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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 rental prices still rising, now could be a great time to invest in UK property.
There are a few things you should know for those looking to buy property in the UK. This guide covers everything from the basics of the UK property market to the best places to buy property in the UK.

Views over the River Thames - Photo by Bejamin Davies

The United Kingdom offers much diversity, from bustling cities to beautiful countryside escapes

Table of contents

  1. What are the requirements to buy a property in the UK?
  2. How much tax do I pay when buying a property in the UK?
  3. How to find a property in the UK?
  4. Where to buy property in the UK?
  5. What are the pitfalls of buying property in the UK?
  6. Why buy property in the UK?
  7. Is it worth buying property in the UK?
  8. Can foreigners buy property in the UK?
  9. Is now a good time to buy property in the UK?
  10. Invest in the UK with GuestReady

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 will be purchasing the property with a loan or mortgage, you’ll be expected to put down 20% of the property value as a deposit.

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2. How much tax do I pay when buying a property in the UK?

Stamp duty is a tax payable on all properties over £125,000, paid by the buyer. This begins at 2% for properties up to £250,000 and rises to 5% for the portion between £250,000 and £925,000. Above this, you’ll pay 10% on the amount between £925,000 and £1.5 million. Anything more, you’ll pay 12% in Stamp duty. Please note that these rates assume that this is your first property – If you own another property abroad or in the UK, you’ll pay an additional 5% across all levels.
After the purchase is complete, you’ll receive a bill for council tax (a yearly property tax)
UK properties’ earnings are subject to income tax. 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 lawyer and notary costs, should be factored in when planning your property purchase.
When you come to sell, you’ll pay capital gains tax on any property price increase.

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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 Foxtons, Savills, and REMAX, but there are also a wealth of local agents in every city, as well as national companies such as Connells and William H Brown having the most offices around the country, all of whom list their available properties on sites such as 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 and Manchester, as well as beautiful countryside escapes, with many areas offering exciting yield potential. Below we look at some of the top performing areas of the UK.

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Brighton

Brighton is a city on the south coast of England and a popular destination for investors and residents. The city is known for its vibrant nightlife, art scene, and beaches. Property prices in Brighton have seen good growth in recent years, making it an attractive destination for investors.

The city is also home to a large student population, providing constant demand for rental property. Brighton offers a great quality of life, with excellent transport links to London and other major cities.

Thanks to the popularity of this city, investors can expect between 4.2 – 5.1% yields. In the heart of Brighton, expect houses to set you back around £4,600 per square metre.

Bristol

Bristol is a city in the southwest of England and is known for its lively music and arts scene. The city has seen strong growth recently, making it an attractive destination for property investors.

Views over coloured residential buildings

Photo by Martyna Bober

Bristol offers a great quality of life, with excellent transport links to London and other major cities. The city also has a number of universities, making it a popular destination for students.
If you’re considering investing in Bristol property, it’s worth noting that the average price for a house, per square metre, in Bristol is £3,800, with a yield of between 3.9% and 5.7%, so choose your areas wisely. The BS13 postcode is currently top of the list for profitable lets in Bristol.

Manchester

Manchester is a large city in the north of England. It is known for its football teams and industrial heritage. Manchester is a great place to buy property, with a wide range of different types of property available.

Boy texting and holding his skateboard in the streets of Manchester

Photo by Surya Prasad

Manchester and the surrounding metropolitan area support a population of over 2.7 million people. The area is popular with tourists, so there is always a high demand for short-term rentals and holiday lets.

Yields in Manchester range from average to good, with areas such as Abbey Hey (M18) and Clayton (M11), among others, offering yields of 6.8%, with most areas offering between 5.5 – 6.6%, though Chorlton-vum-Hardy trails behind at 4.5%, so might be an area to avoid unless a bargain appears. On average, investors pay £2,900 per square metre.

Liverpool

Liverpool, formerly named the city of culture, is a city in northwest England with over half a million population. The city is known for its football teams, music scene and maritime history. Liverpool is a great place to buy property, with many different types of property available on the market.
Liverpool has been earmarked as one of the UK’s most up-and-coming areas, with lots of regeneration taking place. The city has excellent transport links to other major UK cities and is also a popular tourist destination.
If you’re considering investing in Liverpool property, it’s worth noting that the average price for a house per square metre is £2,100. There are some excellent opportunities in the Stockbridge area (L28), with average yields at 9.8%, and much of the city centre offers in excess of 7% yields. At the bottom end, expect yields of 4% in areas such as Aigburth (L19) and Broadgreen (L16).

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GuestReady manages a wide portfolio of properties in the UK

London

With ever-spiralling house prices, rental opportunities are always in high demand as new buyers struggle to get on the property ladder.
Inner London boroughs such as Camden, Hackney, Islington and Lambeth offer some of the highest rental yields in the capital, with properties averaging around £5,200 per square metre.

Chelsea neighbourhood wooden front door

Photo by Bruno Martins

Prices have increased significantly in recent years, but so have rental prices, so investors can expect to see healthy returns on their investments, even if London yields are holding at between 2.9 – 5.5%.

London’s diverse population means that there are a great number of international and faith-based schools for overseas buyers who wish to move in and continue their child’s education in their mother tongue.It’s worth noting that prices in London vary by borough more than in any other city in the country, and you’ll have to do careful research before pulling the trigger. Across the city as a whole, the average house price is £656,500, with the average square metre cost setting buyers back £8,100.

In addition, the Greater London area saw the introduction of a 90-day letting limit for short stay lets, which will directly impact you if you intend to offer your property for let through sites like Airbnb.

Birmingham

Birmingham is a busy city, popular with tourists and business travellers. It’s the UK’s second-largest city with a population of over 1 million people. Birmingham is well connected to other parts of the country, making it a great place to buy property.
Photo of Birmingham by Adam Jones
The city has many types of property available, from traditional terraced houses to modern apartments. Prices in Birmingham are very reasonable, and investors in Birmingham can expect to see healthy rental yields, with most areas of the city offering between 5 – 6.5%. The average price per square metre in the city is £2,900.
There are some excellent opportunities for investors in the Winson Green (B29) and Edgbaston (B16) areas, with yields of 8.4% and 7.2%, respectively. Do your research, though, as, at the bottom end, Four Oaks (B74) offers a yield of only 3.2%.

5. What are the pitfalls of buying property in the UK?

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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, 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 those estate agents are either RICS or NAEA registered.

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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.

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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?

The UK property market is generally buoyant, with prices rising in most areas, which leads to high rental levels. For this reason, landlords are still seeing healthy returns on their investments. You’ll see yields of between 2.9% and 9.8%, depending on where you buy in the UK.
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.
Get in touch today.

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