Overseas Investing: A Closer Look at the UK Property Market

If you are intending on casting your property investment net wider than your country of residence, there is a fair chance that the UK will come onto your …

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If you are intending on casting your property investment net wider than your country of residence, there is a fair chance that the UK will come onto your radar.

The UK has consistently held the top slot as Europe’s premier destination for real estate investors, and London is firmly at the epicenter of property buying activity. The capital city of England is considered to be a leading international city for overseas property investors and many consider that a property in London is a must-have asset in any respectable international property portfolio.

Variety of investment opportunities

If you are considering your investment options before buying a property, a popular route is to search out a suitable property to rent through a resource like www.hamptons.co.uk/toletoffice/Blackheath-/2202/, so that you have a base from which to search out some suitable investment opportunities.

The UK residential property market and London in particular, has delivered some stellar returns for overseas investors who have been in the market for a while, but you might also want to take a look at commercial and industrial properties, if higher yields are a primary investment goal.

Although residential property values in London are looking fully priced in some areas of the capital, yields of between 8-10% on regional commercial and industrial properties are definitely looking attractive to some savvy investors who believe they can make their money work harder for them if they buy some non-residential property in other parts of the UK.

This argument is supported by the fact that the UK government is committed to a large infrastructure project like HS2, which is a high-speed rail link between London and the North of England. The benefits of this project and further expansion in the transport network will likely create demand for commercial and industrial properties in certain areas, which suddenly become an attractive proposition for businesses considering relocation.

Check your tax position

Whatever investment strategy you decide to follow as an overseas investor, you need to clarify your tax position and what impact a UK property acquisition will have on your situation.

The UK does not restrict overseas investors from acquiring property but there are a number of taxes that you need to be aware of and take appropriate professional advice if you need any point clarifying.

You will be required to pay stamp duty when you purchase a property in the UK, which is a tax that is based on a percentage of the purchase price, ranging from 1% to 4%, which is the maximum percentage and applies to properties that cost over £500,000.

If you acquire a residential property, there is an annual property tax known as Council Tax. The charge varies between different areas and is also based on the value and purchase price of the property. Each property is allocated a band so you can soon see which band your intended purchase comes under in order to confirm how much you will have to pay each year to the local council.

Business premises are subject to business rates and the selling agent should advise you on the expected annual cost as this is not always as straightforward to work out. You will only be liable for business rates directly while the premises are not occupied and your business tenant will be liable when they take up a lease.

Direct taxes

In addition to the indirect taxes referred to, you will also need to clarify your tax position with regard to income tax, capital gains tax and inheritance tax.

You residential status will have a bearing on your liability for these taxes and it would be wise to get some professional advice regarding present and future taxation implications, before you complete the purchase of an overseas property.

There is no doubt that there are good opportunities for profitable property ownership in the UK and it pays to do your research in terms of identifying areas of London or the rest of the country, where there is a reasonable prospect of prices moving ahead in the coming years and if you are investing rather than relocating, finding a commercial or residential property which can deliver an attractive ROI.

Buying in the UK can be rewarding for overseas investors, but do make sure that you are aware of all of the additional costs and taxes involved, so that you can make a fully informed investment decision and know what the property will cost you to own and maintain .

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