UK Property Investment Guide for Foreign & Hong Kong Buyers
Below is a general procedure of buying a UK Property in Hong Kong or as a non-resident. This guide is applicable to buying properties in London, Manchester, Birmingham and Liverpool etc.
1. Reserve Unit
First, select the property and unit type. Then, £1000 - £5,000 is payable as a reservation fee to the developer which is non-refundable.
2. Assign a Solicitor to Sign Sales & Purchase Agreement
Assign a UK qualified solicitor as the representative of the buyer to sign the Sales & Purchase Agreement.
3. Pay First Instalment
After signing the Sales & Purchase Agreement, 10%-25% of the purchase price is payable by the buyer to the attorney to the developer's account.
4. Apply for Mortgage
If you are a loan buyer, you are required to apply for mortgage 6 months before completion. We could provide mortgage referral service to our clients.
5. Pay Partial Amount of the Purchase Price
Some of the UK properties might require the buyers to pay partial amount of the purchase price 6 months after signing the contract. (Payment terms vary from developer to developer.)
6. Notice of Completion
When the UK property has been completed, the solicitor will notify the buyer to check the unit. (It can either be carried out by the solicitor or local surveyors). After checking the unit, the solicitor will confirm the handover date. On the day of handover, the bank will release the mortgage amount to the developer. As for cash buyer, you'll be required to transfer remaining amount of purchase price at the same stage. When the buyer gets the key, the transaction is officially completed.
7. Rent Out the UK Property
When the buyer has got the key, you can assign a letting company in the UK to manage your property. They can provide services such as tenant recruitment, checking and maintaining the property, paying taxes for the owner etc. The expenses will be charged directly from the rental return.
FAQ
Q: What is the percentage of mortgage can apply for purchasing UK property as a foreign buyer?
A: Foreign buyers can apply for up to 70% mortgage. The interest rate can be as low as 3.25% per annum and loan period can be 25 years. (Depends on the buyer's financial background and the lender's offer)
Q: Are there any expenses when foreign buyers buy / sell a UK property?
- Legal Fee: The legal fee for buying/selling a UK property is around GBP£1,300 - £2,000. The foreign buyers could use their own lawyers or we could refer a lawyer to you.
- Management Fee: Charged by the management company and depends on the size of the unit. Generally, it will be charged for £2 -£4 / square ft.
- Letting Fee: Will be charged when the property owner rents out its property. A 8%-10% of the monthly rent will be charged.
- Estate Agent Fees: 2% - 4% of the selling price of your UK property is payable when you sell your UK property through a local agent.
UK Property Taxes for Non-Residences
One-off Taxes:
- Stamp Duty Land Tax (SDLT): One of the most expansive taxes in the United Kingdom when someone buy a property. It is normally payable after signing the contract in 30 days. The amount will vary according to the size, usage and the property right. In the UK Budget 2020, the Government announced a SDLT surcharge of 2% on non-UK residents purchasing residential property in England and Northern Ireland with effect from 1 April 2021. The change will affect non-UK resident individuals, trusts and companies exchanging contracts on or after 11 March 2020.
However, the Chancellor of the Exchequer, Rishi Sunak, has announced that starting from 8 July, 2020 to 31 March, 2021, there will be a stamp duty holiday for buying properties in the UK worth less than £500,000.The stamp duty for the UK properties over £500,000 will also be reduced during the stamp duty holiday. (P.S. The property must be completed within the stamp duty holiday period)
The following thresold is applicable to the stamp duty holiday period from 8 July, 2020 to 31 March, 2021.
| Property Price (GBP£) | First Home Buyer | Non First Home Buyer |
| £0 ~ £500,000 | 0% | 3% |
| £500,001 ~ £925,000 | 5% | 8% |
| £925,001 ~ £1,500,000 | 10% | 13% |
| OVER £1,500,000 | 12% | 15% |
The following thresold will be resumed after the stamp duty holiday is ended on 31 March, 2021.
| Property Price (GBP£) | First Home Buyer | Non First Home Buyer | Including 2% Non-resident surcharge from April 2021 |
| £0 ~ £125,000 | 0% | 3% | 5% |
| £125,001 ~ £250,000 | 2% | 5% | 7% |
| £250,001 ~ £925,000 | 5% | 8% | 10% |
| £925,001~ £1,500,000 | 10% | 13% | 15% |
| OVER £1,500,000 | 12% | 15% | 17% |
Other Taxes:
- Ground Rent: No definite amount and varies from property to property. For example, some of the contemporary apartments will be charged for £200 - £300 per annum, whilst some of the properties owned by the UK government might only charge for £10 per annum.
- Income Tax: Non-UK residents are required to report the rental income of properties in the UK. The tax rate is charged at 20% of the rental income but foreign buyers could waive partial amount with some revenue expenses such as repairs, maintenance, insurance, management fees etc. British Passport Holder could enjoy exemption from tax for the first £11,000 or so of profit.
- Council Tax: It is not necessary to pay for the Council Tax if you rent out the property and it will be bare by the tenant. The charges vary from property to property and the exact amount will be notified by the department before the tenant moves in.
Expenses when foreign investors sell a UK property
- Capital Gains Tax: 18%-28% of the profit from selling the UK property. The foreign investor must report to the HMRC within 30 days after you sold the property.
| Profit (GBP£) | Rate |
| £11,100 or below | 0% |
| £11,101 - £31,800 | 18% |
| £31,801 or above | 28% |
