If you are thinking/planning of buying a property in the UK from overseas, then you must plan this and must read and follow all the laws.
You need to check if non-residents are allowed to buy the property. As of the UK, you are allowed to buy the property and rent it.
Currently, if you are from the EU, then there is no problem what so ever but from 1st January 2021, laws are changing, and all EU residents will be treated as non-residents.
This will be a cash purchase. But if you need to mortgage, then the lender will have to do checks on the property to ensure that it offers good security for the loan.
The best way to arrange a mortgage is to speak to a broker specializing in overseas mortgages, as they are familiar with the lending criteria. As you are a non-citizen, you are in your lawyer's hands or your agent, so be very careful.
Make yourself satisfied with what you are happy to purchase. Also, check the inheritance law as there will be an inheritance tax to be paid after you are deceased.
Make sure you have done your research; you must analyze and compare the products and services offered by different high-end companies.
Do not be lured into taking a mortgage through your seller or agent. If you are doubtful about the terms and conditions, then ask the lender to clarify. Once you sign the agreement, you will have no options, and you will not cancel the agreement.
Tax laws for land and property in the UK have become more complicated and have become less beneficial.
To understand the new rules and their implications for your portfolio strategies is very important. And it is very important that your ownership structures all the risks and being Tax efficient.
A heap of measures has been eliminated the tax benefits of indirect foreign ownership of UK residential ownership.
There is an additional 3% Stamp Duty Land Tax added to the standard rate of Stamp duty land tax if the property you are currently purchasing is in addition to another property you own elsewhere in the world. This additional rate applies from 8th July 2020 to 31st March 2021
In the interim, a new tax avoidance rule specifically targets disposals of foreign entities with at least 75% of their value in UK land and property. This allows HMRC to counteract any Tax advantages derived from such sale.
Confronted with more and more difficult tax landscape, non-resident property developers must consider two crucial questions – neither of which have simple answers:
Under current rules, there can be tax advantages to purchasing UK commercial property via an overseas company.
But the opposite is the case for residential property, thanks to ATED, the higher SDLT rate, and greater IHT exposure. Unless that is, the property being purchased is to be redeveloped or let on commercial terms to a third party with no connection to the owner.
b) Should properties be held in foreign corporate entities stay that way?
If buying a property for their own use, non-residents should consider collapsing any existing property-owning companies to avoid ATED and other potential tax liabilities.
Selling a company's shares (instead of the property itself) will attract a much lower SDLT rate than a property sale. But the gains will likely be eroded by the commercial risks and higher transaction costs of selling a company.
The tax rules affecting these decisions are highly complex. There will be a combination of commercial and personal priorities to weigh up alongside the tax implications. Expert technical advice will be essential when structuring your foreign-owned UK property portfolio.
Many property owners end up having problems because they do not seek independent legal advice but have used lawyers and translators recommended by estate agents or developers and, in some cases acting for both parties.
It would help if you appointed an English-speaking lawyer licensed to practice and is experienced in property sales.
You must check they are registered with the Law Society in the UK and are experienced in international transactions and make sure that they hold Indemnity Insurance.
If you do not understand English, then you must hire some who can translate English to your language so that you understand what you are being told instead of falling into unwanted trouble.
Make sure that the interpreter is always with you during meetings. Do not use an interpreter recommended by the estate agent.
There would be a range of additional costs besides the purchase price when buying a property. Some of the universal costs that would be incurred anywhere you buy a property are:
There is a higher risk to do this than buying a resale property
If you wish to buy an off-plan property or property under construction, then there are a number of points you need to be careful of:
If you think you have been the victim of fraud, and you do not have the insurance cover or Bank Guarantee, then you should look for Independent legal advice and take legal action with the help of the Courts.
You are liable to pay tax on your rental income to HMRC. If you earn more than £10,000.00 per year, then you must report it to HMRC as you pay Tax on profit on the rental income.
There are expenses you can claim (allowable expense) on the Rental income if you have rented the property:
You should be able to ask your accountant if you can claim these.
As an investor, you need to be very careful and appoint your legal advisor / financial advisor with care.