UK Real Estate Investment: What You Need to Know

Many US-based property investors have, at one point, considered extending their business abroad. With Europe as a prime destination thanks to its affluence, its va...

UK Real Estate Investment: What You Need to Know Close
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UK Real Estate Investment: What You Need to Know

Posted by Gary Ashton RE/MAX Advantage on Friday, November 8th, 2019 at 10:16am.

Warehouse InvestmentMany US-based property investors have, at one point, considered extending their business abroad. With Europe as a prime destination thanks to its affluence, its variety and its active property market, it’s the top choice for some of the savviest property professionals.

The UK, in particular, attracts numerous overseas investors. Choosing an English-speaking country makes it easier to communicate with your stakeholders, after all, but that’s not the only positive.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

Why the UK?

Many people move to the United Kingdom for work and education – after all, four of the top ten universities in the world are located here. There’s also a high demand for housing from native Brits, as the UK is one of the most densely populated territories on the continent.

Finally, the current political uncertainty in the region may actually prove beneficial for many investors. The impact of the UK’s bid to leave the European Union has caused the housing market to slow down. 

Usually, a period of recession within a sector represents the calm before the storm, so investing now will mean that you’ll be ready to benefit from any property boom that occurs once the Brexit process is sured up.

So how do you go about investing in UK property? In this article, Property Solvers – a UK-based real estate specialist that helps homeowners in search of fast sale options – will offer you a few helpful tips...

How to Invest in UK Property

  1. Ensure you have the funds

It can be very difficult to secure a mortgage as a foreign investor, so the best way to ensure you’re able to secure the property you want is to buy it outright.

The amount you’ll need should also cover any taxes and duties involved in your purchase. See a little more about this in section 3.

  1. Research the red tape

A great deal of UK property legislation is somewhat “up in the air” at present due to Brexit. For this reason, it’s important that you keep yourself up to date with everything that will be required of you as a property investor.

Changes to current laws are highly likely, particularly in the property sector. “Buy-to-let” landlords have, until recently, enjoyed fairly relaxed regulations. However, this has occasionally come at the expense of their tenants.

As a result, the sector has recently undergone something of a revision. There is now a cap on the size of deposit that can be demanded and the number of legal reasons for charges to tenants has been narrowed.

You’ll need to research new eviction rules, minimum space requirements and guidelines for contract lengths to ensure that you’re abiding by the law, as - now more than ever - UK landlords are expected to adhere to high standards. 

If you wish to build a new property or develop an existing structure, you may need to apply for planning permission from your local council. Make sure you’re familiar with the regulations in your area first to avoid disappointment.

  1. Get to know your taxes

In the UK, it has been proposed that foreign investors should pay a 3% surcharge on stamp duty land tax – an English and Northern Irish duty on the purchase of property.

You’ll need to pay income tax on any amount you make through rent. If you’re part of a corporate entity investing in UK property, you might be required to pay Annual Tax on Enveloped Dwellings (ATED) too.

Your property will also be subject to capital gains tax when you decide to sell it. If you decide to pass the property on in your will, the recipient will also need to pay inheritance tax.

  1. Understand the purchase process

Property InvestmentThe process of purchasing real estate in the UK is somewhat different to the States’. You won’t need to seek out a realtor or other agent to help you in your search for property.

Usually, UK residents find the property themselves – often via an online search or by communicating with estate agents. 

Once you’ve found something you like, you can make an offer. You’re welcome to offer below the listed asking price, but be prepared to have this initial amount rejected. 

There is often a little haggling involved, but the seller will not counter with other amounts - you’ll need to keep offering until you are accepted. In some cases, where multiple parties are making offers for the same property, each will be required to make a “best and final offer” with the preferred amount being accepted.

You’ll need to undergo credit checks to prove you can afford the property. You’ll then need to find a UK-based conveyancing solicitor to help with the legalities and arrange the relevant checks and searches on your property.

The property purchase process in the UK usually takes around three months to complete, but this varies considerably depending on circumstances.

Popular investment choices

Depending on the scale of your plans, there are a variety of different approaches that work well when it comes to UK property investment. If you’re wanting to make a profit in an urban area, major cities like London and Manchester are great places to invest.

You’ll find that properties in the city centres are very expensive to acquire (particularly in London, where the average price of a house is £472,230 – nearly $621,000 – but can stretch to the millions). 

However, a typical studio flat in London can cost over £1,000 per month (over $1,300), meaning you’ll start making a great profit within four years.

Other options include holiday homes in beautiful locations such as the Lake District or the south coast – this will mean your earnings will mainly be concentrated through the summer months.

If you’ve got your sights on a bigger project, why not consider investing in serviced apartments? Complexes with gyms and eateries on site are experiencing a boom currently, and may prove extremely lucrative.

If you’re interested in investing in UK property, why not drop us a message at info@propertysolvers.co.uk? We’ll happily talk you through your options and help you choose the best route.

 

Gary Ashton

The Ashton Real Estate Group of RE/MAX Advantage

The #1 Real Estate Team in Tennessee and #2 RE/MAX team in the World!

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