How to buy property in the UK

Buying property in the UK

BUYING PROPERTY IN THE UK: Real estate in the UK signifies reliability and stability for most people because it is a part of Europe but at the same time not a part of unstable continental Europe or the EU. Whatever their age, many wish to buy a property in England, from young people that come to study in universities and live in a stable country to well-to-do pensioners that want to spend their retirement in a safe environment.

There are no legal restrictions on foreigners in terms of which real estate they can buy, it can be a huge flat for a single family or a period mansion. Among other benefits is zero real estate tax which brings later costs down.

Main things to consider when buying real estate in the UK

Before you buy real estate in the United Kingdom, you need to look into the legal side of the purchase and ownership. Title to a property does not automatically lead to citizenship and special benefits; however, it provides protection from the state in the same way as for a British national.

The seller is not liable for any defects or damage found after the purchase. That’s why it’s so important to ask for professional advice and help; they will evaluate the property and make sure everything is in order before you buy it. It will save you a lot of hassle in the future.

If you decided to buy real estate in London or any other city in the UK, it is not just the purchase price you need to think about – it is also potential taxes and expenses. In some cases, additional costs can make up to 20% of the purchase price.

Real estate taxes

The purchase price is only one payment. There are many other payments you need to bear in mind when buying a property in United Kingdom.

Stamp duty land tax (SDLT)

Any type of real estate is taxable; land, flats, houses. It is a fixed percentage of the purchase price, and the lower the price the lower the tax. If you already own another residential property, you must add 3% on top of these rates.

  • Up to £250,000 – 0%
  • The next £675,000 (from £250,000 to £925,000) – 5%
  • The next £575,000 (from £925,000 to £1,500,000) – 10%
  • More than £1,500,000 – 12%

If you’re buying your first home, you don’t have to pay any stamp duty so long as it costs less than £425,000. Where it costs less than £625,000 you have to pay 5% on the portion from £425,001 to £625,000. If the price is more than £625,000, you do not receive any relief.

Other costs

  • Conveyancing fees payable to a conveyancer or a conveyancing solicitor – £500 to £1,500 plus £250-450 for disbursements, e.g. transferring ownership fee.
  • Survey fee payable to a professional surveyor – up to over £1,000.
  • Mortgage arrangement fees payable to a mortgage company – up to 1% of the mortgage, the average is £1,000.
  • Mortgage broker fees – up to 1% of the mortgage.
  • Valuation fee payable to mortgage lender – around £200.

Buying off plan

Buying off plan is the action of buying real estate before the development is complete. In some cases, the development may not have even been started. There are two completion dates to note when buying off plan – the short stop, when the developer expects the property to be finished, and the long stop, when it must be finished.

Advantages of buying off plan

  • Deposits for unfinished new builds may be cheaper than those on completed properties.
  • You can often influence design features, fixtures and fittings.
  • Purchasing the property at a fixed price before completion means you can benefit from inflation on 100% of its capital value;
  • There may be discounts available for bulk purchases, which can act as a safeguard against potential market deflation.

In some cases, you may choose to sell on the purchase before it has reached completion. This process is known as flipping contracts. In order for this to be done the contract must be assignable, we recommend that you check this prior to proceeding with a purchase of this nature.

Off market buying refers to private sales that are not advertised on the open market, either through an agent or directly with the real estate owner.

Buy-to-Let Property

Buy-to-let is a commonly used term for purchasing a residential dwellings with a purpose of letting it out to tenants rather than lived in by the owner. This is a type of investment as old as the practice of land ownership. Buy-to-let property can generate short term rental income, providing that the owner (the landlord) accounts that the revenue will cover taxes, cost of maintaining the property and mortgage, should there be one.

Providing the value of the dwelling appreciates, these investments can also return mid to long term profits through capital growth.

What to consider

Area– areas command different rental yields and capital growth. Investors may choose to focus on an area where real estate prices are rising but rents remain steady, or other way round;

Property Condition– investors can potentially increase the value of their asset through renovation and conversion, but some investors will want a property that is ready to rent immediately;

Mortgage arrangements– interest rates on buy-to-let mortgages are usually higher. The minimum deposit for a buy-to-let mortgage is usually 25% of the real estate’s value (although it can vary between 20-40%);

Single or multi-unit purchase– in some cases bulk discounts are available in multi-unit freehold blocks (MUFBs) when investors looking to buy several properties at once;

Funds liquidity– it might take a while to access the money invested in property;

Landlord responsibilities– it is important to understand your rights and responsibilities when becoming a landlord.

Mortgage in the UK

Typical mortgage rate in the UK is 5-7%. It is very low compared to some other countries. Standard mortgage term is 25 years, but it can be extended to 35 and 40 years.

General eligibility requirements

  • Age –18 to 75;
  • Borrowed amount – up to 100% in some cases though in average 80%. However, it is better to approach a lender with a down payment in hand. The higher the down payment, the better interest rate you can get;
  • Permanent income and stable expenditure records to be able to meet mortgage repayments.

Mortgage in the UK for foreigners

Not all UK banks offer mortgage to non-UK residents. And if they do, they offer slightly sell favourable conditions and higher interest rates. You will be also undergoing extra checks to ensure you are creditworthy.

Required documents:

  • copy of an ID (passport);
  • bank statements;
  • proof of salary/ letter from employer;
  • utility bills, etc.

Buying property in London or elsewhere in the UK is rather straight-forward but there are many things and pitfalls to be kept in mind. If you cannot do it on your own, or you want to minimise taxes and buy high-quality real estate, Imperial & Legal would be happy to help you.

For all your property and investment needs, contact Bond Adams Solicitors on 01162858080 or email

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