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Step-by-step guide to buying property in London
for Singapore investors

HomeGuide for Singapore homebuyers & investors

Introduction

Over the years, the UK has shown to be attractive not just as an investment opportunity, but also as a place to live as a lifestyle option. There has been an increase of purchasers from Singapore seeking to invest in the UK, hoping to take advantage of the higher rental returns and lower prices when compared to Singapore

Unlike some other places in the world, acquiring a UK property can be relative straightforward. It is a very open and accessible market for international investors. The rental market continues to draw buy-to-let investors throughout the UK, in all major cities and their surrounding areas due to high rental demand in the United Kingdom.

Understand Your Budget & Finance

Before you begin your search, you must first organise your finances and determine how much money you may borrow. Speak with your lender or a mortgage broker to see how much you may borrow. Remember that you will still need to save money to cover stamp duty, legal expenses, surveyor fees, and furnishings. Major banks in Singapore also offer loans for your UK property purchase.

Documentation

Purchasing a property will require the following documents.

  • A valid Passport for all buyers
  • Proof of Address - Utility bill or Bank statements showing all buyer’s name with Singapore residential address.
  • Proof of Funds – Up to six months of income statements. This bank account will be the selected one to use for transferred of fund to facilitate the purchase. Any other documents from current employer as proof for source of funds: Income from employment or business, investments, fixed deposits, inheritance or any source of income.

Search and Identify

Research the local property market: Before making any decisions, it's important to research the local property market in the UK. Look at the different areas and types of properties available, and consider factors such as demand, supply, rental yields, and capital growth potential. This will help you identify potential investment opportunities.

  • Purpose of purchase: Is it for investment in buy-to-let market or for your own stay?
  • Location: London is the capital of United Kingdom and is made up of 32 boroughs. In terms of where to buy in London, the most expensive areas are Mayfair, Knightsbridge, Belgravia, Kensington and Chelsea. Areas in East London such as Shoreditch has become very popular with young trendy people who want to live in that location. Canary Wharf is also popular with financial professionals. Property within Zone 1 and 2 are very popular and there is no shortage of tenants regardless of the areas you buy as London is very well connected.
  • Size: Developer normally offers studio, 1, 2, 3 and penthouses. Note that one and two bedroom are more in demand from tenants and also command more attractive yield.
  • New build or Old: Another consideration is whether you want to buy new off-plan or older property.
  • Leasehold: London offers property with short lease and up to 999 years.

Look for properties that meet your requirements in terms of location, type of property, and budget. Consider whether you are looking for an investment property or a property to live in. It is also worth researching the area and the local property market to ensure you are making an informed decision.

Make an Offer

Make an offer on the identified property. Once offer is accepted, proceed to reserve to take the unit off market. Note that there are no legal obligations until contracts are signed.

When your offer is accepted, Memorandum of Sales will be created and circulate to all parties including lawyers for both buyer and seller.

  • New off-plan properties: You will need to pay the reservation fee as deposit. These comes with staged payment depending on the construction progress.
  • Resale/Completed properties: As these are completed, you will need to make full payment on the purchase.

Conveyancing

Once the offer has been accepted, the legal processes begin. You will need to appoint a solicitor to handle the conveyancing process, which involves transferring ownership of the property from the seller to the buyer. The solicitor will handle all legal paperwork, including property searches, contracts, and exchange of funds.

Conveyancing is the term used in the UK for the process of the buyer's solicitor and the seller' solicitor agreeing on all the legal paperwork and for your solicitor to check everything for you which will include checking that the seller has the right to sell the property.

If you are buying the property with another person, whether a friend or family member, then there are two ways to own the property - either as.

‘Tenants in Common’ where each owns a set share- this can either be half each, or a defined percentage and when one dies itis passed as set in their will;

or

Joint Tenants, then if one partner dies, the other automatically becomes the sole owner of the home - this is generally what married couples do.

The completion date is then set by mutual agreement, but is usually one month after exchange. With off-plan properties, completion can be in several years’ time and there will usually be staged payments as stated above.

You solicitor will need the following documents

  • Proof of Identity: A valid passport of all buyers.
  • Proof of Address: Utility bill or bank statements from the past three months with buyer’s name and stating your current Singapore residential address.
  • Proof of Funds: Bank statements up to 6 months showing income source. Note that this will be the account that you will be using to remit the funds.
  • Any other documentation showing income from work or company, investments, fixed deposits, inheritance, or any other source.

Financing

As a foreign buyer, you may face stricter financing requirements compared to UK residents. It's important to have your finances in order and be prepared to provide proof of income, assets, and creditworthiness. You should also consider the exchange rate between your local currency and the pound sterling.

Completion & Handover

Completion is when the balance of the monies is transferred by your solicitor to the seller's solicitor’s account.

After the legal processes have been completed, you will need to pay the remaining balance of the purchase price and take possession of the property. You should also consider engaging a property manager or letting agent to manage the property if you plan to rent it out.

  • Keys will be available to you once the funds have cleared in the seller's account.
  • At the handover, the snag list should be checked that all issues are resolved.
  • You are also require to pay stamp duty upon completion and a surcharge of 5% will be applied to non-UK residents.
  • All new homes in the UK are covered by a 10-year home warranty and insurance guarantee which is free to the purchaser. This provides comprehensive protection against a range of eventualities, including problems with the home's construction.
  • If you are getting a completed property, you may consider getting a survey done to check and alert you on any potential problems.
  • Congratulations, you are now the legal owner of your new property!

Furnishing and Finding a Tenant

We offer a complete one-stop lettings service to source and find the best calibre tenants at the highest rent. For property management, we collect the rent and pay it into your account, deal with any maintenance issue and ensure the tenant looks after your property.

It is common to provide furnishings for your tenant should you decide to let it out. Find an experienced company who has experience in handling international clients to professionally designed and furnished apartments for rent.

We have an in-house furnishings arm that also caters to all kinds of home designs.

For more, visit www.instyledirect.com

Taxes & other expenses

Landlords not resident in the UK must register with HMRC (UK Tax Authority), it is the Law in UK every investor must submit a tax return for their UK income, whether there is tax to pay or not.

Tax rules change regularly so it is vital to employ an expert to ensure you don’t pay tax unnecessarily.

Legal Fees to the UK Solicitor£2,000 - £4,000 approx, depending on the property area and value In the UK, all property documentation must be prepared and vetted by UK Solicitors only.
Property Maintenance Charges
  • Annual Service Charge (est. £3 - 11 per sq ft.)
  • Annual Ground Rent (est. £200 – 600 or peppercorn rent for purchase after 30 June 2022)
  • To be paid every year to the developer as maintenance charges. For the first year, it is to be paid in advance along with the property purchase price.
Stamp duty Land Tax (SDLT)For Non-UK Resident Individuals:
  • On property value of £300,000 - Tax @6.67% i.e. £20,000
  • On property value of £500,000 - Tax @8% i.e. £40,000
  • On property value of £700,000 - Tax @8.57% i.e. £60,000
  • For more, visit
    https://www.benhams.com/calculator/stamp-duty/
Disbursements Miscellaneous£500- £700 approx
Includes transaction or miscellaneous charges to be paid to the Solicitor or other parties, such as insurance, developer's Solicitor engrossment fees, search or due-diligence fees, transaction handling charges etc.
Mortgage Lender's Fees1% of Loan amount approx.
To be paid to the mortgage lender in case you need financing

One stop service

Furnishing & Refurbishment: Instyle Direct, a sister company of Benham & Reeves have been working with overseas investors for over 17 years. They provide furnishing, interior design and refurbishment services and always keep in mind the long-term benefits for the landlords.

Lettings: We have over 20 locations across London to handle every landlord and tenants needs. Getting the best tenants to maximise your investments is our top priority and we have established as the trusted letting agency since 1958.

Management: We assist in rental collection, handling tenant requests and ensuring your property is well maintain. We also help in managing the monthly payment on service fee and utility bills so you can have a peace of mind.

Tax return service: Overseas investors need to pay tax on profits from their rental income. We have the experience to deal with all your property tax matter.

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