Key Stats UK Real Estate Market In Your Region
Overseas investment into the UK from India increased by 321% in 2018/19
have emerged as prime investment destinations with high rental yields and strong tenant demand.
Worth of rental properties with five million rental homes in the UK property market
Investing in UK property from India
Historically, UK property has been a safe investment vehicle with success dependent on choosing a good investment location and performing your due diligence. Working with partners that have UK touchpoints is an excellent way of understanding the market, supported by your own research wherever necessary. This research will allow you to identify markets that are overperforming and determine locations that fit your future goals.
While generally investors are advised to view the investment locations first-hand, this can be a challenge for overseas investors. This is where a trusted UK partner can help, relaying their market knowledge of the area to help you make an informed decision.
While there are unique challenges with investing in UK Real Estate from India, there’s no doubt that the market remains a viable option for investors looking for consistency, stability and above-average returns. This is demonstrated by the continued interest from Indian investors in 2019 – a trend that doesn’t look set to stop.
3 Steps For Your UK Investment When Investing from India
Book a Face-to-face Strategy Meeting
Speak with our local international experts based in India to discover the right investment for you
Reserve Your Property Unit
Then use our Tax specialists, Overseas Mortgage and Foreign Exchange Services available
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Fees and Taxes When Buying UK Real Estate from India
Purchasing Property in the UK for Indian Investors
As with any investment, if you’re purchasing property in the UK it’s vital to understand both UK and Indian tax liabilities as well as how to structure your investment in an efficient manner. In the case of the UK, taxation liability is determined by a person’s residential and domicile status, so working this out is an essential first step for Indian investors.
Essentially, an individual is considered a UK resident if they; spend 183 days or more in the UK during a tax year, arrive with the intention of staying permanently or to work in the UK for three years or more. Social and business ties can have an effect on resident status but will largely be considered on a case-by-case basis.
Taxes when buying UK real estate from India
The four principle taxes that will affect your investment are:
- Income Tax – This is a tax on an individual’s income.
- Capital Gains Tax (CGT) – This is a tax on capital gains made when assets are sold (or gifted in certain cases).
- Inheritance Tax (IHT) – This is a tax on the value of a person’s estate on death and on certain lifetime gifts.
- Stamp Duty Land Tax (SDLT) – This is a tax payable when you purchase land in the UK.
Non-Resident Landlord Scheme for Indian Investors
If you’re investing in a UK property but intend to remain an Indian resident and non-UK domiciled, you can still be affected by all the taxes listed. For Buy-to-Let landlords overseas, income tax will be paid on rental profits in the UK rather than income tax in the country they’re based. Investors should also consider registering under the Non-Resident Landlord Scheme.
For Buy-to-Let landlords, this works differently for tax purposes and means a non-resident landlord pays income tax on rental profits in the UK, rather than paying income tax in the country they’re based. To be classed as under this scheme, the landlord (individuals, companies and trustees) must live outside of the UK for at least six months. In partnerships, each person is considered a separate landlord.
Financing Your Property Investment in the UK From India
In terms of securing finance for a UK property, while many British high-street banks will have reduced products for overseas investors, you still have the option of visiting professional lenders. Trusted specialist lenders tend to have a wider outlook than mainstream organisations, offering better interest rates and more favourable terms. For Buy-to-Let property purchases, this will be the most common method of financing for investors.
Enquiries into the UK from Asia for expat mortgages have increased over the last couple of years, again, mainly from Hong Kong where property prices are some of the most unaffordable in the world. Skipton International saw a 65% rise in BTL mortgages from Hong Kong investors in 2018 when compared to 2016.
How has Brexit effected UK Real Estate?
Despite the uncertainty surrounding Brexit, the UK looks set to maintain its position as a leading investment market for international buyers.
In a recent survey by Knight Frank of 155 leading property investors, 21% of the respondents said the UK was their preferred investment market, up from 11% the year before. This is excellent news for a market that remains robust despite the political shifts over the last two years. The UK is still recognised as a strong overseas investment target, with the primary reasons for investing in the UK being potential rental yields (43%) followed by its stability (32%).
For the UK, undersupply highlights a much more pressing issue. Over half of the surveyed investors (55%) in Knight Frank’s research identified their main challenge as ‘lack of stock’ when investing in the UK, with only 15% citing geopolitical uncertainty as a constraint. These statistics all demonstrate the strength of the UK’s investment potential right now. Opportunities available are still attractive, particularly in regions that are driving new investment and redevelopment.
Comparing India and UK Property Markets
When comparing the UK and Indian property sectors, it’s no surprise that Indian investors are looking overseas – the UK offers an average rental yield of 4.8% while India sits at 3.3%. Yield security is a huge indicator of long-term success and the UK’s stability is a reassurance for many investors.
Since August 2018, the rupee has gained around 2%, bringing down asset costs for Indian investors, while favourable currency exchange rates have supported property buyers over the past six months. Brexit also presents an opportunity to find deals within the UK property market – prompting a 15 – 20% increase in the number of property investors from India.
Overall, the UK property market remains a stable, high-performing alternative to the Indian market. While both sectors have experienced a slowdown, the yield security and potential for a ‘deal’ afforded by the UK is a tempting offer, especially with forecasts showing rising prices through natural market growth.
Completed Q3 2017
- Original £ per Sq Ft price: £215
- Avg Sq Ft Growth: +36%
- 1 Beds £110k – £150k = £40k (36% Capital Growth)
- 2 Beds £140k – £190k = £50k (36% Capital Growth)
- Actual Capital Growth Achieved: +36%. Avg Rental Yield: 7.7%
NOW SOLD OUT
Est. Completion Q4 2018
- Original £ per Sq Ft price: £282
- 2018 £ per Sq Ft price: £352
- 1 Beds £170k – £215k = £45k (26% Capital Growth)
- 2 Beds £200k – £250k = £50k (25% Capital Growth)
NOW SOLD OUT