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How to Buy a Property in the UK? Can people in China buy UK properties? Can you buy a UK property on a tourist visa?
As of January 7, 2021, the latest news in the UK states that all Leaseholders (property owners with leasehold, including apartments and villas) will have the option to extend the lease of their property by 990 years with zero ground rent. This means that the previous ground rent fees will be abolished.
Furthermore, if a Leaseholder wishes to convert to a Freeholder (permanent landowner), they can calculate the approximate one-time ground rent fee payable through the government's official website (with a maximum limit set for the fee). Once the fee is paid, they can become a freeholder.
Additionally, unreasonable calculations of charges, such as the "marriage value," will be abolished. Calculations will be set to ensure a fairer, more affordable, and transparent process.
The marriage value refers to the situation where a Leaseholder wishes to renew the lease, and the Freeholder requests them to pay the difference in the property's increased value during the renewal period. For example, if Freeholder (F) sold the leasehold of a property to Leaseholder (L) for 150 years, and later L wants to extend it to 350 years, the property may have appreciated in value during the additional 200 years. The Freeholder then demands that L pays the difference in value for the extension. This practice is considered unfair, opaque, and unjust, as the Freeholder sets the price for the increased value without considering the actual market conditions during those 200 years. It burdens the leaseholder and makes it difficult for them to sell the property.
Furthermore, the government will take further measures to protect elderly individuals. Previously, the government pledged to limit ground rent to zero for new leases to ensure a fairer renting process. This will also apply to retirement leasehold properties (housing specifically designed for older people), ensuring that buyers of these properties have the same rights as other homeowners and are protected from uncertainty and fraudulent practices.
Tenants can also voluntarily agree to restrict the future development of their properties to avoid paying "development value."
Moreover, the government is establishing a Commonhold Council, which will be a joint committee consisting of leasehold groups, industry representatives, and the government, to prepare for wider use of commonhold, a form of shared ownership, by homeowners and the market.
Commonhold refers to a situation where homeowners have ownership of the land on which their property is located, eliminating the need for ground rent. However, they are still responsible for other relevant property costs. It allows homeowners to have greater control over the cost of their housing ownership while retaining permanent ownership. The shared areas within the block or development are collectively owned and managed, meaning that when someone purchases an apartment or house, it becomes theirs, and they have a say in any decisions regarding its future.
The upcoming parliamentary sessions will introduce the aforementioned legislation, indicating that the UK's property market will undergo changes in the future.
Here is a separate listing for it：
Leasehold refers to the right of use.
Freeholder refers to the ownership rights.
Ground Rent refers to the rent that the leaseholder is required to pay annually to the freeholder. If the rent is not paid, the freeholder has the right to reclaim the head lease.
Head Lease refers to the time-limited leasehold, as leasehold only grants the right to use the property for a specific period of time.
For example, after A purchases from L, A pays G to F annually, but in a certain year, A fails to pay and F reclaims the head lease (H).
Official government link for the UK:
Reminder: This article is quite detailed, but some students have been fined, possibly due to not reading the article or paying attention. When buying a property in the UK, it is necessary to provide proof of legal funds. If the funds are given by relatives from overseas, a proper notarized gift deed is required, and it must be declared. Failure to comply may result in substantial fines or frozen funds. If you secretly buy a property with full payment, it may be liquidated after a certain number of years or at any time, resulting in not only fines but also property seizure.
Reminder: Money transferred from China to the UK, according to legal regulations, cannot be used for the purpose of buying a property in the UK. The verification of funds is subject to scrutiny when purchasing a property in the UK. Generally, the UK does not accept funds from China for property purchases, but it depends on the situation.
Firstly, it is possible to buy a property in the UK with a tourist visa. I remind everyone that if you want to buy a property in the UK, you don't have to be physically present in the UK. You can purchase a property in the UK from any country. However, certain conditions need to be met, such as providing proof of legal funds. Even if you have never been to the UK and don't have any UK visas, you can remotely buy a property in the UK without restrictions.
If you are studying for a bachelor's, master's, or doctoral degree in the UK and staying in a particular location for a considerable period, I suggest that if you have sufficient conditions, buying a property is more cost-effective than renting. After buying a property, you can also rent it to fellow students from the same university. If you plan to return to your home country, you can sell it. If the property appreciates in value during that time, you can make a small profit.
Here's the translation:
The situation of a friend of Shisheng Meow is as follows: He went to the UK to pursue a master's degree and continued to pursue a doctoral degree. When he graduated from his master's program, he bought a house in the UK. Now he is working as a professor at a university in the UK. At that time, he felt that rental prices were being inflated by many people, creating a huge bubble that could burst at any time. The inflated rental prices, when accumulated over several years, were not as cost-effective as directly buying a house. Besides living in the house himself, he could also rent out the other two houses. He bought a total of three houses, one for his own residence and two for renting out, with exceptionally low rent for students from his university.
Around 2019, Shisheng Meow had an aunt whose son was studying in London. She directly purchased a small apartment of about 50 square meters with a bathroom, kitchen, and living room in London with full payment. After graduation, she rented it out to other students, earning a significant monthly rent, approximately several tens of thousands of Chinese yuan.
So, how to buy a house in the UK?
In fact, the process is the same as for UK citizens buying a house. However, there are differences compared to buying a house in China. To buy a house in the UK, you only need to provide your passport or identification card and proof of address.
The first step is to conduct preliminary research before buying.
Before buying a house, it is important to conduct research, including deciding on the location, type, and price of the house, how to make payments, which real estate agent to use, whether to find a lawyer independently or through the agent's recommendation, whether to buy a second-hand or new house, and whether to personally visit and buy or use an agent's assistance, among other considerations.
1）
Here's the translation:
Check the geographical environment
Investigate the surrounding geographical location of the desired house. For example, if buying in London, determine the specific area within London and consider various supporting facilities, safety environment, Council Tax, etc. Supporting facilities include education, healthcare, entertainment facilities, public amenities, green spaces, neighboring areas, transportation, job opportunities, energy companies in the house's area, communication companies, and overall convenience of daily life. Additionally, check the crime rate in the vicinity of the house by visiting the official website of the UK police before purchasing. Choose an area with relatively good security.
To check the security situation in England, Wales, and Northern Ireland, visit the following website:
：https://www.police.uk/
View the official website for crime statistics in various areas of London
2）
Choosing the type of house
Decide on the type of house you want to buy, including the size, number of rooms, age of the house, orientation, garage, property price, and maintenance fees. In the UK, houses come in various types such as apartments, detached houses, and townhouses. Apartments can have one-bedroom, two-bedroom layouts, and so on. They can face the sea or the road and may have front and back gardens or only a back garden. There are many different types to choose from.
Decide whether to buy a second-hand house or a new one. If buying a second-hand house, consider the renovation condition and whether you want to redecorate it later. Shisheng Meow generally suggests finding a reputable large agency (you can inquire with several and check their ratings online). If buying a new house, decide whether to purchase a fully furnished one or plan to do the interior design yourself. It is recommended to directly contact the developer when purchasing a new house, as they may offer discounts.
Shisheng Meow reminds you that houses in the UK are divided into Leasehold and Freehold. Leasehold refers to the right to use a property for a limited time, known as the Head Lease (with a lease term). Freehold, on the other hand, represents permanent ownership, including the land the house sits on, without any time restrictions. The lease term for Leasehold properties typically ranges from 125 to 999 years. Some houses and apartments in the UK are Leasehold. If purchasing a Leasehold property, it is crucial to pay attention to the lease term and clarify any uncertainties.
The second important point to note is Ground Rent, which refers to the rent paid for the land. Those who purchase a Leasehold property must pay Ground Rent annually to the Freeholder, the permanent landowner. Failure to pay this rent may result in the Freeholder reclaiming the Head Lease.
Therefore, it is essential to thoroughly review the contract terms and consult with your lawyer. Some landlords or developers may include certain trap clauses in the contract, such as doubling or renegotiating the Ground Rent every few years or annual increases. This means that many Leasehold property owners have to pay an additional significant fee each year and may face the possibility of paying £10,000 to £20,000 in Ground Rent annually in the future.
You might ask, can you buy the Freehold permanent ownership of the land if you mistakenly purchased a Leasehold property? In some cases, it is possible, but the cost is quite expensive. For instance, the developer or current owner may demand a considerably high price, possibly tens of thousands of pounds, to sell the Freehold. The specific price requirement would depend on the other party's offer.
Regarding Ground Rent, in 2019, the UK Housing Secretary James Brokenshire announced upcoming new policies, including: 1) reducing Ground Rent to zero, 2) selling all new houses as Freehold unless specific circumstances apply, and 3) taking immediate action to amend the Help to Buy policy, preventing taxpayers' money from supporting unreasonable leasehold property sales
In other words, the UK will introduce policies in the future to abolish the Leasehold status for houses.
For example, let's say A buys a Leasehold property in the UK. A can either live in the house or rent it out to others, but the property A purchased is Leasehold, which means it has a time restriction known as the Head Lease. The house can be used for 200 or 999 years, during which A only has the right to use the property for that specified period. Essentially, the house and the corresponding land belong to the Freeholder, and A needs to pay Ground Rent annually, ranging from a few hundred pounds to tens of thousands of pounds, to the Freeholder. However, after the policy is abolished, there will be no more Ground Rent to pay, and all new houses will have Freehold ownership.
However, this policy is not yet in effect. Once it is implemented, it will be truly fantastic as it protects the interests of homebuyers, ensuring everyone has permanent ownership rights.
Shisheng Meow reminds you of another important point: If you purchase a Leasehold property, you will need the consent of the Freeholder, who holds the Freehold ownership, and you may need to pay a certain fee if you want to make any modifications to the property. Please note that property modifications include renovations, adding a balcony, changing the structure, and so on. Even if you obtain planning permission from the government, you must still obtain consent from the Freeholder and provide a certain amount of money, which could be a few hundred or a few thousand pounds.
If you are remotely viewing properties from abroad or wish to gain early knowledge about property types, sizes, geographical locations in the UK, you can search online.
Here are some UK property websites:
：
Rightmove.co.uk
Zoopla.co.uk
Primelocation.com
Among these three property websites, Rightmove is the largest real estate website in the UK, and many agents list their properties on it. The majority of houses on Rightmove are listed by agents. Zoopla, on the other hand, is the second-largest real estate website in the UK, and the third one, Prime Location, belongs to Zoopla. Prime Location primarily focuses on properties with excellent locations and higher-end features in the UK, which means they have good overall conditions and higher prices.
3）
Purchase Funds and Proof
Prepare sufficient funds and provide proof of legal sources of funds. Once you have determined the initial steps before finalizing the property, you will have an idea of the price range and the type of house you want to buy. At this point, you need to decide whether you are planning to buy the property through a mortgage or with cash payment, or other payment methods such as credit card. If you are opting for a mortgage, you need to prepare an adequate down payment in advance, assess your loan capacity, and have a clear understanding of the specific requirements from the bank. If you choose to make a payment with a credit card, you need to consider the credit limit available, including the possibility of using a UnionPay card for purchasing a property. Generally, cash payment in full is highly regarded in any country and may even come with additional benefits.
In addition to considering the property price and down payment, you also need to factor in various payment fees such as agency fees, reservation fees, stamp duty, capital gains tax, and legal fees. Furthermore, after buying the property, you should also consider the costs associated with renovations and moving.
Moreover, it is essential to provide proof of the source of funds for purchasing the property to demonstrate that the funds used for the purchase are legal. It is advisable to prepare the necessary documentation in advance and make the payment through a remittance to a UK account."
Please note that specific financial and legal requirements may vary depending on the country and individual circumstances. It's always recommended to consult with professionals and adhere to local regulations when purchasing a property.
Shi Sheng Miao Reminders:
If your parents give you money to buy a house, they need to provide proof of the legal source of funds. They should also present a notarized certificate as evidence of the gift from your parents. In the case of inheritance, a will or relevant proof documents are required, and it is advisable to have them notarized.
If you sell your own property in your home country or in another country, or if your relatives or friends sell their property or mortgage it in a bank and give you the proceeds to buy a house in the UK, generally, you don't need to provide additional proof of the legal source of funds. However, you need to provide proof such as the property ownership certificate of the sold property, transaction contracts, bank statements, and other documents to demonstrate the legality of the funds. It is generally recommended to have them notarized.
If your funds come from stocks, funds, or investments, when providing proof, you need to provide relevant transaction records and supporting documents, including but not limited to bank records, signed contracts, or statements issued by financial institutions.
If the funds are cash accumulated by previous generations through years of hard work and there is no specific means of proof, you can provide a detailed explanatory document, have it witnessed by a lawyer, and have it notarized. Generally, this should be acceptable, but the document must be very detailed and specify the specific source of funds, requiring the collection of supporting materials.
If someone lends you money, as long as the lender can provide proof of the legal source of funds and then present a notarized certificate as evidence of the loan given to you, it is acceptable.
6、
The proof of legal source of funds is extremely important and must be prepared in advance. Without it, even if you intend to purchase the property with cash in full, it will not be accepted, meaning you won't be able to buy the house. This is a mandatory requirement, and regardless of how long your funds have been in a UK bank, you still need to provide proof of their source.
In certain cases, if your family directly transfers funds (including down payment) to your UK account without providing proof of the legal source of funds, it is highly likely that your funds will be frozen by UK banks or handed over to the UK government. If your funds are discovered by the UK police to be illegal or involved in illicit activities, not only will you lose the money, but you may also face legal prosecution.
Please note that "black money" mentioned here does not necessarily refer to illegally obtained funds. Even if the money is earned through legitimate business or legal employment, failure to pay taxes as required by law or earning money through illegal employment in the UK is considered "black money.
7、
If you fail to provide proof of the source of funds but quietly purchase a house with cash in full, or if you purchase a house through other means without proper proof of the legal source of funds, your property purchased in the UK will be seized
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If you have already signed the contract but do not possess proof of the source of funds, you will be considered in breach of contract and will be required to compensate the seller. Moreover, the property transaction will be halted, and if it is a high-quality property, other buyers may seize the opportunity to purchase it.
So, Shisheng Miao once again reminds everyone to prepare the proof of the source of funds in advance. This is a mandatory requirement. Note: In addition to Chinese, the notarized certificate should also include an English translation. Shisheng Miao has notarized many documents with dual copies, each containing both Chinese and English notarizations. Notarization fees can be a bit expensive, and the translation services provided by the notary office can also be costly, but it is still recommended to use their translation services directly instead of seeking other translators or doing it yourself.
The second step is to conduct property viewing and investigate the transaction.
Once the previous steps have been completed, you can
1）
Choosing the Property Acquisition Method
Deciding whether to purchase a property through a real estate agent, a developer, or a representative can be considered. If you are in the UK and interested in buying a pre-owned property, it is generally recommended to engage a real estate agent. Real estate agents provide comprehensive services, including handling procedures and recommending lawyers. In case any issues arise, you can directly communicate with the agent.
Alternatively, if you directly approach the landlord to purchase the property, that is also possible. You would need to find your own lawyer and provide proof of the legal source of funds to proceed with the transaction. Buying from a developer typically includes all-inclusive services such as financing and legal assistance, which are convenient and save time and effort. If you are in another country, you can appoint a representative to purchase the property on your behalf. Usually, you can directly approach a lawyer in the UK and provide them with notarized documents such as your ID, passport, and proof of address.
Shisheng Miao reminds you that when buying a property in the UK, it is essential to engage a lawyer who can assist you with legal documents and provide guidance in case of any issues. Seek advice from the lawyer and consult friends who have already purchased properties. It may even be beneficial to inquire about the neighborhood surrounding the property you intend to buy.
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Scheduling Property Viewings
Once you have made an appointment, you can proceed to visit the property in person. Apart from visiting the property in person, you can also have the assistance of a real estate agent, developer, or representative who can provide online video tours. Take a look at the surrounding environment mentioned earlier, such as the proximity to schools, supermarkets, and the structure of the house. Some older properties may require reinforcement or even reconstruction, or they may have hidden defects. It is necessary for the buyer to understand these aspects in advance, so property viewings are vital.
Shisheng Miao reminds you: In the UK, regardless of the task at hand, it is customary to make appointments. Without an appointment, you may not be able to proceed with many things. For example, if you wish to view a property without an appointment, it is likely that you won't be able to do so. Additionally, as with purchasing property in China, as long as you haven't made any payments or paid a deposit, you can change your mind and decide not to proceed with the purchase. However, once you have given money or made certain commitments, you will inevitably incur some losses. Nevertheless, you can still visit the surroundings of the property on your own before making an appointment with a real estate agent or developer. After all, what you observe personally may differ from what the agent shows you
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Determining the Property Price
Once you have chosen a property, it's time to negotiate the price. In the UK, both pre-owned properties and new properties from developers can be subject to negotiation or discounts. For example, if you are interested in purchasing a pre-owned property and the seller is in urgent need of money, they may agree to lower the price. Similarly, if you are buying from a developer and offer to pay the full amount in cash, they will be very welcoming and may provide you with additional discounts.
Shisheng Miao reminds you: If you are purchasing through a real estate agent, be aware that the listed price is usually inflated. Therefore, it is important to negotiate and reach a price that you consider reasonable. This involves negotiation skills, and of course, it doesn't mean you should immediately suggest a 50% reduction. Instead, do some research in advance on the prices in the surrounding area and estimate the lowest market price that you would find satisfactory as a buyer. However, for properties with exceptional conditions that are highly sought after, such as properties located in prestigious school districts or affluent areas, negotiating the price may be less likely. In such cases, it is often a matter of the highest bidder securing the property.
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Property Inspection and Analysis
A thorough inspection and analysis are necessary for purchasing a pre-owned property. This includes considering important factors such as maintenance recommendations, the condition of the property's structural materials, and so on. Generally, when buying through a real estate agent, they will provide a property valuation report. However, this report may not be detailed and comprehensive. The cost of conducting such an inspection varies, ranging from a few hundred pounds to over a thousand pounds. The purpose of this analysis is to understand the specific condition of the property, identify areas that may require repairs or renovations in the future, and provide a reference for the selling price of the property.
Shisheng Miao reminds you that conducting a property inspection and analysis is optional and entirely up to you. After all, it can be quite costly. Additionally, it is advisable to proceed with the inspection only when you are absolutely certain about purchasing the property, as otherwise, it would be a waste of money spent on the inspection. Generally, property inspection companies offer different types of surveys: Building Survey (more expensive but comprehensive), Homebuyer Report (moderate price with moderate content), and Condition Report Survey (cheaper but with less detailed information).
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Transaction Lawyers and Insurance
The lawyers representing both parties will begin the legal procedures, exchange contracts (Exchange Contracts), and make payments such as deposits and stamp duty. If you are purchasing a property through a real estate agent or developer, they will generally recommend a lawyer to you, but you can also find one on your own. In the UK, it is mandatory to have a lawyer handle the property transaction. After both parties have exchanged contracts, the transaction is considered officially completed. Following the contract exchange, as per the agreed-upon effective date in the contract, you will need to make payments such as deposits or down payments, stamp duty, and other fees. During this period, your lawyer will handle all the necessary paperwork and provide you with important information and instructions. You will need to sign the documents, but it's crucial that you carefully read and double-check everything.
If you have any questions, be sure to ask your lawyer immediately. It is particularly important to inquire about whether the property has building insurance. Generally, newly constructed properties come with building insurance, but it's not always the case. Additionally, pre-owned properties may or may not have it. If you are applying for a mortgage to purchase the property, it is mandatory to have building insurance. Another type of insurance to consider is content insurance, which protects the items inside your property. Furthermore, you may need to inquire about other types of surrounding property insurance and seek advice from your lawyer regarding which ones to purchase.
Shisheng Miao reminds you that until both lawyers have exchanged contracts, either party can back out of the transaction without consequences, and no deposit has been exchanged. However, once the contracts are exchanged, and the deposit has been paid, any party that breaches the contract will be liable for compensation. For instance, if the buyer breaches the contract, the deposit will not be refunded. Additionally, Stamp Duty Land Tax (SDLT) is a mandatory tax paid to the UK government and is calculated based on the value of the property.
As shown in the figure below, the general threshold for SDLT is £125,000 for residential properties and £150,000 for non-residential properties and land. However, there are stamp duty exemptions for first-time buyers.
Shisheng Miao Reminder: If you fail to submit the tax return and make the payment within 14 days after completing the transaction, you may incur fines and interest charges. However, typically, your property lawyer will assist you with this.
Please refer to the table below for the Stamp Duty rates
：
For example, if you are purchasing a property for £275,000, the calculation for the Stamp Duty Land Tax (SDLT) would be as follows:
The first £125,000 has a SDLT rate of 0%, resulting in £0.
The next £125,000 has a SDLT rate of 2%, resulting in £2,500.
The remaining £25,000 has a SDLT rate of 5%, resulting in £1,250.
Therefore, the total SDLT fee would be £3,750.
For more information on Stamp Duty, please refer to the following link
：https://www.gov.uk/stamp-duty-land-tax
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Key Payment Completion
Once everything is finalized, including the completion of all payments, the lawyer will confirm the procedures and timing for receiving the keys and moving in. After obtaining the keys, you can move into the property based on the agreed-upon move-in date, thus completing the home-buying process. Subsequently, the lawyer will assist you with tasks such as tax payment and property registration to conclude any remaining work. If there are any future issues or disputes, you can seek assistance from your lawyer.
Shisheng Miao Reminder:
When buying a property for rental purposes in the UK, rental income is subject to taxation. This is mandatory. If you plan to sell a property in the UK, any capital gains resulting from the increased selling price compared to the original purchase price will be subject to Capital Gains Tax. For example, if you purchased a property in the UK for £100 and sell it for £150, the £50 difference would be subject to Capital Gains Tax.
It is possible to purchase a property in the UK through a joint ownership arrangement, where multiple individuals come together to buy a property. However, it is crucial to allocate ownership shares properly. It is advisable to seek advice from a property lawyer and prepare a list of questions in advance to address each concern.
From March 2020 onwards, overseas buyers purchasing property in the UK may be required to pay additional Stamp Duty Land Tax (SDLT). The specific details of this policy were expected to be announced on March 11, 2020. As of today, February 25, 2020, the UK government has already released some rules regarding SDLT for overseas buyers. Overseas individual buyers refer to those who spend less than 183 days in the UK, while overseas corporate buyers refer to companies whose shareholders are non-UK residents, even if the company is registered in the UK. However, if an overseas buyer resides in the UK for 183 days or more within one year after purchasing the property, they can apply for a refund of this tax.
Please refer to the following image to learn more about Stamp Duty Land Tax for overseas property buyers. You can click on the official website for further information and access a clear PDF document. Feel free to view and download it, as it is free of charge.
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When buying a property in the UK, regardless of the buyer's identity, there are no quantity restrictions
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It is not possible to immigrate to the UK through property purchase
Shisheng Miao Reminder: It is possible to buy a property without a visa. Generally, purchasing a property in full without financing does not require legal status. Only when obtaining a loan for property purchase in the UK is legal status necessary.