Why buy in UK?
1. For investment purpose, UK has been experiencing stable population growth which results high demand for properties. Especially in big cites like London, the occupancy rate for flat is pretty high for “buy-to-let” investment properties
2. UK has been the center of the history and it still plays important role in the world.
3. UK has many globally known great schools. It prouds of the highest educational standard.
4. Laws and regulation regarding property transaction are well established in England. The property market is also very transparency and you can easily find information about the current market trend.
5. There are no restrictions for foreign buyers buying properties in UK.
Things to watch out when you buy property in UK
1. Do make sure the terms of the ownership. Freehold means you legally own the place and land, but leasehold means you are just borrowing it. Is is always the best to buy freehold. If you are getting leasehold, look for the length that still has over 80 years. Never buy under 60 years lease left.
2. For investment purpose, choose big cities with stable population growth or University town with a lot of students (tenants).
3. Because UK has a lot of historical buildings, there may be restriction apply when you want to renovate your home.
4. Stamp duty can be costly (for properties £500.000 to £1million, you need to pay 4% of the property price! )
5. Buying a property that could be more than 100 years old can throw up structural problems, making a thorough survey a vital part of the buying process to discover any serious defects.
6. There will be only seller’s agent, which means, that they work for seller, not buyer.
7. Never look too keen during or after a viewing. Because the agents work for seller, they will make you buy with higher price or try selling you as soon as possible.
8. Never accept the estate agents suggestion of rental Value. Again, they work for seller’s and they will try to sell it to you as soon as possible and they will do whatever it takes to sell.
9. If you need mortgage to acquire property, remember that fixed rate usually last a year to 5 years. It may increase sharply.
10. Check the neighborhood. When there is too many graffiti on street walls, better to avoid the area.
How to buy property in UK
| STEP 1 |
| If you are planning to get mortgage, get pre-agreed before you start looking |
| You can go and talk to local “Mortgage broker” (they are better than talking to Banks since they have more options) about how much money you can afford.Also, it is good idea to find trustworthy “buyer’s agent” if you are planning to hire one, and good solicitor (Conveyancer). |
⇓
| STEP 2 |
| Once you find the one you like, make an offer |
| Offer will have price of offer, Request for a current land survey of the property, date the offer expires, deposit amount, deposit terms,etc…At this moment of making an offer, it does not legally bind you to buy (except in Scotland). Nor you need to commit to the price you gave as an offer. |
⇓
| STEP 3 |
| Once your offer is accepted, arrange for a home survey (home inspection). |
| Remember, even after the seller accept your offer, they can still back-off (guzumping) and sell to another buyer with higher offer.In order to avoid the case, you can ask seller to put the home out of the market (though, they can say No to this request).‘Gazumping’ or withthdrawing from an agreement to buy or sell before the final contract has been signed is very common.If you are getting mortgage, complete the lender’s application form and send them the documents they require. The lender will arrange for a valuation to be done on the property.There are no set fees for surveys. So, you should negotiate. |
⇓
| STEP 4 |
| Coveyancing (The process of transferring the legal ownership of property or land from one person to another.) |
| Conveyancing proceeds through an exchange of notes between the seller’s solicitor and your solicitor.A “draft contract” will be drawn up by the seller’s solicitor containing the price, information about the seller’s deeds of title, etc.Your solicitor will check this and negotiate with the seller’s solicitor. Searches, enquiries and surveys undertaken on your behalf will include a Local Authority Search, to check that the property is not in the way of any project; a search at the Land Registry to check security of title. |
⇓
| STEP 5 |
| Exchange contracts |
| Once you and your solicitor are satisfied that everything is in order, the contracts can be exchanged.You sign a copy of the contract which is passed to the seller, and the seller signs a copy of the same contract which you receive.You’ll then be asked to pay a deposit- usually 10% (but sometimes 5%) of the property value before contracts can be exchanged.This stage binds both parties legally. Therefore, if the buyer pulls out after this stage, they will lose their deposit and may face legal action from the seller. |
⇓
| STEP 6 |
| Buyer’s solicitor draws up a transfer document |
| Once contracts have been exchanged buyer’s solicitor prepares the draft transfer document (if the land is not registered it will require a special kind of transfer or ‘conveyance’).This documents transfers the title of the property from the seller to the buyer. Once both parties have agreed on the draft, it is signed by the buyer and the seller. |
⇓
| STEP 7 |
| Buyer’s solicitor arranges finalisation and signing of your mortgage documents |
| Buyer’s solicitor will also deal with the finalisation and signing of documentation relating to your mortgage, and will arrange for the money to be available on completion of the sale. |
⇓
| STEP 8 |
| Buyer’s solicitor carries out final searches and enquiries |
| Land Registry checks are carried out by your solicitor, to make sure that nothing is registered against the seller (or at the Land Charges Registry if the property is not registered).Problems such as undisclosed mortgages or disputes could be uncovered at this stage.There will be various matters for you to deal with in the run-up to completion.There will be some documents to be signed and payments to be made: you must pay Land Registry fees and stamp duty. Before completion you need to make sure that all the terms of the contract have been fulfilled, such as any repairs. |
⇓
| STEP 9 |
| Congratulation! |
| After payments are made and the deeds are handed, You are all set!The house is all your now. |
Cost upon purchase
About 5-6 % (more than 90% would go for Stamp duty tax) of the property price.
You will need to pay:
- Stamp duty Tax
- Building survey fee
- Registration fee
- Solicitor’s fee
etc…
About Loan
You can get mortgage as non-resident buyer.
There are 2 types of Mortgage available.
1. One mortgage is for living property that you are actually planning to reside in the property.
2. The anther one is for investment property.
If you need mortgage to acquire property, remember that fixed rate usually last a year to 5 years. It may increase sharply.
Tax (as of December 2014)
Tax varies borough to borough.
You will be required to file tax when you buy a property ( Stamp duty land Tax (SDLT)), when you hold the property (council tax), when you sell the property (Capital gain taax) and when you die while you hold the property.
Tax related to property in London, click here.