The UK remains a favourable place in which to invest in property, with a stable market and a rising demand among tenants. Here at Winkworth we find and manage buy-to-let properties for hundreds of landlords, many of whom live outside of the UK.
What you need to know before investing in UK property
While there are brilliant short and long-term investments associated with investing in UK property (attractive monthly yields above the rate of UK interest and steady house price appreciation), there are some tax implications that international investors need to consider. They are:-
- Income tax - if you live outside of the UK for more than six out of 12 months, you will be expected to pay tax on all UK income sources, including rental income. This tax is collected under the Non-resident Landlord Scheme run by HMRC, and can be paid by either a letting agent or the tenant.
- National Insurance - as a non-resident landlord, you may have to pay Class 2 National Insurance if being a landlord is your main job; if you rent out more than one property and/or if you are buying new UK properties to rent out.
- Personal tax allowance - some non-UK residents are eligible for an annual tax allowance, so it’s worth checking if you qualify.
- Stamp duty - this tax is payable to the Government when any property is bought in the UK, including those acquired by internationals for investment purposes. Properties worth more than £500,000 bought by international purchasers through companies fall into a tax bracket of 15%.There is also a sliding scale of stamp duty payable on homes bought on an individual basis, with tax rates of between 2% and 12% - applied on a proportional basis.
Professional tax planning is recommended ahead of any UK purchase, and Winkworth International would be delighted to assist you during the initial investment stages.
UK investment property landscape
The biggest concentration of tenants is in the UK’s cities, with high demand in centres of commerce, university cities and tourist resorts. London, Manchester, Leeds, Birmingham, Liverpool, Glasgow, Edinburgh, Bristol, Cardiff and Nottingham are all well established with thriving buy-to-let markets.
Investors looking for greater property price appreciation are advised to look ahead to future developments and long-term regeneration projects. The South East of the UK is currently awaiting the opening of Crossrail - a new high-speed train line; it is predicted that house prices along the route will rise now and in the future. A second high speed rail line promising faster connections between London, Birmingham, Manchester and Leeds is also in the planning, with investors eagerly awaiting details of the exact route. Winkworth’s UK network of estate agencies is constantly monitoring opportunities and areas of interest for the international buyers’ market.
Selling a UK investment property
Some non-resident sellers will have to pay Capital Gains Tax on the sale or transfer of a UK investment property - a change that was introduced by the Government in April 2015. Many different factors will affect whether you will have to pay tax on any profit when you sell an investment property, so it is crucial to seek expert tax advice.
Finding the right UK investment property
Scan the property portals and you will find a myriad of houses and apartments for sale in the UK. The skill lies in finding a property that makes a good buy-to-let investment: one that will be desirable among tenants, return good monthly yield on the rent and provide long-term appreciation. The most direct and successful route to the right property is to register directly with UK estate agents, who will give you first refusal on properties for sale.
Managing a UK investment property from overseas
Safeguarding tenants is a big part of the UK lettings industry, and it’s a job done best by professionals in the same country as the buy-to-let property. Winkworth International provides a full tenant find and property management service for international investors, which ensures every let is legally compliant in line with the rules and regulations set out by the UK Government.
If you would like to discuss any aspect of the UK’s buy-to-let market, contact Winkworth International today.
This information is for guidance purposes only and is subject to change. Winkworth recommend that prospective buyers or sellers of foreign property obtain professional legal advice.