Investing In UK Property: The Fundamentals for Expats and Non-Residents

Whether you’re looking to invest in UK property with a view to moving to the UK, purchasing a second home, receiving rental income or making a long-term investment, this guide covers the process of buying a property in the UK in 2025 and the most important information you need to know. 

In our most recent webinar, we welcomed four industry experts from the Experts for Expats partner network to provide an overview of the need-to-knows of investing in UK property including: 

• Opportunities in the UK property market including an overview of the current UK housing landscape and how to identify properties with the strongest potential for return on investment
• How to navigate property viewings and valuations from abroad including remote viewing tips, due diligence checks and potential red flags to be aware of – whether you’re buying resale or off-plan
• Understanding UK mortgage options for non-residents including lending criteria, interest rates and what options are available for expats 
• Tax implications of investing in UK property including capital gains tax and how tax on rental income is treated as a non-resident  

This article is a summary of the key points from the webinar. You can watch the full recording here: 

What is the current state of the UK property market and where are the strongest investment opportunities at the moment? 

There has been significant but steady growth in UK property over the last 10 years, with investors seeing attractive and stable returns with relatively low volatility. 

The key driver for this growth is the simple fact that demand for UK property far outweighs supply. There is a well-documented housing crisis in the UK and currently, the shortage is about 4.3 million homes. The UK Government has a target of providing 300,000 homes per year for the next five years, but it has been missing this target.  

Last year (2024), around 160,000 homes were built and brought to market in the UK. This is the lowest number of homes built per year in the last decade, which means the supply and demand imbalance is continuing to grow. Since Brexit and then COVID, the cost of building houses has also risen significantly which is also driving price growth. 

More recently, interest rates have been decreasing which has brought down mortgage rates. This has made buying a property in the UK a bit easier and has also raised net yield, which has benefited many buy-to-let investors.  

Now is potentially a very good time to buy property in the UK, as nobody wants to buy at the top of the market. The graph below shows UK house prices adjusted for inflation, and we can see the last time we saw a dip like this was in 2013 before prices rose again.  

We have also seen a growth in demand for rental properties since COVID. Right now, there are more people looking for a home to rent than there are properties available. In Manchester, property demand currently outweighs supply by five to one. During 2022 and 2023, The University of Manchester was paying students to commute from the nearby city of Liverpool because there simply wasn't enough housing within Manchester.  

This demand for rental properties is coming from relative unaffordability within the property market. When you look at median incomes compared to house price growth, the average property price is about seven to eight times what the average person in the UK earns – as a result, many people cannot afford to buy. Interestingly though, wage growth in the UK is in line with rent increases, which is good news for the sustainability of the private rental sector.  

Savills forecasts that the Bank of England's base rate, which sets interest rates for both residential and buy-to-let mortgage lenders, will decrease over the next five years.   

This means anyone looking to enter the UK property market between now and 2029 is going to find themselves in a much more favourable lending environment. In the meantime, positive income growth will help with rental growth, and GDP is also growing.  

It is also worth noting that since COVID we’ve seen a change in rental trends. A lot more people, particularly young people, are moving back into city centres like Manchester, London and Birmingham. Whereas, during COVID, we saw a lot more people moving into rural locations. With this trend towards urbanisation, there's a window of opportunity to invest now, as the ability to buy into new urban housing schemes is decreasing.  

When you look at central London, New York, Singapore, or any other highly developed city, there aren't many more plots available to be developed. There is a finite supply of land. Right now, there’s a big opportunity to enter a market like Manchester or Birmingham – while you still can. In five to ten years’ time, all available plots will have been developed.  

In terms of house price growth, the biggest opportunity over the next five years looks to be in the North West of England. Here, Savills are forecasting growth of 29.4% between now and the end of 2029, compared to 17.1% in London and a UK average of 23.4%.   

There are also potentially plenty of opportunities to outperform these figures, particularly in city centre areas being backed by local government regeneration projects, or where new infrastructure is being built. 

In Manchester, for example, the New Trafford Stadium has just been announced. If you can find an opportunity to invest there now, ahead of that completion, this is the kind of scenario where you will likely outperform the market.  

What are the main checks and due diligence considerations people need to be aware of when buying UK property from abroad? 

Regardless of whether you're in the UK or overseas, the first thing to consider is the reason for your property purchase. If it's for family or personal use, there will be an emotional aspect to the decision, and it might take longer to find something suitable. If it's purely for investment, choosing the right property becomes more of a numbers game. In this case, you can usually make a good investment based purely on the facts and figures presented to you – provided they come from a trusted source. 

No matter what type of property investment you’re making, there are certain standard checks that need to be carried out and you will need to get property professionals involved for these. And, if you need to finance the property, living overseas will make things trickier. You’ll want to find a specialist mortgage broker in the UK who can help.   

In the UK, you cannot buy property without appointing a solicitor. They will handle all legal aspects of the purchase for you, including the necessary environmental, deeds and title checks. 

You may also want to work with a professional in the UK to source the property, as this process can be exceptionally time-consuming. A property specialist can connect you with developers, identify opportunities that match your budget, requirements and goals, and be “on the ground” for you in the UK – actively going out and finding suitable properties to meet your brief.  

If you'll be living overseas following your property purchase, it is recommended that you appoint a property manager to manage your investment – just like any other significant investment you make. 

From a purely investment perspective, the most important consideration before purchasing UK property is getting your numbers right. Make sure you have a full understanding of all the costs involved in your property purchase, including: 

• Deposit and purchase price
• Legal fees
• Stamp duty land tax (SDLT)
• Surveys
• Running costs 

You’ve also got to think about all the costs and expenses you're going to incur over the course of holding your property, for example appointing someone in the UK to manage the property for you; finding tenants, drawing up contracts and managing tenancies.  

If you purchase a leasehold property as opposed to a freehold, there'll will likely be service charges for building upkeep and maintenance. If there are communal areas and services such as a gym or concierge, these charges will be higher. You will also need to take out insurance, and you should be prepared to periodically spend money on essential repairs.. 

If you want to make sure your UK property is a good investment, you’ll need to think about potential capital growth and your exit plan. Essentially, to be a good investment, you want to make sure it's going to grow. The location of a property is a crucial factor when it comes to value growth. You’ll want to understand whether the location is already desirable, and whether there is any significant regeneration or development planned in the area that will increase its desirability.  

For example, when Crossrail was announced in 2007, many people purchased property near the sites of proposed stations. Now the Elizabeth Line has been developed, those who bought those properties at fairly low prices have reaped the rewards of their investment. It’s likely we will see similar happen around the New Trafford Stadium in Manchester. 

New build and off-plan developments  

For new build or off-plan developments, most information you need will be supplied to you by the developers, but you should also do your own research. Find out how long the developer has been around and what previous projects they have worked on as this will give you more confidence in your purchase. 

Make sure you also look at the quality of the project, such as the fixtures and fittings being used and the quality of the kitchens and bathrooms being installed. This is an indicator of whether you’re making a good investment which is going to hold its value and grow.  

You can also look at comparable properties using portals such as Zoopla and Rightmove. Find out what else is available in the area, what's already been sold, what the demand is like – and also what's not been sold.  

Lots of people also like to look at price per square foot. However, you can't always use this as an indicator of whether you’re making a good investment, because even within one postcode there can be significant differences in property prices. 

Resale properties 

If you’re purchasing a resale property, either you or someone acting on your behalf will need to physically go to the property, look at the condition of it and identify any potential problems. While you can of course hire builders to fix any issues, this all comes at a cost which ultimately eats into your profits. 

As well as looking at the property itself, you’ll also want to look outside at the community: 

• What’s the area like?
• How busy are the roads?
• Is it a noisy area?
• Is traffic bad?
• What are the local amenities like? 
• Are there restaurants, pubs or bars nearby (which might be great for some people, but could potentially create noise and strong smells)?
• Is there parking? 

All these things will affect the value of the property you’re buying. And scoping these things out is difficult to do from overseas. If you can’t be here yourself, you’ll want to have an expert on the ground, who understands the market, to help you. 

In summary, there are a number of standard considerations and due diligence checks to carry out when you make an investment in UK property – and there are lots of great opportunities here at the moment. During the purchase process, make sure you review all the information available and consult with experts and professionals along the way who are there to help you make a good investment.  

How easy is it for non-UK residents to get a UK mortgage, what criteria do they need to meet and what kind of interest rates can they expect? 

The short answer is, it’s quite easy for non-residents to obtain a UK mortgage. Historically, there’s been stigma around expats and foreign nationals getting UK mortgages. However, in recent years, we've seen numerous lenders open up.  

If you’re buying a residential property, one of the key mortgage lenders to look at is HSBC. In terms of eligibility decisions, they will look at your foreign income and whether you have future plans to live in the UK permanently.  

From an investment point of view, there are plenty of lenders who will offer buy-to-let mortgages, whether you’re a limited company or buying in your own name. 

One of the biggest criteria for mortgage lenders, especially for expats, is whether you have a financial footprint in the UK already. This could be bank accounts, credit cards or existing property. If you haven't, don’t worry – it doesn't mean you can’t get a mortgage. There are plenty of lenders out there who would offer a mortgage solely on the basis that you own a property somewhere else in the world. 

Ultimately, everybody's circumstances are different, and all lenders will each have specific criteria. With the help of a specialist broker, it’s usually possible to find a mortgage as an expat or non-resident whatever your circumstances.  

In terms of interest rates on mortgages, the Bank of England base rate has recently decreased. Already, we can see this feeding into the market and decreasing mortgage rates from the big lenders, as well as specialist and commercial lenders.  

Looking forward as to what rates you can expect, it depends whether you choose a two-year or five-year fixed rate mortgage. In both cases, your interest stress rate is based on potential rental income – not your personal income.  

However, if you're looking at a long-term investment, a five-year fixed rate isn't ideal if interest rates are high. At the moment, if you’re looking to purchase property over the next couple of years, the market is getting more stable. 

Currently, mortgage rates for expats are starting from around 4.29% for a five-year fixed rate and 4.49% rate for a two-year fixed rate. There will also be associated product fees at different levels. Ultimately, a broker will be able to find you the best overall deal when it comes to combined rates and fees. 

What are the main tax liabilities expats and non-residents need to be aware of when investing in UK property? 

Stamp Duty Land Tax (SDLT) 

The most punitive tax on UK property is the Stamp Duty Land Tax (SDLT). In recent years, higher SDLT rates have been introduced, which unfortunately do penalise non-UK residents. 

The standard rates of SDLT that will apply from April 2025 start from 0% on properties up to a value of 125k. Rates are then banded all the way up to a 12% rate for the portion of the property value over £1.5million. Additionally, there are special rates which apply to non-residents and investors who already own UK property. 

If you're a UK resident and you’re replacing a main home – not buying an additional property – you'll be subject to the standard UK rate of SDLT. Therefore, if you were spending £500k on a UK property, your SDLT liability would be £15k on a £500k purchase (from April 2025).  

If you're a non-resident, you'll pay a 2% surcharge in addition to the standard SDLT rates on your purchase. On a £500k purchase, that’s an extra £10k you need to account for, bringing your stamp duty total to £25k. 

If you also already own a property, whether in the UK or overseas, you’ll pay a further 5% SDLT surcharge on the purchase. Now, you’ll be looking at £50k SDLT liability on your £500k property purchase.  

The good news is, if you're a non-resident when you buy your UK property and you incur the 2% surcharge, provided you become UK resident within a year of making that purchase, you can apply for the 2% surcharge to be refunded.  

If you are buying the property as a main home while you also own an additional property, and you sell your other home within three years of making the purchase, you can then also go through the process of having that 5% surcharge repaid. 

Tax on rental income 

When you purchase UK property as an investment, whether as an individual or member of a partnership, your rental profits will be subject to income tax.  

You will need to register through the Non-residents Landlord Scheme (NRLS), in order to avoid the estate agent having to withhold 20% on your gross rental income. 

In the UK, the first £12,570 of your income isn't subject to income tax. This is known as your Personal Allowance and is effectively a nil rate tax band. Any profits from your rental income between £12,570 and £50,270 are subject to the 20% basic rate of income tax. Income between £50,570 and £125,140 is taxed at 40%. If you’re got quite a large portfolio, then anything above £125,140 is taxed at 45%. 

Corporation tax 

If you’re buying your property through a company, different rates of tax apply. The corporation tax rate in the UK starts at 19% for profits up to £50k and then goes up to 25%. 

Mortgage interest tax relief 

If you've got finance for your property and it’s owned in your name, if your rental profits take you out of the basic rate tax band (i.e. if you're making more than £50k in profit), you will start to suffer a restriction on the relief you can claim against your profits. 

Effectively, once you're in the higher income tax bracket, you'll only receive relief on 50% of your mortgage interest rate. 

Capital Gains Tax (CGT) 

If you make an investment in a UK property and you sell that property, you may be subject to UK Capital Gains Tax. If your UK property is a pure investment, you'll need to pay CGT on the profit you make from the sale, net of any costs.  

If the property has been brought as a main home, or it is used as a main home at some point – which is a common scenario for expats leaving the UK, or perhaps returning to a UK home they lived in before their departure – you might qualify for the principal private residence exemption when you sell the property. This exempts any period of occupation from tax on a straight-line basis for the period of your ownership. It also exempts the last nine months of ownership, regardless of whether or not you move back into the property.  

The UK has an annual CGT exemption of £3000, and any gains over and above that amount are taxed at 18% if the gain falls within the basic rate tax band, or 24% if in the higher rate tax band. 

Inheritance tax  

Once you make an investment in UK property, you have a UK asset which is subject to inheritance tax. The value of that asset for inheritance tax purposes will be the property value, less any debt you have on the property.  

To calculate what your inheritance tax liability might be, first you will need to factor in the nil rate band for inheritance tax purposes, which is £325k. There is also a residential nil rate band of up to £175k, which could apply in certain circumstances. Any value over and above £325k (or £500k) is potentially subject to inheritance tax at 40%. 

All expats invested in UK property need to ensure they take the right steps to mitigate their exposure to inheritance tax and consider taking out life insurance if you do have UK exposure.  

Further special reliefs that may apply to expats 

If you leave the UK to take up employment, retain your UK property and rent it out whilst you're away, provided you return to the UK and move back into the property, you should qualify for the main residence exemption for the full period you're outside of the UK.  

Non-residents can also still qualify for the main residence exemption. You must be in the UK for a minimum of 90 nights in the year, and have at some point nominated the UK property to be your main home.