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Frequently Asked Questions about Buying UK Property

How much can an overseas investor get on a property loan when buying property in the UK?

  • The maximum loan amount can reach 70%, the interest rate is as low as 3.25%, and the tenure can be as long as 25 years. (UK property mortgage varies by buyer and bank)

Expenses when buying/holding UK property

  • Legal fees: Legal fees for buying/selling UK property are around £1,000 to £2,000. Overseas investors can appoint their own lawyer, or Zupreme can refer a lawyer to you.

  • Management Fee: It is a monthly/annual fee paid to the management company, depending on the size of the unit, usually £2-£4 per square foot.

  • Leasing management company commission (Letting Fee): The rental management fee is about 8%-10% of the monthly rent when the landlord rents out the property. If the lease term is one year, 10% of the total rent for one year will be charged.ZupremeCARERental management companies provide services such as housing rental services, help owners select high-quality tenants (Reference check), and pay various taxes arising from property rentals.

  • If the unit is sold, 2% - 3% of the property price will be paid to the estate agent's commission.

Tax expenses for overseas buyers investing in UK property

One-time taxes include:
Stamp Duty Land Tax (SDLT):  When buying property in the UK, stamp duty is the most important property transaction tax in the UK and the largest expense. It is usually paid at the same time within 30 days of the completion of the property transaction (receives and processes on behalf of the lawyer). According to the property rights and uses of the property, the quota standards are also different.In the UK government's latest budget, they announced that a 2% additional stamp duty would be introduced for overseas buyers buying property in the UK, with the official implementation planned for April 2021.

Other taxes include:

  • Ground Rent: There is no fixed amount of ground rent, and the ground rent of each property varies. For some newer apartments, ground rent may be £200 to £400 a year.

  • Income Tax: In the UK, the profits earned by overseas investors from renting out units need to be declared to the UK government for rental income. The tax rate is 20% of the rental income, but related expenses can be deducted by declaring property expenses. British passport holders can also enjoy a tax-free allowance of £12,500.

  • Council tax: If the unit is rented out, the owner is not required to pay council tax, it is the tenant's responsibility. Each property in the UK is charged a different municipal property tax. The specific amount will be notified before moving in. The fee is paid by the tenant and has nothing to do with the owner.

Expenses when selling a UK property

  • VAT (Capital Gain Tax): The value-added part of the property is subject to VAT at 18%-28% at the time of sale, and overseas investors must report to HMRC within 30 days after the sale of the property.

 

Yizheng Overseas Real Estate | Zupreme C&C

FAQ London UK
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