Purchasing property in the UK is possible for foreign nationals, but you may have to navigate a few additional legal and financial considerations. Whether it be a home to live in or an investment asset, it is crucial to understand the legal implications, especially around Stamp Duty Land Tax (SDLT) and how your residency status affects what you pay.
Who is considered a Non-UK resident for SDLT?
For SDLT purposes, a “non-UK resident” is someone who has not been present in the UK for at least 183 days during the 12 months before completion of the transaction. This test is applied to each buyer in a joint purchase. If even one buyer is non-resident, the surcharge may apply. Please be aware that this definition is different from tax residency rules used for income or capital gains tax.
The 2% surcharge for non-residents
Since April 1 2021 non-UK residents must pay an additional 2% SDLT surcharge on residential property purchases in England. This is on top of the standard SDLT rates and any additional charges (such as the 3% surcharge for second homes or buy-to-let properties).
For example, if a non-resident purchases a property worth £500,000, the SDLT liability could be significantly higher than that of a UK resident buyer. It is important to factor this element into your budget early on.
Other key considerations:
Legal representation
Engage a solicitor experienced in working with international clients. They can help navigate UK property laws, verify the title, and ensure compliance with anti-money laundering checks.
Financing
Some UK lenders are open to offering mortgages to foreign buyers, but terms can vary and may involve higher interest rates or stricter eligibility criteria.
Ownership structure
Consider whether to purchase the property in your personal name, jointly, or via a company. Each route has different tax implications.
Ongoing tax obligations
Owning UK property may trigger annual tax responsibilities, including income tax on rental income and potentially capital gains tax when you sell.
Buying UK property as a foreign national is entirely possible but it is essential that you have a clear understanding of your tax status, SDLT liabilities, and legal obligations. Seeking early legal advice can save time reduce risk and ensure your purchase goes smoothly.
If you’re considering buying property in the UK and would like tailored support our experienced property team is here to help.
Key Contact
Joanne Parsons
Real Estate Partner
Joanne is a Partner in our Real Estate team with vast experience in residential property matters and conveyancing.
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