortgage valuation fee

Why stamp duty should matters (especially to foreigners)

When you buy a house in the UK you need to pay a kind of tax, called Stamp Duty. We’ve gone into a lot more detail on Stamp Duty here.

But suffice to say, non residents pay more (2%) and investment property (& second homes) cost more (3%) too, so foreigners can often end up paying 5% over standard rates.

UK property tax for foreigners (Stamp Duty)

Property or lease premium or transfer value	Standard rate	Non resident rate	Non resident stamp duty rates for investment property
Up to £250,000	Zero	2%	5%
The next £675,000 (the portion from £250,001 to £925,000)	5%	7%	10%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%	12%	15%
The remaining amount (the portion above £1.5 million)	12%	14%	17%

How much you actually pay will depend on the house price and your situation but there’s a handy stamp duty calculator here you can use to calculate how much you need to pay.

Finding your property

Rightmove and subsequently Zoopla have changed the game for property hunters.

I find Rightmove lets me do everything I want, so will focus on that, but others swear by Zoopla. Their propositions are pretty similar, so if you don’t already have a favourite you might want to use both.

The most commonly used Rightmove tools are these:

Keyword sort: Enter some keywords and Rightmove will priorities them when searching.
Where can I live: Enter places you want to be near & your budget and Rightmove will provide you with suitable properties.
Draw a search: Draw a map, and Rightmove will find you suitable properties within it.
Instant alterts: Get all the info on properties matching your criteria sent straight to your inbox.
School checker: Shows you where pupils at a particular school live, and provides inspection data.
Sold prices: You can see what similar homes are selling for and have sold for in the past.
Calculators: There’s a range of calculators to help you crunch the numbers.
Valuation tools: Get a free, no obligation valuation of your property from local experts.
Apps: All the above in handy app form.

How to contact estate agents when you live overseas

Rightmove and Zoopla’s roles in your property hunt don’t stop there. You can use them to directly contact estate agents when buying UK property from overseas.

The name of the agents and all contact details are provided within the platforms for you to contact them automatically.

Tip: if the agent doesn’t get back to you within a day, give them a call. Some agents property portal/email system can be slow.

How to arrange viewings from abroad

Buying property from overseas used to come up against a big hurdle in the form of viewings.

Unless, you knew somebody living in the area where you wanted to buy, you could find yourself having to buy without seeing a property.

And most people don’t feel comfortable doing that.

Luckily, these days there are a couple more options for you.

First up you can ask the estate agent selling the property to do a virtual viewing for you. This is a great service. However, remember, it’s in their interests for you to buy the property as that’s how they make money.

This means you should put some effort into ensuring they let you see everything they need to.

Alternatively, there are companies dedicated to doing viewings for you. Viewber is probably the biggest player in the space.

No matter whether it is an agent or viewing company, it usually pays to prepare some questions for the viewing from your side.

As a minimum here’s a list of questions to ask:

Virtual viewing question checklist

Are there any problems I need to know about?
How old is the bathroom?
How old is the kitchen?
Can you show me any areas of dampness?
Can you show me any cracks?
Is there any damage you can see?
Can you turn the appliances on and off so that I can see that they work?
Would you open and close all the windows and doors for me so I know they don’t have any problems?
Is there any other damage or areas that may need work that you know about?
Can you show me the view from each window and door?
Are the windows & doors in good order?
Are the windows double glazed?
Can you see any areas that have been newly painted? (You want to make sure the seller isn’t trying to cover up any underlying damage).

Additionally, get them to go in close to things you want to have a good look at.

Get your funding ready

Even if you are paying cash for a property, you’ll usually need to provide documents that prove where your money came from. Common examples being bank statements for individuals or accounting documents for those who run businesses.

If you are using a mortgage you’ll need to have your decision in principle (DIP) ready before you make an offer.

Sometimes called Agreement in Principle, Mortgage in Principle or Mortgage Promise this is an indication from a lender or mortgage broker of how much money you can borrow.

Can a foreigner buy property in UK on mortgage?

Foreigners can buy properties in the UK with mortgages.

There are typically two funding options for this.

First, is approaching local lenders. But more common, it to use a UK lender.

If you plan on getting a mortgage from a UK lender, it usually makes sense to use a specialist mortgage broker.

That’s for the simple reason that most UK lenders don’t lend to foreigners. And even those that do may not provide somebody in your situation with the best deal.

You can often save a lot of money by choosing one deal over another and this is particularly true when buying property as a foreigner.

As the saying goes, ‘a good lender will give you the best deal for them, but a good mortgage broker will give you the best deal for you.’

If you haven’t yet found one, we’ve taken a look at three of the best mortgage brokers that deal with foreigners here.

And no matter which broker you choose, I’d always recommend preparing a few questions to make sure you make the right choice:

Here’s a few I think you could ask as a minimum.

How much do you charge?
When do you take payment?
Do you deal with the country I am living in?
What is included in the services you offer?
Can you arrange limited company BTL finance (if you need it)?
Are you whole of the market?

Making an offer

Many people think they need to negotiate a discount when buying a house. Sometimes this makes sense. Other times it doesn’t. In fact sometimes you’ll need to pay more.

It all depends how much you want the property, how many other potential buyers are involved and how desperate the seller is.

If the seller is desperate and you are the only one interested in buying the property you’ll probably get yourself a good discount.

If the opposite is true, and you really want the house, you probably shouldn’t even bother trying to negotiate.

The most important thing is offering to buy at a price that is right for you. If you can easily afford your dream property at the asking price, why bother trying to get a discount when you risk loosing the property.

Why email is your friend when you make an offer

It usually makes sense to do your offer in writing. Email is most common, but messaging also works.

Writing takes the estate agent’s sales ability out of the equation. At the end of the day they are paid salesmen working on commission. Some of them are very good at what they do, and you could find yourself getting manipulated into offering more than you are comfortable with.

Written text also gives you a record of what was said which can sometimes prove valuable.

Finding solicitors

Strictly speaking you don’t need to recruit a solicitor when buying a property in the UK.

However, the legalities underpinning property purchase are extremely complicated to say the least. Imagine buying a property only to find you hadn’t really bought it because you hadn’t completed the correct legal steps!

OK, I imagine that’s rare, but then again, I imagine buying property without a solicitor is rare too. In fact, I can safely say I don’t know anybody who knows anybody that has ever done it.

In short, most people need a solicitor and this probably becomes even more so for a foreigner.

If you don’t already have a solicitor the tried and tested method of finding one is to ask your estate agent for three options, and then choose the one that you like best.

(As already mentioned you can get agent details from your property portal of choice).

Keeping your team on their toes

Property buying can take a long time. On average it takes between 12-16 weeks, but it can take longer, particularly when buying property in the UK for foreigners.

Asking your solicitor and estate agent for regular updates can help.

You can also ask each one if there is something the other one could be doing to speed things up and then go and ask them yourself.

And don’t forget to keep an eye on the most important member of your team……………YOU!

In other words, if you solicitor or estate agent asks for something don’t mess around. Make sure you provide it at the earliest opportunity.

Arranging an international moving company

If you are buying a property to live in yourself, you may need to move your possessions to the UK from wherever you are.

Although some people manage with a few check-in bags, in all likelihood you are going to need to use a removals company for the items you are taking with you.

Anglo Pacific, Pickfords and Santa Fe Relocation are three of the bigger names you can start asking for quotes from.

Though it is focused on the UK, Which Magazine give some good advice on choosing a removals company here.

Can foreigners buy property in the UK? – the bottom line

So can foreigners buy property in the UK?

In short, yes they can. It can take a little longer, and it can cost a little more, but it is absolutely doable.

In fact, oftentimes buying UK property form overseas is more or less the same as doing it in the UK.

Online property portals and virtual viewings have basically changed the game forever.