Buying a property in the UK

Unlike Australia, which has laws in place to limit overseas property investment, the UK doesn't place any restrictions on foreigners buying property in the UK. That's good news if you're thinking of buying a home in the UK either to live in or as an investment, but there are still plenty of other important factors to consider before you start browsing property listings.

In this guide, we'll show you the key costs, fees and regulations you need to take into account when buying a property in the UK.

What's the property market like in the UK?

The UK housing market reached its peak in November 2022, but has since shown signs of slowing down.

As of January 2024, the average house price in the UK was £281,913, down 0.6 per cent year on year. However, the average price varies depending on the country where you're buying:

• £299,000 in England
• £213,000 in Wales
• £190,000 in Scotland
• £178,000 in Northern Ireland

In England, London is predictably the most expensive place to buy, with an average house price of £517,726. Meanwhile, the cheapest region to buy is in the North East where the average house price was £154,948. Check the table below for average house prices across different regions of England.

Can Australians/foreigners buy property in the UK?

Yes, Australians and other foreigners can buy property in the UK. There are no restrictions on foreigners buying property in the UK, and this remains the same even after Brexit.

So regardless of whether you're looking for an investment property or a home to one day live in, you can start shopping for the right property. But if you're buying a property to live in, keep in mind that you'll need the appropriate visa to do so.

5 steps to buying a property in the UK from Australia

If you want to buy a property in the UK from Australia, here's what you need to do.

1. Work out a budget

The first step is to work out how much you can afford to spend. If you'll be taking out a mortgage, consider how much you can put down as a deposit and the size of the loan you'll be able to qualify for.

Many UK lenders offer mortgages to foreign nationals. You can apply now to get what's known as a mortgage agreement in principle — which is basically the same as home loan pre-approval in Australia — to get an accurate idea of how much the lender will let you borrow.

2. Choose a location

The internet makes it easy to research the UK property market from overseas. Compare property prices and rental yields in different areas around the UK, plus consider other factors such as transport links, nearby schools, shopping and entertainment options, and even population demographics.

At this stage of the process, it's a good idea to get in touch with an experienced real estate agent or broker. They can help you narrow down your search as well as navigate the ins and outs of the UK property market.

3. Choose a property

Now that you've decided on a specific area, it's time to pick a property to buy. Consider whether you want to buy a flat or a detached house, and know how much you can afford to spend.

A real estate agent or broker can help you find the right property, but it's also easy to view and compare properties online on sites like Rightmove and Zoopla. In-person viewings are obviously preferred, so inspect properties yourself if at all possible.

Once you find the right property, it's time to make an offer.

4. Finalise the details

The next stage of the process is to tick all the necessary legal and financial boxes to complete the purchase. You'll now need to apply for full mortgage approval so you can put together the money you need to buy the property. The lender will arrange a valuation to make sure you're paying a fair price for the property.

You'll also need to engage a solicitor or conveyancer to make sure all the necessary legal paperwork and title searches are completed. And don't forget to get your own house survey carried out so you can make sure the property is in good condition and doesn't have any defects or other problems.

5. Transfer money

The last step is to transfer money from Australia to the UK to buy the property. You could send an international wire transfer via your bank, but you'll get poor exchange rates and high transfer fees. You can typically enjoy big savings if you use a specialist money transfer service instead.

Once you've exchanged contracts and paid the remaining balance, you can take possession of your new home.

Things to consider when buying a property in the UK

There are several important factors to consider when buying property overseas, including:

• Cost of housing. The Domain March 2023 House Price Report revealed that the median house price was $1.45 million in Sydney, $1.02 million in Melbourne, and $805,000 in Brisbane. Compare that to London's average house price of £517,726 (approximately $1 million at time of writing). Generally speaking, properties in London and the south of England are more expensive than in the north.
• Cost of living. According to data from Numbeo, the cost of living in the UK is, on average, 17.4% lower than in Australia. That said, costs differ substantially depending on whether you're in a major city or a rural area.
• Healthcare system. The National Health Service (NHS) provides free public healthcare to all residents of England. However, it's also possible to take out private health insurance to get a higher level of cover.
• Get expert help. Buying property overseas can be a confusing and complicated process, so it pays to get expert assistance. An experienced mortgage broker can help you get the lowest rate and better terms on a UK mortgage, while a trusted real estate agent can help make the process of finding a property and making an offer a whole lot easier.
• Get the property inspected. You could cut down on costs by not getting a homebuyer survey done, but that could be a very risky move. A thorough survey will help you determine whether a property is truly worth buying, or whether it's just going to cost you a lot of money and stress in the long run.
• Money transfer options. When you're making a large purchase like a house, even a slight difference in the AUD/GBP exchange rate you get could cost you thousands of dollars. That's why it's important to look beyond your bank and compare international money transfer services to find the best deal.

Taxes and fees for buying and owning property in the UK

There are several extra costs you need to consider when buying a property in the UK from Australia. The first is the deposit for a mortgage, and as a foreigner it's generally a good idea to expect to stump up at least 20% of the purchase price.

The lender may also charge a valuation fee, which will typically start at around £200. You'll need to budget for conveyancing and homebuyer survey costs too, so shop around to compare your options.

Stamp duty applies to properties over £250,000 in England and Northern Ireland and will also be a major expense. If you're not a resident of the UK, you're subject to 2% higher rates of Stamp Duty Land Tax when you buy residential property. The exact rate that applies depends on the purchase price of the property, so check the UK government website for more details. You'll need to check the Land and Buildings Transaction Tax rates if buying in Scotland or the Land Transaction Tax rates in Wales.

Finally, keep in mind that if you're an Australian resident for tax purposes, you'll need to report any income generated from your UK property to the ATO, and you'll be subject to capital gains tax when you dispose of a property.

FAQs when buying a property in the UK

• Can I buy property in the UK and get residency?

  No. Simply buying a property in the UK will not entitle you to become a permanent resident. Instead, you'll need to check with the UK government about the appropriate route to get permanent residency status and potentially become a British citizen.

• Can I get a mortgage from a UK bank as a foreigner?

  Yes, Australians can get mortgages from UK banks. Many banks offer foreign national mortgages, which function exactly the same as traditional mortgages. However, you may find that they have stricter eligibility criteria and slightly less attractive terms than mortgages for UK citizens, as banks tend to view foreign buyers as higher-risk borrowers.

• Which property websites help compare real estate in the UK?

  Sites worth considering include Rightmove, Zoopla, OnTheMarket and Primelocation.

• Do you own the land when you buy a house in England?

  It depends on whether you buy a freehold or leasehold house. If it's a freehold house, you own the house as well as the land it is located on. However, if you buy a leasehold house, you will not own the land.