UK Investment Property Purchase Process Explained

If you are an overseas buyer, you may be considering buying UK residential property as an investment whilst the value of the pound sterling is down. Before you decide to invest, read our explanation of the UK property purchase process

Getting started- your objectives

Before looking for potential UK investment property, you would have to get a clear idea of what you are hoping to achieve with your investment. Are you looking to invest for the short term and achieve good levels of rental yields, or are you looking to hold on to your investment for a longer time for capital growth?

Many agents are selling UK investment property so its best to find the right agent the first time around and an agent that you get along with.

If you are looking for capital growth, London’s property prices are increasing and there are several London developers that are selling directly to China.

Work out your budget

The pound sterling is not faring well against other currencies so those overseas may be able to get a more favourable exchange rate. You would be able to get a mortgage on residential investment properties over £100,000 and with some lenders they will offer minimum mortgages of £50,000 although most lenders generally have minimum mortgages of £100,000. Interest rates would be 4% but the rental income generated through the property would be able to cover mortgage payments as rental yields can be as high as 7% to 8% depending on which part of the UK you are buying in.

Ultimately, buying a property whether as a buy-to-let investment or otherwise is quicker if you are a cash buyer as you will not have to spend time filling in mortgage applications.

Do I have to visit the UK to purchase property?

People from overseas can invest in the UK, and you do not have to visit the UK to purchase property in the country. The legal side is handled by a solicitor and if you used a property investment company such as One Touch Property, they would be able to provide guidance on different investment types in different cities.

Of course, you may want to visit the city you eventually decide to invest in. Some people choose to invest in a certain city or area they feel an affinity with. They might enjoy the status of owning property in that area, like the location, or recognise the impact regeneration has on capital growth of property prices.  It’s based on personal preference and the amount of importance one would place on an area.

Once you have decided what your objectives are with the investment property and have calculated how much money you have for it, you review each investment that is presented to you. If you find an investment you feel comfortable with, you would have to choose a unit and pay a reservation deposit usually between £2,000 – £5,000.

Next your agent will instruct solicitors on your behalf who will do all the legal work and carry out all the necessary legal checks. Once that is completed there would be an exchange of contract and at that point you would pay 100% of the property price minus the deposit. If you were looking to use a mortgage then at this stage your solicitors will tell you to obtain a mortgage before they will exchange contracts with the property seller. The solicitor has to do this to protect your best interests and make sure that you can obtain a mortgage to cover the remaining debt. If you couldn’t obtain a mortgage for any reason then you would only lose any monies paid as a deposit assuming they are non refundable.