Thinking about buying a house in the UK from abroad?
Whether you’re a British expat planning your return or an overseas buyer looking to enter the UK property market, purchasing a home in Bath, Bradford on Avon, Wiltshire or Somerset can be a smart and life-changing decision.
With its gorgeous Georgian architecture, UNESCO World Heritage status and vibrant lifestyle, Bath continues to attract international interest, especially from expats and buyers in Hong Kong and the Middle East.
Nearby local towns and villages, on the other hand, offer tranquillity and a strong community feel while boasting transportation hubs that make living in this part of the world easy and rewarding, no matter what stage of life you are at.
For this reason, the local housing market remains strong with high demand, steady growth in house prices and excellent long-term investment options.
In this guide, we’ll walk you through everything you need to know, from finding your dream property to getting a mortgage and understanding hidden costs when buying a UK property from abroad.
What are the steps to buying a home in the UK?
Buying a house in the UK as an expat can be tricky when you are based somewhere potentially thousands of miles away. However, with the right trusted advice and guidance from our team at Cobb Farr, it can be easier than you think.
Here’s a step-by-step breakdown.
1. Outline your goals
Start by considering your plans for your home in the UK by asking yourself the following questions:
- Why do you want to buy a UK property? Do you want to live in it when you retire? Or perhaps you want to buy it as an investment property and rent it out?
- What type of home are you looking for? Are you looking for a gorgeous period property? A suburban home with a garden? Would a city centre apartment tick all the boxes?
- What location? Would you prefer to live in vibrant, historic Bath city or a community-focused town in Bradford on Avon or a village in Wiltshire or Somerset? Do you prefer rural, suburban or urban?
- What lifestyle do you want to live? When you move, do you plan to continue working? Will you need to be close to transport hubs? How about local amenities like schools, gyms, theatres, parks and so on?
Your plans for the future will influence your decision, so getting clear on what you’re looking for is key to buying a new home from abroad.
2. Calculate your budget
Once you’ve decided to buy a house in the UK, the next crucial step is determining how much you can comfortably spend. Setting a realistic budget will help guide your property search and avoid any surprises down the line.
When calculating total costs, start by looking at the average house prices in the UK and average house prices in Bath. This will give you a ballpark figure that you can use to create your budget.
Make sure you also include the hidden costs of buying a house in the UK that you may be liable to pay. These may include:
- Stamp duty
- Solicitor fees for buying a house in the UK
- Home surveys and valuations
- Currency exchange rate
- UK house insurance for expats
3. Find out about financing
If you need a mortgage for buying a home in the UK, it’s time to do your homework.
While some high street banks offer mortgages to overseas buyers, there are usually stricter criteria for expat buyers. This is because it will be a non-standard mortgage application and will carry a higher perceived level of risk.
As a result, you can expect to pay a higher deposit for your home (usually 25-40%) and you will face higher UK house loan interest rates that will increase your mortgage repayments.
While reviewing your application, mortgage lenders will assess your credit history in the UK, which may be limited or non-existent if you live abroad or have been an expat for a long time. You’ll also need to provide proof of income, credit card reports (translated and notarised if necessary), your passport and residency documents.
If you’re earning in a currency other than pounds sterling, the exchange rate will also play a significant role. It affects not only the affordability of your mortgage repayments but also their calculation – lenders may shave off some of your salary to account for currency fluctuations.
Of course, this depends on the currency, its exchange rate against the British pound sterling and whether it is considered ‘stable.’ If you have a British bank account or a relative in the UK, the house buying process will be easier.
We highly advise that you seek a specialist lender that specialises in buying a house in the UK from abroad to help you navigate the financing process.
4. Seek professional advice on tax obligations
Owning a property in the UK as an expat means there could be different tax implications than if you were a resident. These could include:
Stamp Duty Land Tax (SDLT)
This is a tax paid on property transactions in the UK. The same rates apply for foreign buyers but there may be a surcharge of 2% on top of standard SDLT rates.
Annual Tax on Enveloped Dwellings (ATED)
ATED is a tax paid by companies that own residential property in the UK over a certain threshold. Rates vary, depending on the value of the property.
Capital Gains Tax (CGT)
Capital Gains Tax is paid on the profit made from selling assets such as property in the UK. Foreign residents are subject to this tax, with certain exemptions and reliefs in place.
Non-Resident Landlord Scheme (NRL)
Expat landlords could be subject to a tax named NRL. This means they must deduct the base rate income tax from rental payments received and submit it to HMRC, unless the landlord has been approved to receive the gross rental income.
Inheritance Tax (IHT)
This is a tax paid on the estate of someone who has died and includes their property, money and possessions in the calculation. You or your family could be subject to this, even if you’re non-resident.
Always consult a professional tax adviser who specialises in expat taxation for accurate, personalised advice.
4. Contact a trusted estate agent
Next, get in touch with a trusted, reputable estate agent like Cobb Farr.
We take the time to understand your situation and goals, recommend ideal properties for you and can liaise with solicitors, surveyors and sellers on your behalf. This makes it easier to buy a property in the UK when you’re not physically present.
We have many years’ experience working with expats and overseas buyers so you are in safe hands. You’ll discover the beautiful properties that are available in Bath, Bradford on Avon, Wiltshire and Somerset and start making your dream of owning a UK property a reality.
5. Make an offer
Once you’ve found a UK property you love, you can make an offer.
If the homeowner is happy with your offer, you can go ahead and purchase the property. Otherwise, you can negotiate a better deal or search for another property that fits your needs and budget.
Once your offer is accepted, the property is ‘under offer.’
You will then need to engage a solicitor to handle the contract exchange, property searches, surveys, valuations and local compliance. It’s essential to have these done to uncover any problems such as structural issues.
Once the contracts are exchanged and the deal is finalised, this UK property will be yours.
Summary – Buying a home in the UK
Buying a home in the UK as an expat can be a rewarding process, whether you’re buying a second home, an investment property or planning for the long term.
By understanding the home buying process, exploring the local market with Cobb Farr’s trusted help, and getting clear on taxation as an expat, you can make a confident decision and enjoy your new home in the UK.
If you are based overseas and would like to buy a home in Bath, Bradford-on-Avon. Wiltshire or Somerset with a team of trusted experts with over 25 years of local experience and professional insight, contact us today.
