A Guide to the UK Property Purchase Cycle

1. A GUIDE TO THE UK PROPERTY PURCHASE CYCLE

2. You’ve thought long and hard, and have decided to invest in UK property. What happens next? This article will guide you through the different stages of the UK property investment process. It starts with choosing a property that fits your budget and investment goals and appointing an agency that can take you through the purchase process. Unless you don’t mind the hassle of traveling to and from the UK to deal directly with the developer/seller, a good agency will help you select developers carefully, i.e. those with a good track record of completing projects on time. It is important that your agent works closely with the developers, facilitating communication from the developer to you, and vice versa.

3. 1: Property Reservation We recommend investments based on your goals and budget, and once you have decided on the property for investment, you will need to sign Reservation Forms and a Solicitors Appointment Letter.

4. 2: Anti-Money-Laundering Checks The Anti-Money-Laundering process is a very important part of buying UK property, and is done by your solicitor on behalf of the UK Government to ensure that your purchase funds are not related to suspected money-laundering and terrorism links. Your solicitor will ask for proof of your identity, residential address, availability of funds and its sources.

5. 3: Exchange of Contracts & 1st Payment Once you have completed the Anti-Money-Laundering process, you will need to sign the Sale and Purchase Agreement. This is normally done within 28 days of your solicitors receiving the contract from the seller’s solicitors. Together with this Agreement, you will make your first payment to the developer via your solicitors. This amount varies from one developer to another.

6. 4: Financing You may apply for financing while purchasing UK residential property with a value in excess of £100,000. Application for financing can be done 3 to 6 months before settlement, and the banks will assess your financing position and eligibility.

7. 5: Final Settlement & Stamp Duties When your property is nearing completion, the developer will send a Completion Notice to your solicitors. You will need to make full payment for the property at this stage, which is also known as the final settlement, and pay any applicable stamp duties to HM Revenue & Customs (HMRC).

8. 6: Property Management  When you exchanged contracts with the developer, you may have signed an agreement to hire a letting agent. You may also have chosen to manage the property yourself. The letting agent will ensure your property is well-maintained, taking care of all expenses involved, and collecting the rental on your behalf.

9. 7: Rental Income You will need to pay income tax to the UK Government once your property starts generating rental income. We can recommend a qualified professional in the UK to manage your taxes. You may also file your rental income taxes to HMRC through self-assessment (using form NRL1). 

10. 8: Property Resale/Exit Should you choose to sell off your property, we can recommend a property agent and solicitor to assist you. The agent’s commission rates, your advertising budget, and exclusivity will be decided by you and the agent. The agent will provide an appraisal of the property indicating how much they expect to sell the property for, and tell you how they plan to market your property.  

11. Thanks You If you are interested to explore investing in UK property for high returns, or if you need us to refer you to a good tax firm in the UK, don’t hesitate to give us a call at (65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com!