If you are not based in the UK, but are looking to buy a property in the UK, what are the topics that crop up in our conversations?
When deciding how much you want to spend on a property, there are various associated costs that will need to be considered over and above the purchase price. These include mortgage set-up costs, legal fees and stamp duty. These also vary whether you are buying a home to live in or an investment property.
Once you have had an offer accepted, you will need to appoint a UK solicitor or a relevant professional to manage the purchase process for you so you are not just reliant on the estate agent.
Stamp duty is also payable and which is based on the property’s purchase price and is usually payable within 14 days of completing the transaction. The usual rate charged ranges from 2% on purchase prices over £125,000, up to 12% on transactions over £1.5 million. However, due to the economic fallout of the coronavirus pandemic, the UK government has put in a place a stamp duty holiday until April 2021, and which means the basic level of stamp duty will not be due on properties values up to £500,000.
If you own another property in the UK, or live anywhere else in the world (even if you are a UK national), there is also additional stamp duty surcharge of 3%. Meanwhile, for overseas buyers, the additional stamp duty levy increases to 5% in April 2021.
Capital gains tax may also be due on any profits you might make in the future if you sell the property.
It’s worth making sure that you choose the right lender that has experience lending to international clients and who can guide you now and in the future given any plans can change.
Depending on the purpose of your investment, you can choose to buy your property in your own name, or through a company or trust structure. Often the simplest route in terms of the level of administration should be owning the residential property in your own name. And if you are not deemed to be UK domiciled, you can use a mortgage to fund a property purchase and mitigate your exposure to UK inheritance tax.
However, there could also be estate planning and asset protection benefits through owning your property through a structure, particularly when over the long term or in perpetuity. It’s important to be aware though that the impact of using a corporate or trust structure needs to be weighed against the effect it can have on your tax situation. The tax implications should always be looked at in detail using appropriate specialist advice – advice which Nedbank Private Wealth does not provide – based on your individual tax circumstances. Especially since the UK tax system is notoriously complex and changes on a regular basis.
In 2015, the UK government introduced rules that mean the cost of buying, owning and selling residential properties in the UK increased from a tax perspective, particularly for non-residents. These changes also include the introduction of non-resident capital gains tax.
Meanwhile, changes to the corporation tax treatment of offshore companies are due next year, and more changes are likely to come through, and other changes may also be on the cards as the UK government seeks to recoup some of the debt incurred in supporting the economic during the cornoavirus pandemic.
It is also important, however, to use a lender that has a long timeline of experience and a significant book of international clients so they can appreciate the complexities that arise and help you understand if, and how, the backdrop may change during the purchase process.
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Clients can borrow against a UK, Isle of Man or Channel Island-based residence, be it a home or an investment property. We also lend against investment portfolios, and loans can be denominated in Sterling, Euros or US Dollars. With clients in 160 countries, we often help clients based outside the UK, and have lent using the same approach across market cycles since 1987.
To find out more about Nedbank Private Wealth’s bespoke lending services, please contact your private banker directly or call our client services team on +44 (0)1624 645000. Or you can get in touch using the links to the forms towards the end of this page.
Your home is at risk if you do not keep up repayments on a mortgage or any other loan secured against it.
Andrew has over 27 years’ banking experience and joined us from Lloyds TSB in Miami where he was responsible for providing banking and investment services to clients in Latin America and the Caribbean. He initially joined the bank’s Isle of Man office in 2004, and following secondments in the South Africa and London offices, he moved to the UAE in 2013.
Based in Dubai, Andrew is primarily responsible for the bank's international growth in both the private client and intermediary sectors in the Middle East. He is a Chartered Member of the Chartered Institute for Securities & Investment and recently graduated from the London Business School with an Executive MBA. Andrew also has full STEP membership, qualifying him as a Trust and Estate Practitioner.
Andrew has over 27 years’ banking experience and joined us from Lloyds TSB in Miami where he was responsible for providing banking and investment services to clients in Latin America and the Caribbean. He initially joined the bank’s Isle of Man office in 2004, and following secondments in the South Africa and London offices, he moved to the UAE in 2013.
Based in Dubai, Andrew is primarily responsible for the bank's international growth in both the private client and intermediary sectors in the Middle East. He is a Chartered Member of the Chartered Institute for Securities & Investment and recently graduated from the London Business School with an Executive MBA. Andrew also has full STEP membership, qualifying him as a Trust and Estate Practitioner.
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If you are not based in the UK, but are looking to buy a property in the UK, what are the topics that crop up in our conversations?
Read moreAndrew Bates explains some of the many reasons why UK property is in high demand, but also highlights some of the hurdles for UK nationals living abroad
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