If you’re not a UK citizen but would like to buy a property there, you will be glad to hear it’s good news. There are no legal restrictions on foreigners purchasing property in the UK, regardless of their nationality or residency status. This means that anyone, from anywhere in the world, can buy a property in the UK.
At Cairds we understand that expat life can be daunting, and buying a property in the UK may seem like a complicated process. If you’re planning on buying a house in the UK, this blog will deep dive into the subject so that you have all the information you need to proceed with the process.
Eligibility for buying a house in the UK as a foreigner
There are no limitations on expats buying property in the UK. However, there are some hurdles to navigate in certain situations. If you have been in the UK for under two years and are unemployed you may find that lenders will be apprehensive about providing a mortgage, perhaps asking for a large deposit or a guarantor.
Working with a solicitor will certainly make the process easier when buying a property in the UK. They will be able to provide solutions and make purchasing a property a reality.
Why types of homes can expats buy in the UK?
Non-residents are not limited to a certain type of property when browsing the UK market. There are a variety of different property types available and, often, some areas offer more of one than the other.
Flats and apartments
Typically, the most affordable type of property in the UK to buy are flats. They are found in cities and towns, often contained in a single building or block. The majority of flats have one or two bedrooms, with some larger apartments stretching to three. They are most suitable for individuals, couples, or smaller families. Most flats in the UK are leasehold and your solicitor will be able to explain the implications of this to you.
Terraced houses
These are the most common type of property in the UK and often benefit from a community feel. They can be smaller in size with two bedrooms, or expand over three or four floors, known as a townhouse. Terraced houses are popular with first time buyers not wanting to invest in a flat, and families.
Detached
If you want privacy or a large family home, buying a detached property may be an option for you. They typically come with a larger price tag, but you will benefit from multiple bedrooms and lots of outside space. These properties are mostly found in more suburban and rural areas in the UK.
Semi-detached
This type of property boasts all the benefits of a traditional detached home. However, you will have neighbours, as semi-detached homes share at least one wall with another property. They’re a great investment if you want the indoor and outdoor space of a detached home but don’t have the budget.
Bungalows
Bungalows come in all shapes and sizes but are single-story dwellings (sometimes with an extra story built into the sloping roof). They are mainly detached, with some large bungalows presenting as semi-detached homes. They’re great for older expats, or those with mobility issues or a disability, because all the rooms of the property are on the ground floor.
How can foreigners pay for property in the UK?
There are different ways for non-citizens to purchase property in the UK. Expats can buy a property using cash, mitigating the need for any type of loan.
Alternatively, non-citizens are welcome to apply for a mortgage. This will involve finding a mortgage lender and inputting your details, including your finances, so that they can give you a ‘mortgage in principle’. The MIP is a written statement from a lender that they are willing to lend you a certain amount of money to buy a property. It is not a guarantee that you will be approved for a mortgage, but it does give you an indication of how much you can borrow.
What is a mortgage?
A mortgage is a loan that is secured by a property. For example, if you’re an expat wanting to purchase a property for £300,000 and put down a 10% deposit (£30,000) your mortgage lender will provide you with the remaining £270,000. You will then pay this amount back over a certain number of years until the balance is zero.
There are two main types of mortgages: fixed-rate mortgages and adjustable-rate mortgages (ARMs). Fixed-rate mortgages have an interest rate that stays the same for the life of the loan. ARMs have an interest rate that can change over time, usually based on an index such as the LIBOR rate.
When you take out a mortgage, you will need to make monthly payments that include principal and interest. The principal is the amount of money you borrowed, and the interest is the fee that the lender charges you for borrowing the money. The amount of your monthly payments will depend on the size of your loan, the interest rate, and the length of the loan term.
Mortgages can be a great way to finance the purchase of a home. However, it is important to understand the terms of your mortgage before you sign on the dotted line. You should also make sure that you can afford the monthly payments, even if your interest rate or housing costs increase.
What is the process for buying property in the UK as a foreigner?
The process for buying a property in the UK as a foreigner is similar to the process for UK residents, but there are some additional steps that you will need to take.
Research where you want to live
Before you start looking at properties, it is important to do your research and understand the different areas of the UK. This will help you choose an area that is right for you and your budget. Understandably, if you have relocated due to your job, you’ll be more limited in your location. However, be mindful to look at transport and road links if you need to commute to your place of work, it may open different location opportunities.
Find a property
Once you have an idea of where you want to buy, you can start looking for properties. You can use online property portals, estate agents, or word of mouth to find properties that are for sale.
Make an offer
When you find a property that you like, you can make an offer to the seller through their estate agent. The offer should include the price you are willing to pay and any other terms that you want to negotiate.
Get a mortgage
If you need a mortgage, you will need to apply to a lender. Lenders will assess your income, expenses, and credit history to determine whether you are eligible for a mortgage.
Instruct a solicitor
You will need to instruct a solicitor to handle the legal aspects of the purchase. The solicitor will check the title of the property, negotiate the purchase contract, and arrange for the transfer of ownership.
Pay the deposit
Once the purchase contract is agreed, you will need to pay a deposit. The deposit is usually 10% of the purchase price but this is not always set in stone and different financial matters can impact this amount.
Exchange contracts
Once the deposit has been paid, you will exchange contracts with the seller. This means that you are legally bound to buy the property and the seller is legally bound to sell it.
Complete the purchase
The final step is to complete the purchase. This is when you pay the balance of the purchase price (via your lender if you’re not paying cash) and the seller transfers ownership of the property to you.
Moving to the UK as a foreigner
If you’re moving to the UK and want a property that is within easy reach of London, Cairds are here to help. As Epsom estate agents we have properties of all shapes and sizes available in the town itself, as well as the surrounding areas such as Leatherhead, Ashtead, and Ewell.
London is easily commutable from our Surrey locations, with direct trains to some of the capital’s mainline stations boasting journey times little over 30 minutes. Furthermore, property prices in the areas we cover are significantly lower than central and Greater London residential destinations.
We’ve helped a number of expats with finding the perfect property when relocating to the UK, whether buying or renting. Get in touch today to find out how Cairds can be of service.