A Non-UK Resident’s Guide To Investing In UK Property



There are many reasons why someone might want to invest in UK property even if they live overseas: you might want a place to stay when visiting friends and family, a home for family members living in the country, or maybe you simply recognise the value of investing in the UK property market, even if you have no ties to the country yourself.

Whatever the reasons for your investment, here’s a brief guide to what to expect from the process of investing in UK property from overseas, from the best areas for your investment to mortgages, legislation and renting your investment property in the UK.


Finding the right area for your property investment

Investing in UK property is an attractive prospect for overseas investors due to the country being generally stable in terms of its economy and politics and because the UK’s population is growing in the midst of low housing supply where there is an increasing need for new, affordable homes.

Even in the midst of Brexit uncertainty, investors both in the UK and abroad continue to invest in the British property markets. Here in Scotland, a recent poll of investors in the Edinburgh property market showed that 85% of investors felt confident about making further investments into the city’s property market in the near future.

Here at Cox & Co, we specialise in property in Scotland’s metropolitan central belt. In general, the north of the UK, including both Scotland and the post-industrial cities of Northern England have been experiencing steady growth in property values over the past several years, partially due to big leaps in regeneration and partially due to steady economic growth in these areas. 

This is in contrast with the south of England and especially London, where property prices have been high for a long time. Many people are now abandoning the capital in favour of a more affordable life up north.

Keep in mind that Scotland has different legislation from the rest of the UK, so make sure to read up the specific property legislation of the country you want to invest in within the UK before getting started. An experienced property investment manager can help you understand the laws around buying and owning residential property in your chosen area.


Mortgages for non-UK residents

While the commonly-heard myth that you need a UK passport to qualify for financing in the UK is false, your options for mortgage products can be somewhat limited as an overseas investor. When it comes to commercial property, it can be very difficult to qualify for a mortgage as an overseas investor, which is why we recommend non-UK residents look into residential property in the UK. 

It’s worth noting that financing is most commonly available for non-UK residents on for properties valued over £150,000. You’ll also usually need to seek out a specialist bank to obtain a mortgage as an overseas investor.

It’s often more difficult for people of certain nationalities and residencies to acquire a mortgage in the UK. Most lenders have a list of countries whose residents they won’t lend to due to these countries’ bad reputation for regulation and the economic sanctions that the UK has against some countries, such as Iran, Russia and Venezuela. 

However, it’s not impossible for people in these countries to obtain a mortgage in the UK: they simply have to work with a mortgage broker who has strong experience in working with overseas investors and British expats as well as private banks and niche lenders.

In order to qualify for a mortgage in the UK, you’ll usually need to provide two forms of photographic ID, proof of address (with something like utility bills or recent bank statements), proof of income and an overview of your financial history. 

With many of our international clients of high net worth, providing an outline of all of their income streams and assets can be challenging, especially if they’re self-employed. But working together with your accountant, an experienced mortgage broker should be able to get the necessary paperwork together for your would-be lender.


The process of buying UK residential property

In some cases, it makes more financial sense to purchase a property in cash. This means you won’t have to take out any mortgage and the whole process generally moves much faster. You can read more about buying a house with cash in hand here.

Unlike many other countries in Europe, in the UK, due diligence checks take place before entering into a binding contract rather than after this and just before the completion of the sale. These checks include things like the title of the property, obtaining a survey, carrying out searches of the local authorities and agreeing to the terms of the contract. If a mortgage will be taken out by the buyer, an offer from the lender will also have to be submitted before the papers are signed.

In addition to your downpayment on the property you’re buying, LBTT is calculated and added to the overall purchase price. Land and Buildings Transactions Tax (LBTT) is a tax that is added on top of the purchase price of residential property for flats and houses purchased for more than £145,000.


Renting out your UK property

If your intent is to buy UK property in order to rent it out, you should familiarise yourself with the relevant UK taxes and the legislation that is in place to protect both landlords and tenants. Working with a reputable UK property manager means you stay compliant with local legislation no matter what, which is why we recommend consulting with an expert when making your investment.

Keep in mind that if you receive rental income over a certain amount, this will be taxed under the local income tax laws. In Scotland, this goes up to 46% for individuals whose UK income is over £150,000 in any given year. The basic rate of 20% currently applies for individuals whose annual income is between £14,549 and £24,944.

Under the non-resident landlord scheme (NRLS), you’ll also be taxed on your rental income. The easiest way to handle this is to obtain an NRLS certificate and a reference number from the HMRC – these make the process automatic. Otherwise, your UK letting agent needs to deduct this tax themselves.

Working with a property manager is not only a good idea for making sure you pay the necessary taxes and stay compliant with landlord legislation – it also means that you don’t have to concern yourself with the everyday running of your buy-to-let investment property. 

Your property manager will act as the middleman between you and your tenants and organise any necessary maintenance work with contractors they have a strong relationship with. This means that you don’t have to worry about being out of the loop with anything or that you’re not getting the best possible deals because you don’t live locally.


Property investment in Scotland

At Cox & Co, we specialise in the Scottish property markets and provide a full property investment service for our clients. This means that we can help you raise funds for your investment, find you the most suitable property for your investment, negotiate the best deals for you, advise you on mortgage products available to you and even manage your buy-to-let property for you.

We have experience in obtaining investment property and mortgages for clients from around the world and manage numerous properties on their behalf across Edinburgh, Glasgow, Dundee and the Scottish Borders.

Find out more about property investment in Edinburgh here and read our report on the best areas in Glasgow to buy property here. If you’d like to discuss your property investment options with our experts, get in touch with us here.


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