Americans buying UK property Americans may wish to buy houses or property investments in the United Kingdom (UK) for personal or investment reasons. Each American needs to think about UK mortgages. This article will overview UK property investment for Americans buying properties with or without a mortgage. What are the basics of Americans buying UK property? Americans have been among the largest non-British groups of UK property buyers for some time. There are no legal restrictions on American expats buying property in the UK. Foreigners and non-residents can also get a mortgage in the UK. Americans with less than two years’ residency in the UK and without a job may face more challenging conditions, including a bigger deposit to secure a UK property mortgage. Americans can buy property in the UK even if they do not live in the UK. Americans buying property in the UK will find it easier as cash buyers. Can Americans get a UK mortgage? It does not have to be a challenging process to secure a mortgage for a UK property if you are an American. Some banks require more information from an American looking to secure a mortgage in the UK, but a range of lenders offer mortgages to Americans. The main considerations will be that they have a visa and typically a 25% deposit on the UK property they buy. Americans, resident or not, can legally buy properties in the UK. Banks will set their own terms for each mortgage application from an American. As foreign property investors, some Americans may be offered less favourable conditions or higher interest rates. This does not have to be a deterrent from investment in UK properties by Americans buying property here. What are the pitfalls of getting a UK mortgage? Americans can face common hurdles when applying for a UK mortgage on properties. The 2010 Foreign Account Tax Compliance Act (FATCA) requires US citizens to report their non-US financial assets annually to the IRS. The amount of paperwork associated with FATCA reporting can be daunting. As a result, many UK high street lenders are wary of granting mortgages to Americans. A decent number of private lending institutions and non-banking lenders are willing to submit the necessary disclosure agreements and offer Americans mortgages. Some will do this even if the American applicant’s salary is paid in a foreign currency or if they do not live in the UK. It is essential for Americans looking to buy UK property to work with a specialist mortgage broker with good relationships with these lenders. Buying a UK mortgage at competitive rates is possible with the right investment partners. UK Estate Agents vs US Realtors Americans buying properties are used to working closely with a real estate agent throughout the entire property buying process. A US realtor finds and shows buyers properties that fit their criteria, making finding a dream property easier. In the UK, the buyer usually finds suitable properties and contacts the property agent charged with selling them to arrange a viewing. This can be difficult for Americans buying property in the UK, mainly if they have limited knowledge of the property market or don’t live there. Some support is available for Americans buying property in the UK, with property investment managers helping buyers source suitable properties and supporting them through the UK buying process. Americans working with a property investment specialist also help to navigate additional cost factors such as Stamp Duty Land Tax (SDLT) and Land Registry fees. Working with a property investment expert in the UK can also give American buyers access to off-market investment properties and private sale opportunities. Americans who have never purchased a UK property before need to be aware of the difference between the UK and US property purchase processes. It is advisable to get the financing of a UK property before looking for properties. The time between agreeing on a property sale and closing the deal can take months in the UK. Until property contracts are exchanged, the buyer pays a deposit of 10% of the purchase, and a completion date is set. Until this point, a UK property purchase can collapse at any moment. What are the tax considerations for Americans buying and selling UK property? The tax considerations for Americans buying properties in the UK include: Stamp Duty – an upfront tax payable on any UK transfer of land or property valued at £125,000 or more. Stamp Duty Land Tax can often surprise many Americans buying UK properties for the first time. Since 2016, the basic stamp duty rate, which ranges from 2% to 12% (the top rate being charged on UK properties worth £1.5 million or more), has had an additional 3% levy added where a residential property purchase over £40,000 is not the buyer’s first home. Americans buying property in the UK who retain a previous home back in the US would likely fall within the net of this higher tax. Capital Gains Tax is another area Americans buying properties in the UK need to be aware of – not in the UK, but in the US. Americans living abroad are still liable for US taxes. Even if they are tax residents in the UK and pay their income tax to HMRC, they still need to file tax returns to the IRS. Americans may still be required to pay tax on gains on the sale of their main residence, wherever it is in the world. Since 01 April 2021, an additional 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland has applied. If you are an American buying a UK property that will not be the main home, you will pay the 2% non-UK resident surcharge plus the 3% SDLT charge on purchasing additional properties. If an American buys a UK property through a company and it is worth more than £500,000 a flat rate of 15% SDLT applies. There are limited exemptions from this 15%, such as the purchase being for the purpose of letting as part of a rental or property trading business. It is worth researching further if you are an American living and paying tax in the UK.