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Advantages of buying UK property

Real estate in the United Kingdom signifies reliability and stability because the country is known for its economic prosperity. UK properties are expensive, and they constantly grow in value. If you want to make a secure and profitable investment, purchasing a UK property could be a good idea.

Apart from the opportunity to rent out and re-sell your UK property at a higher price, purchasing British real estate can be attractive for several other reasons. For example, foreign nationals are allowed to buy any property they like, from a family flat to a large period mansion in a prestigious London borough. British taxation system also offers a major advantage since there is no annual property tax per se; it means your post-acquisition costs are lower.

This explains why people of all ages consider investing in UK properties, from young people who want to study in prestigious British universities and build their careers in a country with a stable economy to wealthy retired people who seek comfort and safety.

Peculiarities of purchasing UK property

Before you buy a UK residential or commercial property, you need to look into the legal side of the purchase and ownership. Title to a property does not automatically lead to an Indefinite Leave to Remain (ILR), citizenship, or benefits; however, it provides governmental protection the same way as for a British national.

The seller is not liable for any defect or damage found after the purchase. That’s why, it’s so important to ask for professional advice and help. Experts will evaluate the property and make sure everything is in order before you buy it. It will save you from unexpected costs in the future.

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

Taxes on UK property and other costs

You should not forget that the purchase price is not the only payment you must pay. There are many other payments you need to bear in mind when buying a UK property. For more information, continue reading this article.

Stamp duty land tax

Any type of UK property (land, a flat, or a house) is taxable with a Stamp Duty Land tax (SDLT). The tax rate depends on the following factors:

Buyer’s nationality: non-UK residents have to pay more from 1 April 2021.
Property location: there are different tax rates and criteria for England and Northern Ireland, Scotland, and Wales.
Property value: the lower the value, the lower the tax rate.
Buyer’s ownership in the UK: whether it is their first UK property.

Average values

Average residential property values in inner London

District	Studio flat (£)	1 bedroom apartment (£)	2 bedroom apartment or house (£)	3 bedroom apartment or house (£)	4 bedroom apartment or house (£)
Camden	435 000	534 000	965 000	1 741 000	2 252 000
City of London	585 000	820 000	1 463 000	3 387 000	3 309 000
Hackney	421 000	434 000	562 500	882 500	1 225 000
Hammersmith and Fulham	324 000	537 000	782 000	1 452 000	1 675 000
Haringey	274 000	362 000	567 000	773 000	1 017 000
Islington	303 000	567 000	825 000	1 128 000	1 477 000
Kensington and Chelsea	417 000	790 000	1 334 000	2 518 000	3 608 000
Lambeth	389 000	397 000	722 000	826 000	1022 500
Lewesham	255 000	320 000	510 000	632 000	966 000
Newham	348 000	293 000	461 000	543 000	778 000
Southwark	384 000	498 000	770 000	923 000	1 198 000
Tower Hamlets	387 000	594 000	735 500	1 023 000	1 295 000
Wandsworth	328 000	570 000	682 000	1 195 000	1 437 000
Westminster	387 000	632 000	1 049 000	2 220 000	3 089 000

Average residential property values in outer London

District	Studio flat (£)	1 bedroom apartment (£)	2 bedroom apartment or house (£)	3 bedroom apartment or house (£)	4 bedroom apartment or house (£)
Barking and Dagenham	253 000	325 000	413 000	422 000	498 000
Barnet	210 000	340 000	479 000	647 000	1 135 000
Bexley	249 000	251 000	370 000	491 000	693 000
Brent	307 500	334 000	468 000	718 000	1 190 000
Bromley	188 000	247 500	420 000	589 000	903 000
Croydon	191 000	307 000	344 000	571 000	712 000
Ealing	344 000	410 000	554 500	698 000	1 124 000
Enfield	192 000	263 000	440 000	562 500	855 000
Greenwich	344 000	369 000	504 000	674 000	823 000
Harrow	245 000	311 000	472 500	598 000	1 008 000
Havering	208 000	229 000	327 500	442 000	704 000
Hillingdon	209 000	266 000	410 000	560 000	829 000
Hounslow	247 000	404 000	455 000	575 000	893 000
Kingston upon Thames	268 000	321 000	519 000	677 000	840 000
Merton	293 000	359 000	429 000	634 000	893 000
Redbridge	234 000	273 000	400 000	554 000	707 500
Richmond upon Thames	270 000	494 000	691 000	861 000	1 280 000
Sutton	240 000	270 000	361 000	552 000	729 000
Waltham-Forest	224 000	313 000	466 000	570 000	757 000

Intervals

Average residential property values in inner London

District	Studio flat (£)	1 bedroom apartment (£)	2 bedroom apartment or house (£)	3 bedroom apartment or house (£)	4 bedroom apartment or house (£)
Camden	265 000 – 800 000	270 000 – 875 000	550 000 – 1 750 000	600 000 – 4 250 000	1 350 000 – 5 250 000
City of London	360 000 – 850 000	475 000 – 1 150 000	650 000 – 3 335 000	900 000 – 9 500 000	975 000 – 9 900 000
Hackney	250 000 -698 000	285 000 – 750 000	400 000 – 850 000	600 000 – 1 850 000	595 000 – 2 450 000
Hammersmith and Fulham	195 000 – 505 000	435 000 – 820 000	440 000 -1 300 000	650 000 – 4 500 000	900 000 – 3 750 000
Haringey	167 000 – 350 000	230 000 – 525 000	265 000 – 825 000	475 000 – 1 400 000	530 000 – 1 600 000
Islington	190 000 – 450 000	300 000 – 883 000	400 000 – 1 400 000	650 000 – 2 000 000	750 000 – 3 500 000
Kensington and Chelsea	275 000 – 575 000	425 000 – 1 325 000	750 000 – 2 290 000	1 100 000 – 4 950 000	1 750 000 – 5 500 000
Lambeth	220 000 – 560 000	285 000 – 775 000	350 000 – 1 250 000	425 000 – 1 520 000	450 000 – 1 695 000
Lewesham	180 000 – 350 000	210 000 – 450 000	350 000 – 675 000	440 000 – 835 000	650 000 – 1 650 000
Newham	200 000 – 490 000	220 000 – 425 000	285 000 – 650 000	375 000 – 700 000	525 000 – 1 200 000
Southwark	220 000 – 575 000	335 000 – 925 000	400 000 – 1 250 000	595 000 – 1 350 000	750 000 – 1 850 000
Tower Hamlets	300 000 – 560 000	375 000 – 945 000	375 000 – 1 250 000	450 000 – 2 000 000	450 000 – 2 500 000
Wandsworth	230 000 – 675 000	375 000 – 810 000	440 000 – 995 000	650 000 – 2 065 000	900 000 – 2 080 000
Westminster	275 000 – 610 000	425 000 – 950 000	600 000 – 1 600 000	1 000 000 – 5 750 000	1 895 000 – 6 500 000

Average residential property values in outer London

District	Studio flat (£)	1 bedroom apartment (£)	2 bedroom apartment or house (£)	3 bedroom apartment or house (£)	4 bedroom apartment or house (£)
Barking and Dagenham	165 000 – 375 000	175 000 – 280 000	245 000 – 425 000	265 000 – 600 000	363 000 – 600 000
Barnet	150 000 – 290 000	200 000 – 529 000	325 000 – 650 000	375 000 – 965 000	795 000 – 1 850 000
Bexley	100 000 – 400 000	160 000 – 425 000	250 000 – 650 000	340 000 – 590 000	446 000 – 1 150 000
Brent	215 000 – 480 000	265 000 – 529 000	350 000 – 675 000	375 000 – 1 300 000	675 000 – 1 775 000
Bromley	160 000 – 250 000	180 000 – 385 000	280 000 – 645 000	325 000 – 995 000	700 000 – 1 900 000
Croydon	160 000 – 250 000	230 000 – 415 000	250 000 – 475 000	465 000 – 750 000	375 000 – 1 500 000
Ealing	195 000 – 525 000	210 000 – 538 000	330 000 -815 000	490 000 – 1 350 000	645 000 – 1 750 000
Enfield	150 000 – 225 000	165 000 – 485 000	260 000 – 650 000	400 000 – 760 000	575 000 – 1 200 000
Greenwich	230 000 – 429 000	190 000 – 550 000	280 000 – 750 000	450 000 – 1 350 000	480 000 – 1 500 000
Harrow	200 000 – 300 000	190 000 – 375 000	250 000 – 775 000	375 000 – 850 000	650 000 – 1 450 000
Havering	160 000 – 325 000	140 000 – 300 000	200 000 – 435 000	325 000 – 550 000	525 000 – 1 050 000
Hillingdon	160 000 – 260 000	195 000 – 325 000	290 000 – 500 000	400 000 – 700 000	575 000 – 1 195 000
Hounslow	175 000 – 420 000	225 000 – 635 000	300 000 – 695 000	400 000 – 795 000	525 000 – 1 550 000
Kingston upon Thames	230 000 – 325 000	270 000 – 430 000	275 000 – 695 000	450 000 – 900 000	575 000 – 1 425 000
Merton	200 000 – 425 000	230 000 – 650 000	250 000 – 595 000	430 000 – 1 150 000	495 000 – 1 595 000
Redbridge	165 000 – 397 000	210 000 – 400 000	265 000 – 500 000	350 000 – 750 000	500 000 – 1 000 000
Richmond upon Thames	160 000 – 440 000	340 000 – 795 000	475 000 – 1 250 000	500 000 – 1 350 000	625 000 – 1 750 000
Sutton	185 000 – 375 000	210 000 – 315 000	175 000 – 475 000	350 000 – 700 000	595 000 – 875 000
Waltham-Forest	150 000 – 325 000	182 000 – 600 000	300 000 – 700 000	413 000 – 875 000	550 000 – 1 000 000

If you’re buying your first home, you don’t have to pay any stamp duty as long as it costs less than £425,000. If it costs less than £625,000, you must pay 5% on the portion from £425,001 to £625,000. If the price is more than £625,000, use the table above.

Other costs

SDLT is not the only tax that buyers of UK properties must pay. The UK real estate agents usually act in the sellers’ interests. If you want to make a good deal, you will need professional assistance from independent experts. Such assistance will add to your purchasing costs:

Conveyancing fees starting from £2,000;
Costs for requesting a government report that start from £700;
Survey fee of around £1,000;
Sometimes, additional costs to get help from third parties: lawyers who act on behalf of a housing management company or other individuals involved (the sum is agreed upon on a case-by-case basis).

If you plan to take out a mortgage to purchase a UK property, you will have to consider the following expenses:

Mortgage arrangement fees payable to a mortgage company – up to 1% of the mortgage, the average is £1,000.
Mortgage broker fees – around £1,000.
Valuation fee payable to a mortgage lender – around £800.

Post-acquisition costs

Ground tax

If you do not own the land that your house or flat sits on, you enter a long-term rental relationship with your landlord. The ground tax rate is not very high and amounts to £50–100 per year. The only exception applies to expensive flats and houses in central London where the tax rate can reach tens of thousands of pounds.

Council tax

Any occupiers of a UK property, a landlord or a tenant, must pay a council tax that is used to maintain the outside territory and the infrastructure surrounding the real estate. It means that if you rent out a flat or a house, it will be your tenants’ responsibility to make the payments. It substitutes the property tax that is not charged in the UK.

Buying UK property off plan

Buying off-plan means investing in real estate before its construction is complete. In some cases, the construction may not have even been started. There are two completion dates to note when buying off-plan: a short stop date when the developer expects the property to be finished, and a long stop date when it must be finished.

What are the 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 the property before it is built. To do this, the contract must be re-assignable. It is recommended to check this before proceeding with a purchase of this nature.

Off-market buying refers to private sales that are not advertised on the open market. We have access to the pool of such options and usually select the most attractive options for our clients.

Purchasing UK buy-to-let property

When you plan to purchase a buy-to-let property, your approach would differ from when you buy a flat or a house for yourself. This is a type of investment as old as the practice of land ownership.

A buy-to-let property can generate a short-term rental income, provided the owner (the landlord) has accounted for all taxes, maintenance costs and mortgage, if any. Should the value of the property go up, the investment can generate capital gains in the mid to long term.

Criteria for UK buy-to-let property

Location
The location will determine how much you can let your property for and how much you will gain if you decide to sell. In the UK, there is an inverse relationship between these two parameters. Investors may choose to focus on an area where real estate prices are rising, but rents remain steady, or the other way around.
Property condition
You can increase the property value through refurbishment or alterations. However, most people prefer to buy a UK property that can be rented out right away.
Mortgage arrangements
Interest rates on buy-to-let mortgages are usually higher. The deposit for a buy-to-let mortgage can vary between 20 and 50%, but the minimum deposit is usually 25%.
Single or multi-unit purchase
In some cases, bulk discounts are available in multi-unit freehold blocks (MUFBs) when investors are looking to buy several properties at once.
Funds liquidity
It might take a while to access the money invested in a property. Besides, you need to objectively assess the liquidity of your purchase: for some flats and houses in the UK, there is a steady demand; others cannot be rented out so quickly and easily at a reasonable price.

Landlord’s responsibilities

You must understand your rights and responsibilities if you plan to become a landlord. For example, every time you get your rent, you must do the following:

Declare your income;
Pay income tax even if you are a non-UK resident.

Mortgage in the UK

The mortgage rate in the UK is record low starting from 2%. The standard mortgage term is 25 years, but it can be extended to 35 and 40 years.

General eligibility requirements

Age – from 18 to 75 years old;
Stable income and regular outgoings to be able to make mortgage repayments;
Borrowed amount is on average up to 80%. In some cases, it can be up to 100%. However, it is better to approach a lender with a deposit in hand. The higher the deposit, the better interest rate you can get.

Mortgage documents for foreign applicants

An ID;
Proof of your current address;
Proof that you have enough finances in your bank account (bank statement etc.);
Proof of your sources of income for the last three months (for example, payslips, dividends, bonuses for the last year, etc.);
Additional documents to confirm your creditworthiness.

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Purchasing UK property with Imperial & Legal

Purchasing UK Property with Imperial & LegalPurchasing property in London or any other British city is not so difficult. At the same time, there are a lot of things to be aware of. If you are not sure whether you can comprehend all of them, if you want to optimise your taxation and be confident in the condition of the property you purchase, you can contact Imperial & Legal for help.

We are not real estate agents, so we will represent you, the buyer, and not the seller. Our approach is to offer completely unbiased and balanced support to ensure you find and purchase the right property at the right price. We will also advise you on the related taxes and fees and offer cost optimisation solutions.

Imperial & Legal’s specialists have been in real estate for more than 20 years working both in the open and private markets, with well-known real estate agents and private developers alike. The latter usually offer very attractive options.

How we work

Initial meeting
It is an important first step that enables us to fully understand your requirements and what is important to you. We can also advise you on locations, styles, price per square meter, and current market conditions.
Property criteria
We narrow down search criteria taking into account your requirements and preferences. This is emailed to you so that we are all clear on the initial search criteria.
Property search
We do a thorough market search on your behalf, including properties which aren’t officially on the market. Our network of contacts alerts us of any housing stock, distress and failed sales, auction opportunities, and new builds in advance of agent listings. We then preview the properties which closely match your criteria.
Report to you
Having viewed each property, we shortlist those which best suit your brief and provide you with honest and objective feedback on them.
Viewings with you
Most of our clients choose to view the shortlisted options themselves. We organise viewings at times to suit you. We drive you to all viewings to show you around ourselves and discuss feedback with you afterwards. If you’re not going to be in London, we can organise a virtual tour (via Zoom, Skype, etc.) or show the options to your friend or family member.
Negotiation
When the right property is found, we advise you on its value and negotiation tactics or handle the negotiations on your behalf to secure the lowest possible price. We can also organise an independent inspection of the property to detect all the defects before the purchase and avoid the related additional repair costs.
Overseeing your purchase
Once the price is agreed upon, we manage the buying process on your behalf through to completion, liaising with all parties involved. Our experienced conveyancing solicitors will act in your interests through the whole process, check all documents, and ensure that the process runs as smoothly and quickly as possible.
Settling in
Even after the deal is made, Imperial & Legal remains on hand. We will provide you with a tailored comprehensive relocation package. Our experts will help you not only obtain the required visa but also open a bank account, set up a business, find schools for your children, and optimise taxation.
Property management
If you treat your UK property as an investment or do not plan to live in the purchased flat or house for some time, we can provide you with a full property management service.

Other services for relocation to the UK

Investing in new UK property

Finding an ideal home for a family from Ireland

Global Talent and mortgages: a journey from Georgia to UK

Helping entrepreneurs from Brazil to buy a house in UK

Turnkey commercial real estate solution: the story of Gerhart

How an entrepreneur from Portugal started a medical business in the UK

Property purchase and Buy-to-Let investment in London for a Portuguese couple

What taxes do I have to pay if I rent out a UK property?

According to British law, even if you are not a UK tax resident, you will have to pay taxes on all the income that originates inside the UK. Individuals pay income tax on salary, bonuses, pensions, savings interest, and rental income. The tax rate is progressive and ranges from 0% to 45% with annual indexation. For example, here are the income tax rates for the 2023/2024 tax year:

Income (£)	Tax rate
Up to 12,570	0 %
From 12,571 to 50,270	20%
From 50,271 to 125,140	40%
More than 125,140	45%

What taxes do I have to pay if I sell my UK property?

Apart from an income tax on your rental property, you will have to pay a Capital Gains tax (CGT) if your property value has grown since its acquisition.

CGT is paid after you sell your house or flat. It is the difference between the purchase price and the selling price. Sometimes, you can lower your tax burden by deducting the money you have spent on legal support of the purchase (real estate agents and solicitors) and refurbishment from your gain. You can also get some tax reliefs depending on the tax year. The CGT rates are the following:

18% – gain is less than £37,700;
28% – gain is more than £37,700 (for residential property; 20% – for commercial property).

If you are not a UK tax resident, you will have 30 days to pay a CGT after you sell your property. As a UK tax resident, you will have more time but only till the end of the tax year.

What is the stamp duty land tax rate for companies?

If the property value is more than £500,000, the stamp duty land tax (SDLT) rate for legal entities will be 15%. In some cases, companies are exempt from SDLT. To learn more about the benefits that you can enjoy, contact Imperial & Legal’s experts.

What is a freehold property?

Most foreign nationals who come to the UK do not know that they must pay a ground tax if they own only the property and not the land that it is built on. This type of ownership is called leasehold and means a long-term rent for up to 999 years. As a rule, a leasehold property is cheaper, and the annual rent rarely exceeds £100.

However, if you want to secure a property for good, you should aim at a freehold property when both the building and the land will belong to you.

What will be the stamp duty land tax rate if I purchase my first residential property in Scotland?

Scotland has its own SDLT rates that differ from the British and Irish ones.

Standard SDLT rates for residential properties in Scotland

Property value (£)	SDLT rate
First 145,000	0%
Additional 105,000 (property value from 145,001 to 250,000)	2%
Additional 75,000 (property value from 250,001 to 325,000)	5%
Additional 325,000 (property value from 325,001 to 750,000)	10%
More than 750,000	12%

If you purchase your first property in Scotland, the first £175,000 of the property value will be tax-free.

What is a condominium?

A condominium is a form of property ownership when people who live in a block of flats own only their flats while sharing the ownership of common areas. All the decisions concerning the maintenance of commonhold areas are made during general meetings.

A condominium may include several neighbouring blocks of flats with shared outdoor space.

Can I skip an independent survey?

As it was mentioned above, by UK law, you won’t be able to claim against property defects that you only discovered after the deal is made. To avoid unpleasant surprises and additional costs, it is recommended to contact an experienced surveyor for an independent inspection of your future house or flat.

The inspection will give you an objective look at the condition of the property you plan to buy, maintenance costs, and repair costs. In some cases, based on the estimated required costs, you can get significant discounts on the purchase price. Most importantly, you can avoid a reckless purchase when the attractive price will just hide expensive repairs and maintenance costs.