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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

Like in any other country with a free and stable economy, UK real estate market has been through different periods, stagnation and fast growth. However, Great Britain is not in the top 5 investment destinations of the world for nothing. In the long run, a house or a flat in the UK will not only save your money from inflation, but also generate a significant gain if you decide to sell it.

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.

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.

Преимущества инвестирования в британскую недвижимость

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.

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

Note: In the table, we have not included the most popular way of buying a property, mortgage. Mortgage interest rates from the UK banks are relatively low and in average are 3.5%.

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

Total additional costs pre- and post-purchase, excluding stamp duty, amount to £4,980 to £13,500.

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
Property purchase value	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.

FAQ about investing in UK properties

What taxes will I have to pay if I buy a residential or commercial property in the UK?

If you want to buy a property in the UK, you must be ready to pay the following taxes:

Stamp Duty Land Tax – tax that you have to pay when you purchase real estate in the UK. For individuals, there is no fixed rate. It depends on the real estate itself and the parties to the deal. For example, if you already own a real estate in the UK, the rate will be The stamp duty rate for corporate buyers amounts to 15%.
Annual Tax on Enveloped Dwellings (ATED) – property tax that is paid annually by companies that own a UK residential property. A company is exemptd from paying this tax if a residential property is rented out. In this case, the company pays only an income tax.
Capital Gains Tax – tax that is collected from any asset the sale of which brings profit to the owner.
Council Tax – tax that is collected by municipal authorities. The rate is calculated after the assessment of property value.
Rental income tax – since renting property is treated as a business operation, you will have to pay taxes on the rental income, deducting the costs of maintaining the property.

The UK Tax Code may grant tax exemptions to certain categories of property owners.

How do UK nationals with an averageincome purchase real estate?

UK nationals who do not have enough of their own money to purchase a flat or a house can apply for a mortgage. British citizens are lucky to have relatively low mortgage interest rates (about 3.5%). They can borrow up to 90% of the purchase price from the bank, with the repayment period reaching 25 years.

Foreign citizens and new residents who have just come to the UK cannot benefit from these low mortgage interest rates. But if you have lived in the UK for a long time, doconsider taking out a mortgage.

How to profit from the purchase of real estate in the UK with slowly rising prices?

The best investment schemes include:

Purchase of high-potential off-plan properties that will increase in value after commissioning.
Purchase of properties for which the demand exceeds the Normally, such properties are not sold on the open market. To benefit from this investment option, you need to have access to exclusive offers.
Buy-to-let residential and commercial properties.

These investment options will benefit only those investors who have business acumen and reliable legal support from a trustworthy company.

What are the inheritance tax rates in the UK?

If you inherit real estate from your deceased spouse, you do not have to pay inheritance tax. In all other cases, an heir will get the estate only after paying 40% inheritance tax.

Sometimes, you might have to sell part of the inherited assets or use some financial instruments to pay inheritance tax.

Do I need insurance if I purchase real estate in the UK?

If you take out a mortgage, it is obligatory. In other cases, it is up to youwhether to insure your property or not. It is a common practice to insure a flat or a house, as well as contents both inside and outside the property, to avoid a lot of problems in the future.

A standard insurance in the UK is valid for 1 year. We recommend you not to hurry when the time comes to prolong it. You should talk to your insurance broker to discussbetter insurance plans that you can benefit from.

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