Investing in UK property from Dubai
In this guide we will talk you through everything you need to know about investing in UK property if you are from Dubai.
Why invest in UK property from Dubai?
In recent times, the Dubai property market has underperformed. A massive oversupply of stock and a lack of demand has seen house prices in the region fall by 30% in the 2014-2021 period. On the other hand, the UK property market has been one of the most lucrative markets in recent years and is widely regarded as one of the lower-risk places to invest your money – for a good reason too. UK property has gone from strength to strength over the last few years, weathering the storm throughout the economic uncertainty spurred on by the likes of Brexit and the Coronavirus pandemic to reach unprecedented heights over the last few years, and many in Dubai are starting to look towards this booming investment class.
Throughout 2022, house prices in the UK increased by an impressive 10.3% according to HM Land Registry and prices only look set to continue to soar. Real estate agent JLL has forecast that house prices in the UK are expected to see an 8.9% increase over the next five years, whilst rents are set to soar at an even faster rate, increasing by 15.9% in the same time period.
With this in mind, as well as the favourable exchange rate available at the moment, investing in UK property from Dubai offers a stable yet prosperous way to diversify your investment portfolio – and we’re here to talk you through everything you need to know about the process.
House prices in the UK have increased by over 10% annually for the last 2 years.
Property prices in the UK are set to increase by an impressive 8.9% in the 5 years to 2027 (Savills, 2022)
Rental growth in the UK is set to increase by an impressive 15.9% in the 5 years to 2027 (Savills, 2022)
What are the tax implications for overseas buyers investing in UK property?
Stamp duty land tax (SDLT)
Any non-resident who purchases a property in the UK will be subject to both the standard stamp duty land tax rates, as well as an additional 2% surcharge. Click this link to see the most up-to-date SDLT rates.
Non-UK residents who purchase a property in the UK will be subject to inheritance tax. On death, 40% inheritance tax is levied on the value of all UK-situated assets for non-UK domiciled individuals.
ATED is a yearly tax payable by companies that own residential property with a value of more than £500,000 in the UK. For the most up-to-date ATED rates, visit this link.
Capital gains tax
Capital gains tax is a tax on the profit realised on the sale of a non-inventory asset and is required by both UK and non-UK residents upon the disposal of residential property in the UK. Visit this link for the most up-to-date rates.
Any rental income you earn on your UK investment property will be subject to income tax. This can be paid in two ways – either earn your income in full and then pay tax through a self-assessment tax return or allow your lettings agent or tenant to deduct the tax automatically. For up-to-date income tax rates, visit here.
What documentation do you need to invest in UK property?
When it comes to investing in UK property from abroad, there are a few forms of documentation that are required before you can move forward with the purchase to comply with UK anti-money laundering and fraud laws. These checks will usually be conducted by solicitors, banks and the agent you purchased through. These documents include:
- Proof of identity – your passport or driving license are ideal
- Proof of address – a bank statement, utility bill or driving licence are required
- Source of funds – Payslips, tax returns and proof of benefit are among the documents that can be used as proof of source of funds
These documents may be requested at numerous stages throughout the investment so it is important to have them ready from the start in order to avoid any unnecessary delays to the process.
Do I need a visa to invest in UK property from Dubai?
No, you do not need a visa when investing in UK property from Dubai, up to a certain amount. As long as you have the required documentation and identification mentioned above, all non-UK residents can legally purchase property in the UK without the need for a visa up to the value of £2 million, after this, you may apply for a tier 1 investor visa if you meet the requirements. It is important to note that buying a property in the UK does not make you eligible for a UK visa, this is an entirely different process.
Can I get a buy-to-let mortgage when investing from Dubai?
You can get a buy-to-let mortgage when investing in the UK from Dubai, however, the process can be more challenging for non-UK residents as many lenders are not willing to lend to a non-UK resident. This can mean that you have fewer mortgage options, and those options may have higher interest fees and deposits.
Who will manage my investment property?
After investing in a property in the UK, you are now a landlord, and as a landlord, you have a multitude of responsibilities that can be extremely overwhelming. There are, however, alternative management methods and we recommend using a lettings agent. Lettings agents offer full property management services, allowing the landlord to take a step back from wherever they are in the world.