Buying London Property Overseas:
5 Tips To Get Started
London’s property market attracts home buyers and investors from every corner of the globe. Buying in a foreign country can be an intimidating process so we thought we’d put together a short list to help you get started.
Five tips for international London property buyers
1.Which Stamp Duty Rate will I pay? – Stamp Duty Land Tax is a UK tax on property purchases. There are two main types: a first home and a second home rate. If you are buying a London property as a second home you will likely be paying the higher rate. You need to factor in this cost before making an offer on a property. Of course there are other smaller fees to take into account such as surveyor, solicitor and mortgage broker fees. You can use this online calculator to quickly check the SDLT on a property you’re interested in.
2. Currency exchange rate. After spending hours on Rightmove, it is easy to start thinking of your purchase only in terms of pound sterling. Unless you already have funds in sterling, remember to benchmark prices against the latest rates in your own currency. We have previously written about changes to UK property prices since the Brexit referendum but the drop in sterling since the vote has been more dramatic. This means London property will be significantly cheaper for many international buyers compared to three years ago.
Exchange rate of pound sterling against major currencies (Source: Google Money: April 20th, 2019)
3. Understand the different types of property tenure. The UK’s property ownership system is less straightforward than in many other countries. A good first step is understanding the main differences between freehold and leasehold which we have covered in detail here. Remember, if you are looking to buy an absolute freehold, as opposed to a share of freehold, you will likely have to purchase a house not an apartment.
4. Get organised. Estate agents and vendors respond best to prepared buyers.
Before making any offers on a property you should:
- know how you will finance the purchase (cash or mortgage)
- have proof of funds in place – if you are buying with a mortgage it is best to have a mortgage Agreement in Principle in place
- know which solicitor you are planning to use
- how quickly you want to exchange contracts/complete the purchase
5. Use a buying agent? We may be biased on this point but it is definitely worth consideration! If you are time poor, based outside of London or simply want an expert to represent you, a buying agent may be right for you. In the UK, estate agents are paid by and work in the vendor’s interests. Having a buying agent fighting your corner and working in your interests alone can be a real advantage. Most buying agents take a relatively small retainer fee and only get paid the bulk of their fee once you have purchased a property. A good buying agent will take the time to understand what their client is really looking for in a property, look to save them money and make the process as stress free as possible. If you are buying a property yourself from outside the UK without a buying agent, remember to factor in the time and financial commitments of regular viewings to London to view properties. Read more on Why You Should Use A Buying Agent.
Interested in buying in London from overseas? Get in touch with us today for a free consultation.