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Expat: Stamp duty is changing – now is the time to invest in property

Last updated: 16th June 2020

Things are changing for expat property investors, so for those considering investing in UK buy-to-let property, now’s a good time to do it.

From April 2021, all expat and foreign investors investing in UK property will face a stamp duty surcharge of 2% – this is on top of the 3% surcharge investors are already required to pay when purchasing a second property.

Understanding stamp duty

If you don’t know about stamp duty – you should. As a property investor, you need to understand what stamp duty is and how it works, because it could blow your budget without you realising.

Anyone purchasing a property in England or Northern Ireland needs to pay stamp duty on any property purchase worth more than £125,000. This works in bands and the amount you pay depends on the purchase price of the property.

The banding works like this:

  • £0 – £125,000 – Zero
  • £125,001 – £250,000 – 2%
  • £250,001 – £925,000 – 5%
  • £925,001 – £1.5 million – 10%
  • Anything above £1.5 million – 12%

We’ve done an in-depth piece on what stamp duty is right here.

As it currently stands, investors purchasing a second home or buy-to-let property pay an additional 3% on top of the above – and this is for any property valued at £40,000 and higher.

You can see how quickly this can add up if you weren’t expecting it.

What’s changing for expat and foreign investors?

From April 2021, expat and foreign investors will be hit with an additional 2% – as well as the additional 3% which is already required for those purchasing second properties. Ouch!

So you can see why expat and foreign investors are keen to bag their next property purchases before the new surcharge kicks in.

Funding a property as an expat

Gone are the days when expats needed cash to invest – the accessibility of mortgages have changed the game for investors based abroad.

The expat mortgage market has changed considerably over the last few years. Funding property purchases as an expat used to be a major headache, however lenders have realised that this could be a lucrative market and have ramped up their product offering.

It’s worth noting that expat mortgage products still often have slightly higher interest rates because of the additional workload involved and higher risk factor from a lender perspective.

Now, expat mortgages aren’t as simple as some residential or buy-to-let mortgages here in the UK – there may be a few hoops for you to jump through, so we’ve covered everything you need to know about getting a mortgage as an expat in this YouTube video. We’ve also dished out some specific advice on expat buy-to-let mortgages here.

What and where to buy as an expat investor

Knowing what type of property to purchase and which location to buy it in can be the most challenging thing for an expat property investor. Simply because you can’t do the normal things such as viewings or visiting a location – not without costly travel expenses anyway.

That’s where we come in – and we’ve already done the leg-work for you.

We’ve put together the 2020 hotspots we think are set to perform well this year and where we’ll be looking at sourcing properties for our Property Hub Invest clients.

And in our free education section, we’ve got dozens of location guides to help you choose the right location for you.

How to get started

Whether you’re an experienced expat investor or you’re just starting on your property investment journey, this video on how to invest as an expat will definitely give you some tips.

Or, you could head on over to our forum where we’ve had a number of expat investors post their questions for fellow investors to answer and offer advice on.

There’s never been a better time to invest in property than right now, not to mention saving yourself a small fortune before those budget changes in April 2021!

So, if you’d like to take action, why not get in touch with a member of our Invest team and start off with either a free goals call or a strategy meeting to get you on your way.

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