This article was prepared in collaboration with Fladgate, a bespoke UK law firm that specialises in working with High Net Worth (HNW) and Ultra High Net Worth (UHNW) families, their corporate structures and family office platforms.
UK real estate is a popular choice for investment, and is among the Top 10 of multiple lists1, 2, 3. To help our clients understand the market better, we’ve gathered some of the most commonly-asked questions about:
- UK property purchase rights
- Types of property
- Documentation required for foreign property purchases
If you’re ready to invest, DBS Treasures can help with property financing. Plus, we have a network of partners that can help take care of your legal, property management, property maintenance, and relocation needs.
UK Property Purchase Rights
Q: How are my rights properly protected when I buy a UK property?
When you buy UK real estate your purchase is registered at the Land Registry, an online central registry.
Each property has a registration number, and the register will be updated with the buyer’s name. If you buy in your own name this will be your name, if you buy through a corporate vehicle then this will be the company’s name.
Q: Can UK property be confiscated by the state?
No. There are situations where property ownership can be reverted to the State, but these situations are very rare. For instance, when the property is owned:
- By an individual who dies without making a will and has no relations, or
- By a company that has been liquidated
For individuals or companies whose names are on the sanctions register, their assets in the UK are frozen but the property is not confiscated by the State.
Q: I have heard about certain properties being owned by the Crown or the Church of England. How does this affect me?
Several large institutions (including the Crown and Church of England) own large areas of UK real estate, often in the premium residential areas in London. This means they own the freehold title to the land and are the landlords granting leases of the flats and houses in the area.
This is because historically they acquired large areas of real estate in prime areas and then granted leases out of these estates to buyers. A reason for doing this is because as landlord they can then enforce controls in the area to ensure all properties are maintained externally in a uniform manner which enhances the overall area.
If you purchase a property that is leasehold:
- Your lease will be registered at the Land Registry with a title number.
- Your name will appear on the register as the legal owner. If you buy through a corporate or trust structure, the name of the entity you elect as purchaser will appear on the register as the legal owner.
- The landlord’s name will appear on the freehold register as the owner of that title (which sits above your lease
Types of property in the UK
Q: What kinds of property can I buy in the UK?
There are two main types of property title you can buy in the UK:
- Freehold: A freehold title absolute is the best type of title you can buy in the UK. This is usually a house, and you own it forever.
- Leasehold: With leasehold properties, you “rent” it from the freehold owner for a fixed period, usually above 70 years. The longer the lease, the more it will be worth.
You might be buying a flat in a building with other flats, where the freehold owner owns the building and common areas like the hallways and gardens, and you'll own the inside of your flat for the lease period.
Q: What are the main impacts of owning leasehold property?
Having a residential lease gives you capital value interest in the property.
However, there may be some restrictions on what you can do with the property. Your solicitor will let you know about potential impacts before your purchase the property.
For instance:
- You’ll need to obtain landlord consent before making any changes to your property. You'll also need to get landlord consent to sell your lease. This is to ensure the new owner can afford to pay the fees associated with the property.
- If you're buying a flat or a property on an estate with shared services, the landlord is likely to be required to carry out maintenance services, and you'll need to pay a service charge covering these costs.
- The landlord will insure the building, including your flat, and you'll need to pay a share of this cost. You'll also need to take out your own insurance policy to insure the contents of your flat.
Documents and foreign property purchases
Q: What restrictions are there regarding the purchase and sale of property by foreign investors?
There are no restrictions beyond the UK Sanctions List published by the government. The list includes people and companies from other jurisdictions where there is a concern.
Q: What documents are typically required to be signed for purchases and leases?
Your solicitor will guide you through the process and explain any other ancillary documents you need to sign.
Q: What documents are typically required to be signed for purchases and leases?
Your UK solicitor will advise you on the sales agreement and any other legal documents.
If you’re buying a lease in a development site off plan, you’ll likely be asked to pay a reservation fee and other deposits.
These deposits can be held as:
- Agent: Which means they can be released to the developer and used by the developer as they please; or
- Stakeholder: Which means they are held by the developers’ solicitors in their client account as a trustee and returned to you if the contract is terminated because of a breach of contract by the developer.
Though it’s common for deposits to be held as Agent, it is important to make sure the developer is well-known and established before agreeing to this.
Q: What about for rental agreements?
Your UK solicitor will advise you on usual terms in your lease.
You'll need to tell your solicitor if you have any specific plans for the property, such as renovations or alterations. Your solicitor can check whether the lease allows this and confirm if there are any planning requirements to consider. This is because landlord consent is often needed for works and major works may not be permitted.
Turn these dreams into reality with an overseas property loan, and tap on our network of partners.
More from our UK property series
1. Must-know tips for London property investors2. Up and coming districts to look out for in London
3. UK Property: Finding the Right Agent and Valuer
4. A Guide to London Property Pitfalls for International Buyers
Sources:
1Yield Investing, 13 May 2024. Best Place to Invest in Property in the World 2024: Top 10 Picks.
2Baron & Cabot, 14 May 2024. The Best Place to Invest in Property in the World: 2024 List.
3Euronews, 20 May 2024. Europe’s best and worst property markets: Where to invest in 2024?
Disclaimers and Important Notices
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.
