Can a Foreigner Invest in UK Property?

In a world of increasing globalisation, investing in foreign property is – in theory – more accessible than ever.

Property investment opportunities in the UK are rich and diverse, and they are open to people living outside of the union’s borders.

However, investing in foreign property can be more complex than investing in British property from within the UK itself.

In this article, we look at how feasible it is, and what requirements need to be met.

Can a foreigner invest in UK property?

There are no specific legal barriers to foreign property investment in the UK. Outside buyers can pursue property investment opportunities as readily as British citizens, though the latter may find it easier.

Foreign property investors will enjoy straightforward access to the market if they have the available capital ready in cash. That having been said, there are other options to finance property investments for foreign buyers.

A foreign national mortgage can help non-UK buyers with investment, and it has a few requirements. If the individual taking out the mortgage is an EU citizen:

  • They must have lived in the UK for at least three years
  • They must have a UK bank account
  • They must have a permanent job in the UK

Non-EU citizens with permanent residency or indefinite leave to remain in the UK must meet a similar set of requirements, needing to prove that:

  • They’ve lived in the UK for at least two years
  • They have a permanent job in the UK
  • They have a UK bank account

They may also need to show evidence of a substantial deposit, typically of at least 25%.

Lenders will always weigh these factors and will possibly want to see further pieces of evidence, so the process will not necessarily be the same from person to person.

Do I need a visa to buy property in the UK?

No, having a visa isn’t a prerequisite for buying property or securing a mortgage in the UK if you’re a foreign national. Be aware that buying property in the UK does not equate to citizenship, unlike some countries where citizenship by investment is a valid route.

Despite not needing a visa, lenders typically will be hesitant to lend to anybody who cannot prove a good (UK-based) credit score and evidence their time spent in the UK. Those who do consider it are likely to do so on less attractive terms, such as higher rates.

Certain visas like the BNO (British National overseas) visa apply to British overseas citizens on July 1 1997, by way of having no other nationality or citizenship than that of Hong Kong on 30 June 1997. These visas grant the right to live and work in the UK for a number of years with the option to extend into citizenship.

What costs do foreign property investors in the UK need to consider?

Non-resident buyers – whether companies or individuals – acquiring properties costing greater than £500,000 may be liable to a Stamp Duty Land Tax of 15%.

On top of this, there is an additional 3% surcharge if the purchase is a ‘second home’. This means that if property is owned anywhere else in the world, the surcharge will apply to a UK purchase. This will not apply if the purchase is to replace the investor’s main home in the same day.

As of April 2021, a further surcharge of 2% is applicable to any non-UK resident purchasing property. This applies alongside the 3% surcharge if property is already owned, meaning foreign investment can quickly mount in cost before any other costs like conveyancing and estate agents’ fees come into the picture.

Regarding conveyancing, the Law of Property Act provides that a UK-based solicitor must be involved in a purchase even if the buyer and seller are based outside the UK. This means that exchange fees for currency may also occur, adding extra cost.

Investors who spend a considerable amount of time outside the UK may want to consider avenues that take the stress of managing property in a different country and time zone out of the picture, like armchair investment. This means additional costs to the investor, but experienced management and local oversight of their property in exchange.

How can investors afford property investment in the UK?

The most straightforward route of investing in property in the UK is to raise your own capital and have plenty of it to afford the initial stages of your investment. Investment types like buy-to-lets are easier to manage once they’re up and running thanks to tenancy rent payments.

If upfront capital is an issue, you might need to consider a different route offered by another investor or a company specialising in property.

Joint venture investment can alleviate the costs of getting a property ready to rent by partnering an investor’s efforts with those of a business like Mistoria Group. Renovation and refurbishment are jointly funded, resulting in a property with high value but lessened upfront cost for the investor.

Merchant investment is another avenue that helps take some of the financial demand off an investor’s shoulders. This allows properties like HMOs to be purchased below market value. Merchant investment also results in a property that yields high value once refurbished and renovated as necessary.

Property investment with The Mistoria Group

We aim to be the most inspired choice for armchair property investment on the market.

Our expertise, business network, and in-depth knowledge of the property sector can guide you to the right opportunity for your property investment dreams and lead you to profitability in no time.

To learn more about the services and investment opportunities we offer, please get in touch today.