Considering starting a property business from overseas? Here’s what you need to know:
Research. This is essential. Decide who is going to be your target market for your business, and where you’re going to find them. You’ll also need to find out what they want in a property. If, for instance, you want to rent to young professionals, then you’re looking at city centre buy to lets. But which cities? Find out where the best yields currently are and why (because there’s a good demand in the location, for example).
Infrastructure. How is your business going to be financed? This is where you decide if you’re going to be a sole trader or limited company. Also, if you’ll need to consider whether you’ll go down the Joint Venture route, by looking for a reliable and trustworthy partner physically based in the UK.
Look at the business culture. If you’re setting up as a limited company, then it’s necessary to register with Companies House, where your company profits and expenditure will be open to public scrutiny. If you are a sole trader, then you must register for self-assessment, which is how you will pay tax on profits (but which is kept private).
Look at global tax rules. From April this year, any profit made by an overseas investor selling UK property (residential or commercial) will be subject to capital gains tax. From April, the following year, overseas companies selling UK property will pay corporation tax on rental profits.
Finding UK business partners. Online property forums are a great way to meet other property-minded individuals – some of whom may have complementary skills to your own. They may even have the same business outlook as your own. If you’re ever in the UK, then attend property conferences and meet other investors face-to-face. Social media shouldn’t be overlooked either; there are some excellent Facebook property groups as well as LinkedIn property associations and individuals.
Building relationships. Gaining a network of property experts who you can turn to when necessary is important in this sector, in order to find out about new investments, or even just the best way to go about something. The best way to do that is to prove trustworthy, honest and open in all your dealings. Give advice or help on online forums and offline too whenever you can.
UK rules and regulations. There are a number of rules landlords in particular must adhere to when renting out property. HMO landlords, for instance, must have a licence to operate from their local authority. All landlords must put a tenant’s deposit in a special scheme within a set number of days, which he or she can’t access until the end of the tenancy. The law is particularly strict when it comes to eviction notices.
Where to invest in the UK. Where you decide to buy property depends on your particular strategy and also where yields are currently best. For a while now, it has been the larger cities outside the capital, such as Manchester, Birmingham, Leeds and Glasgow. Property is less expensive here and regeneration in many cities is creating high demand.
Property management. For overseas investors, it makes practical sense to have someone ‘on the ground’ manage your property investments for you. For a fixed monthly fee, companies will take care of maintenance issues, collect rents and even find tenants for you (including carrying out credit checks).
Exchange rates. These vary from day to day and even hour to hour, which is why it pays to consider using a Foreign Exchange Specialist. That’s because they will find you much better rates for money transfers. Check who is accredited and approved in the UK, by looking at the Foreign Exchange Register.
Exit strategies. Not all property investments are successful – which is why it makes sense to have an exit strategy i.e. a way out quickly if necessary. Every one property investor should consider an exit strategy prior to starting up. This could be when he or she will retire and how i.e. sell half their properties to pay off the mortgages on the others.