Money matters

When buying a property in the UK, there are several important financial matters that must be considered and planned carefully. Here are our Top Ten Tips for foreign property finance:

1. What is your total budget? How much money do you have to spend on your property, the property buying process – including fees – and its ongoing upkeep and maintenance?

2. How will you fund the property purchase – with a mortgage, releasing equity from another property, or are you paying cash? If looking to take out a mortgage it is worth noting that while, in theory, buyers of most nationalities are eligible for investment loans, there are now far fewer banks and lenders offering them than once was the case. Barclays is one bank which does offer a range of services to overseas buyers, including those looking to purchase a buy-to-let property, while UK nationals who live abroad are also catered for. Foreigners can often secure loans in their own country as they may already have established assets they can charge against and have mature relationships with their existing banks. There may be tax implications with this that you will need to check out first, however.

3. Factor in all additional costs, such as property viewings and visits to the country before buying the property, legal fees, agent fees, taxes, valuation and registration costs, and exchange rates when moving money between countries.

4. Be aware of currency market movements and their effect on the price of your property.

5. Don’t forget the ongoing costs associated with owning a property in the UK. You will need to ensure any regular bills, such as council tax and mortgage payments are covered, as well as ongoing maintenance, amenities, and so on. Remember that if you are paying these in another currency, the same currency market movements mentioned above will affect the price of these payments. Consider any recurring and regular payments and discuss how you could potentially save money on these with a currency specialist.

6. Get reliable estimates for removals and shipping costs if you are moving to the UK permanently, and ensure these are included in your overall budget. Find a professional relocation and removals firm to give you a quote. If you are purchasing a home for investment purposes, and therefore not planning on moving any belongings to the country, then you will need to ensure that the house you buy is furnished or budget to furnish it once you have bought it. Unfurnished homes command less rental value than furnished ones, and are harder to find tenants for.

7. Consider any inheritance implications, including Inheritance Tax, your will, and the effects of the property purchase on your estate. If you've got a non-domicile status in the UK, then only UK-based assets will be liable to inheritance tax in the UK. If you are UK domicile and your estate is valued at over £325,000 your estate will be subject to inheritance tax - either 40 percent or 36 percent on the amount over the threshold. *

8. It may be worth opening a UK bank account from your home country. While most major British banks – particularly those with global branches – do offer bank accounts to non-UK residents, quite often the services these accounts offer are limited. You will need to discuss your options with a number of banks to see which one offers the best choice for your particular needs.

9. Organise salary or pension payments. If you are moving to the UK long-term, ensure that your salary or pension can be paid directly to you. If you are a British expat who is planning on moving back to the UK, and you have a Qualifying Recognised Overseas Pension Scheme (QROPS), then you are able to keep this when you move back. However, whether you will be will be liable for income tax on this will depend on where your QROPS is held and whether or not the country in which the QROPS is established has a dual taxation agreement (DTA) with the UK. Always consult an independent financial advisor (IFA) for any financial decisions of this nature and to find out what best suits your individual needs.

10. Plan ahead as much as possible and as far ahead as is feasible, to ensure you have accounted for all the financial aspects of your property purchase.

• You are classed as UK domicile if you either spent more than 183 days in the UK during the tax year or if your only home is in the UK and you have spent at least 91 days in it in total and at least 30 days in the current tax year.