Benefits of investing in UK properties: How much money do I need?
It is a well-known fact that investment in the United Kingdom is one of the most effective ways of relocating to the country with the right in the future to apply for permanent residence and eventually British citizenship. Besides, contributions to the UK economy is also a good way to earn money.
In this article, we will talk about investing in commercial and residential properties in the UK as a good way to save and increase your capital in the long term.
Hidden benefits of the UK real estate market
Those investors that are not prepared to wait for years for the best opportunity to sell their property have another option. Our experts will help you find commercial or residential properties that you can buy to let and start getting regular income from day one.
How to invest in UK properties?
Expert advice on pros and cons of investing in residential and commercial properties in the UK
What’s the benefit of having a management company?
How much profit your house, flat or a plot of land can generate depends a lot on how well they are managed. Our property experts at Imperial & Legal will make sure that you not only secure the best deal, but:
- Get access to the segment of the market where the demand is constantly higher than the offer.
- Optimise your maintenance and running costs.
- Outsource any communications with tenants and sign new tenancies more easily.
Can I get residence by investment in a UK property?
If we look at other European countries that have less strict requirements, investment in real estate is as good as investment in shares of local businesses. But you can spend millions on a house or land in the UK and still have no immigration status. To apply for an investor visa that is comparable to a European residence permit, you will need to invest at least £2 million in the economy, e.g. in stocks and shares of UK companies.
On the other hand, investment in real estate is less risky than buying shares. UK legislation in no way limits the ownership rights of foreign nationals buying houses, flats, land or commercial properties in the country. They have the same rights and duties as the British nationals.
Please bear in mind that investment in a residential or commercial property can serve in your favour when you apply for a long-term visa to the UK, because it demonstrates the following:
- Your financial stability
- Serious nature of your intentions
What is the difference between freehold and leasehold?
First, let’s understand what freehold means and why it is called free as opposed to non-free?
It is a fact that land always belongs to someone. If your house or warehouse stand on the land that also belongs to you, it is called freehold.
If you only own a flat or a house while the land belongs to somebody else, you are renting the land long-term and it is called leasehold. You are signing a long-term lease with the landowner(s) that stipulates clearly the rent and when it expires.
There is yet another type of property ownership in the UK called commonhold. In this scheme, you own the freehold of a flat while the common areas such as staircases, corridors, land and adjacent territory are jointly owned and managed by all owners in a condominium.
5 tips for UK commercial property investors
- The demand for certain types of commercial properties in the UK significantly exceeds the offer. Therefore, you are buying a property with high liquidity and potential gain when you sell it.
- The most popular investments are offices, shopping centres, shops and warehouses. The best buy is a combination of properties, for example a house in the city centre with shops and a café on the ground floor and offices on top floors.
- If you choose to invest in shops or a shopping centre, look for spaces and buildings in densely populated areas with good access routes.
- If it is your first investment in the commercial sector, consider purchasing warehousing facilities.
- Do not forget about liability insurance; it is a must in the UK. Factor it in your costs how much you will spend on property insurance and landlord liability insurance. This will save you from damages and potential court fees.
How much does real estate cost in the UK?
UK real estate market is known to be one of the most expensive, especially if you are buying freehold. To be more precise, we have prepared a table with residential property prices in 15 London boroughs as of April 2020.
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 |
How to buy residential property in the UK?
The whole purchasing process may take up to 2 months. Here is our step-by-step buyer’s guide for residential properties in Great Britain.
- Step 1
You sign a contract with a legal firm where you stipulate all your wishes and intentions regarding future purchase in the UK as well as search criteria. - Step 2
We are searching the market, including the one closed to the general public, for properties that best suit your criteria. We then shortlist properties that we offer to you to consider. - Step 3
We are viewing shortlisted properties together with you. If necessary, we arrange for an independent valuation by a third—party expert. - Step 4
We start negotiations with a seller and provide full legal support of the deal from drafting a sale and purchase agreement to obtaining all necessary documents for yourself as a new owner. - Step 5
We arrange your relocation to the UK and notify relevant authorities of your arrival. You can also appoint us to manage your property if it was bought as an investment.
Property-related taxes and additional costs for property buyers in the UK
You must know that you will have to pay some taxes and other fees when you buy real estate in Great Britain. The exact amount depends on the terms and conditions of the deal.
By way of an example we will take a house or a flat with 100% upfront payment. For your convenience, we have included all payments in a table below except for the purchase value and stamp duty that we will cover separately.
Pre-purchase costs
| Service | Cost | Notes |
| Conveyancing for legal advice and support | £2,500 – 5,500 | Depends on the situation, for example, the number of parties to the deal, whether it is freehold or leasehold |
| Independent valuation and survey | £900 – 2,000 | It reveals structural defects of the purchased property |
| Location analysis | £400 – 700 | It will look for issues on the adjacent territory that could affect the purchase value |
| Land registry fee | £90 – 950 | To register transfer of title |
| Bank commission | £40 – 50 | |
| Total costs | £3,930 – 9,200 |
Therefore, if you have been living and working in the UK for a long time, you can consider buying a property with a mortgage. But in this case your costs will increase by £200 to £2,500 for bank valuation and other services.
Post-purchase costs
| Service | Cost | Notes |
| Property insurance | £300 | Annual fee |
| Relocation | £50 – 1,500 | |
| Council tax | £700 – 2,500 | Annual tax, depends on the council |
| Total costs | £1,050 – 4,300 |
You can learn about other taxes that a property owner must pay in the UK in our article here.
How to calculate stamp duty in the UK?
There is no stamp duty for British nationals buying their first home that costs less than £300,000. If the value is in the range of £300,001 to £500,000, there is no stamp duty on the first £300,000 and the rest is taxed at 5%.
From April 2021, stamp duty for foreign buyers will be increased by 2%. Therefore, we had to subdivide the table below into more columns: basic rate and additional property rate for UK and foreign nationals.
Calculate your stamp duty
Property purchase value | Basic rate | Additional property rate | ||
| UK residents | Foreign buyers* | UK residents | Foreign buyers* | |
| Up to £125,000 | 0% | 2% | 3% | 5% |
| £125,001 to £250,000 | 2% | 4% | 5% | 7% |
| £250,001 to £925,000 | 5% | 7% | 8% | 10% |
| £925,001 to £1,500,000 | 10% | 12% | 13% | 15% |
| Over £1,500,000 | 12% | 14% | 15% | 17% |
* From April 2021
Even with all additional costs the UK real estate is still a very good investment either for those who want to move to the United Kingdom or those who is looking to save and increase their capital.
No matter what issues you have when buying a house, flat or land in the UK, our qualified lawyers at Imperial & Legal are always happy to provide you with full legal support in searching properties in Great Britain, assisting with completion of a deal and if necessary with your relocation to the UK.
