Buying property in the UK: A guide for investors
The United Kingdom has always been a favourite destination for property investors. It is a country that offers so much diversity, from bustling cities to beautiful countryside escapes. Buying property in the UK is straightforward, and with property prices still rising, now could be a great time to invest in UK property. This guide provides a comprehensive overview, from understanding the basics of the UK property market to identifying the best locations for purchasing property. Here are a few essential tips for those looking to buy a property.
1. What are the requirements to buy a property in the UK?
When it comes to purchasing property in the UK, there are a few requirements that need to be met. You will need to provide the following.
- Proof of Identity: This will be either a driving license or passport
- Proof of address: Typically, this will be a utility bill or bank statement.
- Evidence of your funding source: This establishes that your funds come from a legal source. This may include payslips or bank statements.
These documents will be requested to comply with Anti-Money Laundering Regulations. In addition, if you are buying the property with a loan or mortgage, you will have to pay 20% of the value of the property as a deposit.
2. How much tax do I pay when buying a property in the UK?
Stamp duty rates depend on whether you are purchasing your first or only home or own another residential property. The rate also depends on the property purchase value. Note that the rates may vary in Scotland, but these are the figures to know for those with one property in England:
| Property | Stamp Duty |
|---|---|
| Up to £250,000 | 0% |
| The next £675,000 (£250k to £925k) | 5% |
| The next £575,000 (£925k to £1.5 million) | 10% |
| Anything over (above £1.5 million) | 12% |
For example, if you purchase your only home for £295,000, your stamp duty liability is:
- 0% on the first £250,000
- 5% on the final £45,000
- Total £2,250
If you have more than one property, the zero threshold is only up to £40,000. After that, you must pay an additional 3% on top of the single-property rates. Once the purchase has been made, you will receive a bill for the council tax (an annual property tax).
UK properties’ earnings are subject to income and capital gains tax. The amount of tax you pay will depend on your circumstances, such as your tax residency status and how much money you have made from the property.
As a non-UK resident, you are only taxed on the money you earn in the UK, so you don’t need to worry about suddenly becoming liable for tax on your home country’s income. Check out our article on how much tax you’ll pay for rental property income in the UK.
You can choose to pay your tax annually through a self-assessment tax return or have your lettings agent deduct tax automatically on your behalf. Additional costs, such as legal and notary fees, should be taken into account when planning the purchase of your property. If you want to sell, you will pay capital gains tax on any increase in the price of the property.
3. How to find a property in the UK?
There are many ways to find a property on the UK market. You can begin with international agents, such as REMAX, but there are also a wealth of local agents in every city, as well as national companies, all of whom list their available properties on sites like Rightmove and Zoopla, the two primary retail property platforms in the UK.
4. Where to buy property in the UK?
The UK is home to bustling cities like London, Nottingham, and Liverpool, as well as beautiful countryside escapes, with many areas offering excellent yield potential. Below are some of the best locations for potential property investors in 2024:
East Ayrshire, Scotland
Average rental yield of 9.57%
Scotland is one of the best places to buy property in the UK, with comparatively low purchase prices and some excellent rental yield averages. Properties in East Ayrshire offer the best potential yields in the whole of the UK in 2024, at an average of 9.57%. Other areas in Scotland worth looking at are West Dunbartonshire (9.15%) and Renfrewshire (9.13%).
Today, East Ayrshire has a population of around 122,000, the 16th most populous council in Scotland. Historically a prosperous mining area, East Ayrshire is undergoing redevelopment, with bustling centres in towns like Kilmarnock and Stewarton.
Kilmarnock also boasts solid transport links into Glasgow. You can drive into the city in less than an hour via the A77, making it an excellent hub for Scotland’s second city. For more rural properties, head to locations like Cumnock, Darvel, and Hurlford for great value for money.
Middlesborough and Sunderland, England
Average rental yield of 8.52% and 8.50%, respectively
Though not necessarily the most salubrious locales in England, Middlesborough and Sunderland are great options if you’re looking for an investment property in the UK in 2024.
Properties in Middlesborough fetch an average rental yield of 8.52%, while Sunderland offers a solid return of 8.50% on average. The nearby town of Hartlepool is also a good option, with an average yield of 8.31%.
The northeast of England is home to the incredible Durham Cathedral and rolling green countryside in Berwick and Northumberland. The bustling metropolis of Newcastle is a short drive from both Middlesbrough and Sunderland, boasting some of the best nightlife in the country. There are large student populations in most towns and cities in the northeast, so that student properties could be a viable option for potential property investors in this part of the country.
Liverpool, England
Average rental yield of 7.57%
Home of the Beatles and one of England’s most successful football teams, Liverpool is a city enjoying a renaissance, with significant recent investments in the city’s docklands area.
Rental yields in Liverpool are attractive, averaging 7.57% at the start of 2024. Though there are some city suburbs to stay away from due to high crime rates, you can find great value in and around the city centre when looking for one and two-bedroom apartments.
Current Rightmove data shows that the average property price in Liverpool sits at £211,038, with the average price of apartments at just £136,597. Given the rejuvenation of the city and the great potential yields, 2024 is a great time to invest in property in Liverpool.
Burnley, England
Average rental yield of 8.41%
Burnley is a working-class town in Lancashire, located in England’s northwest. Property prices in Burnley are low, with an average property sale price of just £131,686. Terraced properties in Burnley offer great value, going for an average of just £92,952.
As a buy-to-let location, Burnley is an intriguing option for investors, offering average yields of 8.41%, making it one of the best towns in England as far as rental yield is concerned.
Burnley is located around one hour from Manchester and approximately the same distance from Leeds, two of northern England’s most vibrant cities. The value and potential yield available make Burnley an attractive proposition, and it’s a town worth looking at for property buyers in 2024.
Southampton, England
Average rental yield of 6.42%
If you want to invest in property on England’s south coast, Southampton offers good value to potential investors, with an average rental yield of 6.42% in 2024. Though it’s not the cheapest place to buy – the average house price in Southampton is £287,726 – Southampton is lovely with some top attractions.
In fact, Southampton is often ranked as one of the nicest UK cities to live in, outperforming cities like Manchester and even London in some metrics. There are beautiful parks and a rugged coastline for anyone who loves the outdoors, while the city centre boasts nice restaurants and great bars.
Nottingham, England
Average rental yield of 7.06%
Investors looking at the Midlands should check out properties for sale in Nottingham, a vibrant city at the heart of the East Midlands. Nottingham has a significant student population, with two highly ranked universities bringing lots of students from different parts of the world.
As such, the short-term student lettings market is big in the city, and many young professionals are looking for rental opportunities within the city limits. On average, properties in Nottingham fetch a rental yield of 7.06% in and around the city, representing great value for money in this part of the Midlands.
Terraced properties in Nottingham offer good value for money, with an average sale price of £181,876 over the past twelve months. The famous home of Robin Hood and his merry men, you won’t have to steal from the rich to invest here in 2024, as Nottingham is a great value city for would-be investors offering high potential yields.
5. What are the pitfalls of buying property in the UK?
GuestReady is a globally leading short-term rentals company that operates in Europe and the Middle East. Unlike in some other countries, properties do not carry the previous owner’s debt, so you do not need to be concerned about this when buying property in the UK.
However, there are a few hurdles to jump through to buy property in the UK. Even with no mortgage to worry about, you need to provide the documentation mentioned in section 1 while having a UK bank account to receive your funds. However, obtaining a bank account can be a chore without already owning a UK residence.
For expensive properties, the top-end stamp duty rates can come as a shock, so make sure you’ve sorted all your finances before committing to the process. While you should always be careful with who you enter a contract with, in the UK licensing is required by estate agents and property conveyancers, and the industry is typically considered secure.
Look for CLC-registered solicitors, and check that estate agents are either RICS or NAEA registered.
6. Why buy property in the UK?
The UK is a great place to buy property for many reasons. The economy is generally stable, and house prices have increased significantly in recent years. Many types of property are available, from traditional terraced houses to modern apartments.
The UK offers a great lifestyle, with many different types of activities and attractions available. The climate is mild, and the country is not prone to much in the way of natural disasters.
7. Is it worth buying a property in the UK?
Landlords in the UK have had a tough time in recent years, with the government introducing several measures to make buy-to-let investing less attractive. However, there are still many reasons to invest in property in the UK.
Rental demand is high in many areas, especially in cities like London and Birmingham. Prices have increased significantly in recent years.
Do your research, calculate your costs carefully, and consult with a professional if you’re unsure about any aspect of the process. With careful planning, buying property in the UK can still be a great investment.
8. Can foreigners buy property in the UK?
Foreigners are incentivised to buy property in the UK, as there are no restrictions on purchasing a property beyond the previously mentioned documentation.
As this will most likely be your second (or greater) property, you’ll pay a higher rate of stamp duty, but the UK government offers several reliefs that can reduce the amount you’ll need to pay.
9. Is now a good time to buy property in the UK?
2024 is a great year for potential property investors in the UK market. Property prices in the UK will likely in the coming years, with the market still bouncing back from the pandemic.
A “good” rental yield is between 5% and 7.5%, and with several areas offering 7.5% or higher in the UK, now could be a good time to dip into the market and invest in one of the above areas.
The government has introduced some measures to cool the market, such as a 5% Stamp duty surcharge on second homes, but this has not stopped prices from rising. If you’re considering buying property in the UK, now is still a good time to do so.
10. Invest with GuestReady in the UK
Guestready provides managed property lets throughout the UK. We take the hassle out of hosting. We carry out all guest communication and approval, house preparation, check-in, key exchange, and guided check-outs. We’ll keep your property in tip-top condition, ready for your next guest, so you don’t have to worry about the small things.
We ensure your listings have professional photography, with your listing optimised to ensure you earn the highest return on your investment. We’ll even provide you with a dedicated property manager to answer any of your queries and give you peace of mind that your property is in good hands.
