Key Findings for South Africans Investing in the UK
Security & Stability
The UK Property market is highly protected by the country’s robust legal system
have emerged as prime investment destinations with high rental yields and strong tenant demand.
South African citizens have moved to other countries within the last 20 years
Investing in UK property from South Africa
The South African property market value has dropped by 30% of its value in hard currency terms over the last number of years due to a number of uncertainties. This has made looking further afield from South Africa to places like the UK more desirable.
The UK’s property market has shifted in recent years, in favour of regional cities and towns as opposed to the traditional London model, this has created difficulties for South Africans to identify the best areas in which to invest. For investors new to the UK market it is important to note the real estate market in the UK is a mature and stable market.
There are multiple options when looking to invest in UK real estate from South Africa. As a developer, SevenCapital provides an off-plan investment solution meaning investors can buy a property that is in the process of being built. As an experienced developer, we recognise regions of growth, stability and demand which are typically the preferred strategy when looking to invest.
If you would like to learn more and look at options to invest in UK real estate from South Africa, you can contact our investment consultants based in Johannesburg anytime on our contact us page.
3 Steps For Your UK Investment When Investing from South Africa
Book a Face-to-face Strategy Meeting
With our UK expert in South Africa to discover the right investment for you
Reserve Your Property Unit
Then use our Tax specialists, Overseas Mortgage and Foreign Exchange Services available
Customer Care Turn-key Solution
Receive supported aftercare and property management services with our 360 Customer Services
Is it a good idea to invest in UK property from South Africa?
For expats earning foreign income abroad, the time has never been better to invest in UK property. Aside from being a secure and regulated marketplace, the two main reasons below highlight why overseas investors are capitalizing on a resurging UK property market.
Although cities such as London are experiencing a slower period than normal, due to investment from the government and city councils towards infrastructure and improved transport links – new marketplaces have emerged offering investors an opportunity to get a foothold on the UK property ladder. Central London has historically been the first choice for Buy-to-Let property, however due to inflated prices and average returns of only 2%, commuter belt towns situated around central London as well as regional cities such as Birmingham and Manchester have now risen in popularity.
The main reasons behind the shift is due to lower price points as well as higher projected returns of 5-6% in these areas. This provides investors with new markets more suitable for their financial circumstances and with better future prospects than central London.
Fees and Taxes When Buying UK Real Estate from South Africa
Purchasing Property in the UK for South African Investors
As with any investment, if you’re purchasing a property in the UK it’s vital to understand both UK and South African 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 a sensible first step for South African 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.
What does an SA client need to purchase a property offshore?
For any investor purchasing property offshore, several things are required.
Firstly is the reservation fee. This will be required, along with a proof of ID and address, at some point after you choose your preferred unit. Following that, depending on your purchase type, you’ll move ahead with a cash payment or deposit and mortgage for the remainder of the purchase.
SA investors should also consider whether they have funds moved offshore, if not they’ll need to apply for tax clearance. It’s advised that SA investors work alongside a specialist foreign exchange partner to ensure the best rates as the rand can be a volatile currency.
Finally, consider how you’re financing the property. Are you borrowing offshore? In which case you’ll want to make sure you’ve researched and applied for that well in advance. Again, work with a specialist lender. Mortgage products for international buyers are more prevalent than they used to be but its important to be well prepared.
Can I mortgage a unit as an SA investor?
Of course, SA investors are free to get a mortgage in the UK but it does come with some caveats.
While there are a wider range of products for international buyers in the UK, SA investors should be aware that the application will typically be a longer process.
For the majority of investors, the lender will require proof of id alongside tax returns from their country of residence to prove income, as well as any business accounts or personal statement assets being verified by an accountant. This is simply to understand your current income, tax position and a detailed understanding of your personal assets and liabilities.
Am I able to leverage my local property in SA to purchase in the UK?
Remortgaging to buy property abroad is a common tactic for investors, provided you have access to borrowing services in your chosen country.
Again, research lenders in the area and speak to an expert to figure out whether it’s the right move for you. If you’re buying abroad it’s vital to have knowledge of the local area so you can ensure you’re aware of investment potential and what returns you can expect.
Can I attain residency through buying property in the UK?
No, owning a property in the UK does not provide residency. If you do not have right of residence in the UK you can only use the property as an investment or a holiday residence – this means you can stay there for as long as your passport or visa permits.
While EU residents had the right to reside until Brexit, this does not constitute residency, which is a completely separate process for international investors.
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
Completed 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