Buying a property can be a complex process, with various different considerations to take into account, where buying a property in the UK as a foreigner brings with it all kinds of additional considerations. As such, if you are currently looking to invest in UK property, it is essential to understand what is typically involved in this process.
The following guidance for overseas nationals on the rules when buying property in the UK looks at everything, from the relevant visa requirements to renting out property as a foreign landlord.
Do you need a visa to buy property in the UK?
Whether you need a visa to buy property in the UK will primarily depend on what you are planning to do with that property. If you are contemplating buying a property as an investment, one which you intend to rent out rather than live in, the visa requirements are relatively straightforward. You may not even need a UK visa, depending on your nationality.
As a non-visa national, for example, if you are American or Australian, you can visit the UK without having to apply for a visa, provided you meet the requirements under the UK’s visitor rules. During your stay, this time could be used to search for a suitable property, to secure any necessary funding and to instruct a conveyancing solicitor to make the relevant enquiries and undertake the usual searches before finalising the completion paperwork.
If you are a visa national, you require permission from the UK Home Office in advance of travelling to the UK. With a valid UK visitor visa in place, you can come to the UK to search for and buy a property which can then be advertised for rental purposes.
Importantly, if you are wanting to buy a property in the UK as a home, regardless of your nationality, unless you already have permission to live in the UK, you will need a suitable visa that permits this. There are various visa options available, including family-based visas and employment-based visas, although there are strict requirements that must first be met. There are currently no options available for UK permanent residency status in the UK solely on the basis of buying or investing in property.
What are the visa requirements to visit the UK to buy property?
You can visit the UK for the purposes of buying property under a standard visitor visa for a period of up to 6 months. Provided you do not engage in paid employment during your stay, this visa will give you ample time to search for a suitable property in the UK and make any other necessary arrangements to go ahead and purchase that property.
However, to be eligible for a standard visitor visa, you must be able to demonstrate that:
- you intend to leave once your permitted stay is over
- you are able to support yourself while in the UK
- you are able to cover any costs associated with either your return or onward journey
- you do not intend to live in the UK for an extended length of time through either frequent and/or successive visits, or make the UK your main home.
If you are not required to secure a visa prior to travel, you may still need to persuade immigration officials that you are seeking entry into the UK for a purpose permitted under the visitor rules. Even though buying a property, of itself, is not prohibited, you must have sufficient documentation to demonstrate that this will be an investment property and not a property that you intend to live in yourself, in this way potentially living in the UK through either frequent or successive visits. You may be asked various questions at the UK border about the activities that you plan to undertake during your stay, so you must be prepared and have in your possession sufficient paperwork to clearly support your account.
What documentation will you need to invest in UK property?
The UK openly welcomes overseas nationals to invest in UK property. Still, when it comes to regulatory requirements, and the various checks that must be made prior to purchasing a property, including identity checks and checks around source of funds, the rules are strict.
Identity checks
By law, those involved at various stages of the property purchase process in the UK will need to carry out certain checks under anti-money laundering regulations. These include undertaking ‘customer due diligence’ measures to check that their customers are who they say they are. In practice, customer due diligence will mean obtaining the following:
- your name and date of birth
- a photograph on an official document confirming your identity
- your overseas residential address.
As such, you will be asked by your solicitor, any bank or other lender involved, as well as any estate agent, to provide a government-issued document, like a valid passport or driving licence, to prove your identity. You will also need to provide utility bills, bank statements and potentially other official documents as proof of your overseas address.
Source of funds checks
Again, by law, those involved with the property purchase process will need to check your source of funds. The type of documentation acceptable to verify source of funds can include your bank statements, payslips, recently filed business accounts and/or tax returns, or documents confirming the source, such as the sale of another property, the sale of company shares or even a bequest under the estate of someone recently deceased.
Importantly, any failure to meet its’ statutory obligations could have serious consequences for a business, where it is a criminal offence to fail to comply with obligations under UK legislation to prevent, recognise and report money laundering. This means that any solicitor, bank or estate agent dealing with your property purchase will have no discretion to waive either the identity or source of funds checks, so you should ensure you have the necessary documentation ready and available to produce on request to avoid any delay.
How to buy a property in the UK as a foreign national
There are two main steps when it comes to buying property in the UK: the funding process and the conveyancing process. We look at each in turn below.
The funding process
As an overseas national, it is possible to secure a mortgage in the UK, although each lender will have its’ own lending criteria relating to each of the following:
- the price of the property and affordability
- the loan to value, so how much borrowing you can have based on your deposit
- your credit history and whether you have a UK bank account.
The range of providers and mortgage products are likely to be far more restrictive than for those living in the UK, not least when it comes to the level of deposit required or interest rates charged, but it is worth shopping around. There are plenty of specialist lenders available, where an experienced mortgage broker with access to these types of lenders can be especially useful for overseas nationals looking to secure a buy-to-let mortgage.
However, if you have the available funds to buy a UK property outright, the process will be far easier as a cash buyer. Further, yields from rental income can be high, while property prices tend to rise in the UK, making this a potentially lucrative way to invest your money.
The conveyancing process
Having identified a suitable property to invest in, and having secured funding to buy that property, where necessary, you will need to instruct a conveyancing solicitor. This is a legal professional with the qualifications and skills needed to undertake the conveyancing process, namely transferring the legal title of a property from one person to another.
Having instructed a solicitor, you will be asked to prove your identity and source of funds. You will also usually need to have a survey done of the property in question. As a cash buyer, having a survey is not mandatory, but it is best to err on the side of caution, where a surveyor should identify any potential problems with the property, including structural issues, subsidence or damp. If any problems are identified, it is then open to you to attempt to renegotiate the sale price to reflect the cost of rectifying any defects.
Once a survey has been undertaken, assuming you are happy to proceed, your solicitor will then complete the necessary conveyancing searches to identify any other potential problems with the property you are planning to buy. They will also review the title deeds to see if there are any issues that could adversely affect your interests, including your ability to either sell or mortgage the property in the future, or which may have an adverse impact upon its’ value. Finally, your solicitor will raise various detailed enquiries with the seller about the property, from any known boundary disputes to any major works done.
Provided everything is satisfactory, written contracts will be exchanged and your deposit paid. The property purchase will either complete on the same day, or typically up to 2 weeks after, at which stage, the balance of the purchase costs will be transferred to the seller and you will be handed the keys as the new legal owner of your UK property.
Importantly, you may also be liable to pay any stamp duty land tax (SDLT) upon completion, depending on the purchase price, where SDLT is a tax imposed by the UK government on the purchase of property with a value over a certain threshold. Your solicitor will be able to advise if this is payable and, if so, how much this will be.
Can you rent out UK property as a foreign landlord?
Having bought a property in the UK, you ought to be able to rent this out, although if you have a mortgage secured on that property, this would need to be a buy-to-let mortgage, where this type of mortgage may involve higher interest rates than a standard mortgage.
You should also give careful consideration as to how the rental of the property will be managed, where a landlord has a continuing obligation in the UK to ensure that any property they rent out is in good and habitable condition. For example, if the boiler broke and the tenants were without heating, you would need to rectify this issue straight away. Still, there are plenty of UK-based letting agents who specialise in managing rental properties on behalf of landlords, both in the UK and overseas. In some cases, your agent may even be able to offer some form of rent guarantee arrangement to ensure that you always receive a return on your investment, even where the property is vacant.
Finally, in addition to the costs associated with buying a UK property, including your conveyancing and survey costs, together with any SDLT, you must also carefully consider the potential tax implications if you will be receiving a rental income from the UK.
The Non-Resident Landlord Scheme (NRLS) is a special scheme for the UK rental income of landlords whose usual place of abode is overseas, where letting agents of a non-resident landlord must directly deduct tax from this income and pay the tax over to His Majesty’s Revenue and Customs (HMRC). If you do not have a letting agent acting for you, the tenant themselves must withhold tax personally under the NRLS if the rent they pay to you is more than £100 a week. However, you can apply for approval from HMRC to have any rent paid to you with no tax deducted, instead opting to declare this by way of self-assessment.
Need assistance?
As UK immigration specialists, DavidsonMorris can advise on your visa options when investing in the UK, from short term visits through to longer term routes. Contact us for expert guidance.
Buying property in the UK FAQs
Can foreign nationals buy property in the UK?
Yes, foreign nationals can buy property in the UK as there are no restrictions on non-UK residents owning properties in Britain. Foreign national property owners will be subject to the UK tax regime.
Do foreign nationals need a visa to buy a house in the UK?
No, foreign nationals do not need to have a visa to buy property in the UK. Likewise, buying property in the UK does not give foreign national property owners any UK immigration rights.
Does buying a house in the UK give you residency?
No, foreign nationals do not attain any rights to live in the UK through buying a house.
Last updated: 13 May 2023
Author
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals
