Any property investment made in the UK is subject to a one-time Stamp Duty Land Tax (SDLT), calculated based on the property’s value. This tax ranges from 0% to 12%, depending on the price bracket.
In addition to SDLT, buyers must also pay several related costs, such as Land Registry fees, notary and legal services, estate agency commissions, and local council charges. Many of these taxes and fees vary based on the type of property (e.g., new-build or resale) and its purchase value. On average, buyers should expect to spend around 5% of the property price on associated costs.
After the purchase, homeowners must also pay Council Tax annually, which ranges from £700 to £2,500 per year, depending on the property’s location.
In terms of income tax, rental income is tax-free up to £12,500 per year. Any income above this threshold is subject to a 13% income tax rate.
It’s also important to note that when selling a property, foreign investors may be liable to pay Capital Gains Tax (CGT) at a rate of 18%, based on the increase in property value between the purchase and sale dates.
How to Invest in London Property from Abroad: Step-by-Step Guide
To begin, make sure you have all the essential documents required to complete a property deal in London and pass the necessary compliance checks as a non-UK citizen.
The most important documents include:
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Proof of identity – such as a passport or driver’s license
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Proof of address – such as a bank statement or utility bill
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Proof of funds – such as a tax return or payslip to explain the source of your funds
If you wish to complete the deal remotely and online, note that you can issue a Power of Attorney (POA) to your solicitor. This means you can buy a property in London without having to visit the UK in person.