Buying UK Property From South Africa in 2021 – that will be the topic of today’s article.
Before introducing this article, if you are interested in our core services which are expat financial, insurance and mortgages, you can contact me here.
The best time to consider your financial situation is when you are moving to a new country.
In recent years, the United Kingdom has long been a stable and mature market for South African investors looking to diversify their portfolios. We have a team that monitors the UK property, and we have a proven track record of building high-quality and award-wining development to secure investments.
While pandemics have impacted the entire global stage, the South African property was particularly hard hit. And of course, after a bounce-back as of early 2021, the country is gradually returning to its normal state and economic prosperity. That said, many expats would love to take advantage.
However, if you’re investing in UK property from South Africa, there are many things to consider. Contrary to common belief, South Africans who don’t have a residence in the UK or a British passport can buy property in the country and equally get a mortgage. Are you still wondering if that could be possible?
Of course, worry less as it’s true! Depending on where the property is based, the potential rental yield. And with your financial standing, you could get a UK property without government restrictions. Meanwhile, a substantial amount of deposit would be required if you intend to buy the UK property.
Moreover, we’ve got you covered in this article. Have you been surfing the internet to get the right information about UK property? Well, this is the best platform to know more about investment packages and expats guides. Aside from that, we will walk you through the best ways to profit from the UK.
What to Consider When Buying UK Property
If you’ve been craving to buy a property in the UK but not based in the country, there are a number of considerations you should bear in mind with regards to financing. In fact, this is one topic that we do have conversations with many clients. Without further ado, let’s quickly walk you through the things to consider.
Get a Mortgage Provider
Finding a mortgage provider with the right experience is one of the first things to consider. For non-UK residents, an excellent approach to start is a lender in an international finance center, such as Jersey, the Isle of Man, as these typically have more experience of non-UK based investors. And the main reason to get a professional is to help with the bespoke support needed to buy the property from the UK residents.
Check Out for Hidden Costs
If you want to buy any property from the United Kingdom, one of the things to know is the hidden costs. More so, various associated costs need to be considered over and above the purchase price. And some of these include; the mortgage set-up costs, legal fees, as well as stamp duty. On the flip side, these hidden costs vary whether you’re buying a home to live in or an investment property.
In addition, there’d be additional stamp duty and is usually payable within 14 days of completing your transactions. The usual rate charged ranges from 2 percent on purchase price over £126,000 and up to 12 percent on transactions that’s over £1.5 million.
Get the Best Structure in Place
Depending on your investment packages, you can choose to buy your property in your name or through a company. But in this case, the simplest route in terms of the administration level should be to have the property in your name. Moreover, you can do estate planning ahead and asset protection through owning your property through a structure, particularly when over the long term or in perpetuity.
Tax Changes and Legislation
Another thing to consider when buying a property from South Africa is to check the tax change and legislation process. For example, in 2015, the UK government introduced rules that increase the tax of cost of buying a house, owning and selling residential properties in the United Kingdom for non-residents. However, it’s always better to use a realtor to help you with the complexities in the long run.
Support for Currency Exchange
It’s essential that you should look to use a bank that allows you to benefits from accounts in multiple currencies. With that taken into consideration, you’d be able to make transfer large sums of money easily and cost-effectively when competitive foreign exchange rates are available. Aside from this fact, you’ll also have the security of knowing what rate you will get on the day you wish to make a transfer.
Best Places to Invest in UK Property (2021)
Whether you’re living in South Africa or you choose to invest in UK property, knowing the right place is essential. After a dramatic coronavirus, you may be left feeling unsure about the next steps you should take in the property market. But don’t fear, as we’re here to help you. In no time, check the best places.
To be strict and stay true to the meaning behind the best places to buy property in the UK, we only include lucrative rental yields above 5 percent. We also follow a set of criteria to help us evaluate a cities potential to determine the best property investment location in the UK from South Africa. Some of the requirements include; Tenant demand, affordability, basic amenities, career opportunities, transport links, regeneration, and many others, to mention a few.
Manchester (United Kingdom)
Where else could we possibly start on the list if not buying a property in Manchester? This northern powerhouse is located in the Northwest of England. It has surged in popularity amongst private landlords over recent decades, and for a good reason too, the city has continuously been rated the best place to invest. Not only that but it has also been credited as a top 10 global location for business.
Reasons to Invest in Manchester
- Manchester is the second-largest regional economy outside of London
- It has a top tier transport links with tram system and future HS2 expansion for Manchester
- 59 percent of the population is under 35, with 51 percent graduate retention rate
- It has a student population of about 100,000, with 19,000 international students
Liverpool (United Kingdom)
Another mainstay on anyone’s list of the best and most affordable places to invest in is Liverpool. With projects like Liverpool ONE, the Baltic, Triange propelling, Liverpool has quickly cemented itself as probably the best place to invest in property in 2021. Without further ado, below are the reasons.
Reasons to Invest in Liverpool
- Liverpool is a major student destination with over 70,000 students
- As of today, massive regeneration efforts are ongoing in the city, with a £5.5 billion Liverpool Water project
- Liverpool has a unique property opportunity and is home to the North West’s first eco-property
- Around 75 percent of the population is aged 17-27 in Liverpool city center as of today
- Liverpool is among the top 10 global locations for business start-ups alongside Manchester
Birmingham (United Kingdom)
This city is currently leading the way in rental demand, with reports finding a 25.2 percent rise in demand between 2020 and 2021. Aside from this fact, we’ve found that there was a 51 percent increase in rental inquiries. Unlike Manchester and Liverpool, Birmingham has an incredibly young population propelling its rental demand with about 40 percent of the population under 25 and 64 percent working class.
Reasons to Invest in Birmingham
- Birmingham is one of the cities that’s leading when it comes to rental demand, with a 25.2 percent raise
- This city has a student population of around 100,000 with a 41 percent graduate retention rate
- Birmingham is among the largest business, professional, and financial hubs outside London
- Research also made it known that 40 percent of the population is under 25
- This is the third best city in the UK for attracting graduates with no prior links to the city
Nottingham (United Kingdom)
Nottingham is known as a fun, funky, and affordable place to reside. While it ranks as one of the best areas for property investment, it can generate significant yields upwards of 6.13 percent. Not only that, but it has the two major universities attracting over 43,300 university students, and around 13 percent of the total population are students. Besides, Nottingham is credited as the central cog in UK logistics.
Reasons to Invest in Birmingham
- This city is home to Queens Medical Centre, and it’s one of the largest UK teaching hospitals
- Nottingham is also a UNESCO City of Literature with the top transport network set to be expanded with a new HS2 line
- Research revealed that 30 percent of the population is aged 18-29, with 70 percent of the population at working age
- Nottingham is also considered to be the top performer for East Midlands job creation, with a 14.8 percent raise
Newcastle (United Kingdom)
Newcastle is known as the eighth largest UK cities with some of the lowest property prices and highest rental yields available in Europe. And with this fact, Newcastle has remained the ideal location for property portfolio for landlords. With current rental yields average of 7.11 percent, you can buy property from South Africa. And with its expanding population, it has a growing reputation for investment.
Reasons to Invest in Newcastle
- Newcastle has a sky-high rental yield of 7.11 percent
- This city has a world-class metro light rail system, and it’s home to one of the best cities to live and work, according to the Royal Mail survey
- Newcastle has over 50,000 students across two excellent universities
- The city is one of the best places to visit in the world according to several research from our experts
UK Home Buying Process from South Africa
If you’re considering buying UK property from South Africa, there are specific processes you should know. Typically, the process takes 2-3 months, but this can also be longer if you’re part of a chain of buyers and sellers waiting to purchase or sell other properties in the country.
Before you start house-hunting from South Africa, it’s always better to have an estimation of your finances. This way, you’ll know what you can afford, what to buy, or see whether it’s a mortgage or you can afford it with your own capital. More so, these processes will help prevent delays once your offer has been accepted. In a nutshell, below are the key stages to follow if you wish to buy a property.
1. Hire a Solicitor or Legal Advisers
As an expat living in South Africa, hiring a solicitor or financial adviser is one of the first things to consider. And more so, you’ll need a solicitor to carry out you legal workaround UK property sales. Besides, the financial adviser represents you during the process of buying the property from South Africa. Beyond that, they also check with the local authority to see if any issues affect UK property ownership.
2. Get a Survey from Solicitor
After you might have hired a solicitor, the next thing to do is get a proper property survey. Although you’ll have to pay for this property survey, but it can save money from buying non-registered property. More so, there are different types of surveys available if you’re buying UK property for the first time. Check out the types of surveys that your financial adviser or solicitor might conduct.
- Building or structural survey, which is recommended for old apartments or those in need of renovation or repair and it could cost nothing less than £650+
- RICS homebuyer report, which is a more detailed survey that includes valuations and it could cost nothing less than £400+
- Royal Institute of Chartered Surveyors (RICS) condition report, which is basically used to check new homes in the country, and it could cost you nothing less than £256
3. Make an Offer through Estate Agents
Getting your finances available is one crucial thing you need to plan. With that being said, you can make an offer via an estate agent or direct with a private seller in the United Kingdom. Once your request has been accepted, your estate agent will have to draw a contract to transfer ownership.
Meanwhile, England, Wales, and Northern Ireland offers may not be sealed until contracts are exchanged. Also, note that property in the UK do frequently sell for less than the asking price, but you do risk being beaten by another buyer when your bid is low.
4. Finalizing Your Offer (Property)
After you might have sealed the offer, hire a professional realtor (estate agent), finalizing your offer is the next thing to consider. This is the process where you’ll have to pay after renegotiation. Besides, this is the last chance you’ll have to pull out of the sale before the contracts are exchanged. Also, your mortgage lender will give you seven days to accept the offer but you might lose the upfront fees for mortgage costs.
5. Exchanging Contracts from Seller
This is the next stage after you might have finalized your offer. If possible, check the contract details to know if there are any amendments. So, if you’re satisfied with the documents and processes, you can sign it. And as such, the contract should include all key details, including price, completion date, and the condition of sale.
6. Final Arrangements to Property Ownership
Once you’ve signed the contract, the next thing is to transfer the money to the solicitor’s account or the property owner. At this point, when the former owner has confirmed your payment, you can now get the keys to your new home. Moreover, your solicitor can also register the sale with the Land Registry and pay any stamp duty due.
Relocating into Your New Home
If you buy a property from South Africa to relocate to the United Kingdom, you need to read this part. The first thing to know is to get insured. If you take out a mortgage, for example, or you buy a property to let, you’ll need to purchase building insurance that’d protect your possessions and furniture.
Additionally, many insurance firms offer a combined homeowner insurance covering the building and whatever you have in it. Meanwhile, you can sort out connecting utilities in the UK such as electricity, gas, and water once you’ve moved in. besides, choosing a new energy or internet provider is fairly straightforward, and you can compare different sites to get the best deal for you and your family.
Furthermore, whether you own or rent an apartment in the UK, you should be ready to pay council tax on your new home. Also, notify your local authority whenever you’re moving to the new apartment. On the flip side, the costs are always related to your property value, while those living on their own could get nothing less than a 25 percent discount.
Benefits of Purchasing UK Property In 2021
Property management is one of the most popular choices in today’s 21st century. However, deciding whether or not to invest your money in real estate is a different thing. This is because; it requires proper planning and enough funding. But, we have compiled the benefits of buying UK property; check it out!
1. Long-Term Returns/Income
This is one of the benefits of investing in real estate. As with anything that you may be looking to invest in, the property is an asset, and the prices can go up and down in your own favor. This way, when you focus on the property of your choice for the long term, you can be very confident that the price will go up.
2. Loan Benefits
Owning a property while in South Africa not just only give you endless return but could be helpful. This means the value of your house can be used to take out secure loans if you’re short of cash. Although it could affect you in the long run but they have a better rate of interest because they’re less risky. And many homeowners often take the opportunity to remortgage and withdraw equity from the value of their apartment/home.
3. Avoid Paying Retirement Rent
Buying a UK property from South Africa is the best decision to avoid paying rent in retirement. And more so, if you’re able to buy in your 20s and 30s on a standard mortgage, you’ll have paid off the debt you have before you retire. This way, not having to pay rent during your retirement is a significant financial saving, while buying a house is in some regards like saving for a pension to enjoy your retirement lifestyle.
4. Potentials for Capital Gains
As mentioned earlier, buying UK property will definitely give you potential returns. But aside from this fact, it has always been a better investment than the stock or crypto market. However, you’re free to make changes and decorate the house according to your taste, but you’ll be limited in making alterations and decorations if you rent the place.
Frequently Asked Questions about UK Property
Can South African buy Property in the UK today?
Of course, until now, South Africans are free to buy and invest in UK property without disturbance. While there is a wider range of options for the citizens and non-residence, South African investors should be aware that the application is easy but could typically be a long process.
Can Expats buy a house as non-residents in the UK?
As of the time of writing this article, there are no legal restrictions on expat buying property in the United Kingdom. This means foreigners and non-residents can also get a mortgage in the country. Moreover, those with less than two years of residency without a job may face more stringent.
Can a student get a house in the UK?
Of course, the answer is yes! And in fact, the good news is that you can get a mortgage when you’re a UK student, and many providers could help you through. On the flip side, always know that mortgage providers in the UK offer mortgages for students aged 18 or older.
As with any investment, real estate still remains one of the best in today’s this digital world. As an expat, you can buy UK property from South Africa, but you’ll need a solicitor, legal backup, and real estate agent to make a successful transaction. With this in mind, you may become the next homeowner.