Step-by-step guide to buying property in London
for Singapore homebuyers & investors

Arranging your finances

Whether you buy with cash or borrow from a lender, financial planning is a crucial step before you set out to buy a property in London. Regardless of the payment mode, you will need a minimum of 15-20% of the property's value payable as a deposit upfront to reserve the property. Here are a few ways you can go about arranging your finances to be purchase-ready.

• Cash purchases For buyers who have the funds ready to cover the total cost of the property purchase, the buying process is relatively simple as there is no mortgage approval hassle involved. As a buyer, you may also have more leverage for price negotiations where the seller wants a quick sale. However, since you'll be reducing your liquidity to acquire the asset, you should be aware of the risks involved.
• Releasing equity You can finance a property in London by releasing equity from a property you own in Singapore. However, different banks can charge varying interest rates, and you need to consider the risk of your property getting repossessed on the failure of repayments or incurring negative equity if the property value depreciates.
• Local bank mortgage Many banks in Singapore will support overseas property purchases in London, provided all the relevant documentation is produced. Opting for a local bank can be helpful as your credit score and other income details are more readily available and communicating with the bank will be easier if you are to spend more time in Singapore than in London.
• UK bank mortgage If you are looking to secure funds from a lender with a better understanding of the local laws in the UK, you can do so by checking with lenders that provide mortgages to foreigners. However, compare the loan-to-value (LTV) ratios and the interest rates with your local banks to make the right choice.
  
  Buying a London property is subject to many additional expenses as there are solicitor, conveyancing and agent fees that need to be kept ready, along with stamp duty land tax (SDLT) and other moving costs. We will help you through this process and provide all the advice you need.

Mortgage eligibility

Most UK lenders are extra careful when lending to overseas borrowers, owing to which your application could be subject to additional scrutiny, especially for high-value properties valued at over £1 million. Depending on whether you are purchasing for yourself or as a buy-to-let investment, lenders will check your ability to pay back with interest at rates negotiated based on the risk involved.

Foreign nationals typically need a substantial deposit, often at least 25%, to secure a UK mortgage. While it’s advisable to have a larger deposit, if possible, mortgage options include fixed and variable-rate loans starting from £50,000. Although it's feasible to borrow up to 85% of the property's value, finding a lender that offers international mortgages is crucial if you don't have a UK bank account. A reputable mortgage broker can be of help to secure the right financing.

Documentation

As a property buyer from Singapore you will need the below documents to purchase a property in London.

• Proof of identity A valid passport is sufficient and you do not need a UK visa.
• Proof of address Recent documents such as utility bills, driving licenses, or bank statements can verify your address. All documents must be dated within the past three months.
• Proof of funds Bank statements from the past three to six months are necessary to demonstrate your financial capacity. You'll also need to verify the source of these funds through documents like payslips, business records, gifts, fixed deposits, sale of property, company profits, liquidation of an investment portfolio, dividend payments, inheritance, insurance policies, retirement income, etc.
• Document certification All submitted documents must be certified by a qualified professional, such as a solicitor, accountant, or notarising authority.

Narrow down your search

We have access to an extensive inventory of listed properties for sale in London and can assist you in finding the perfect one. However, before you begin your search, it is important to consider a few things

• Purpose of purchase Are you buying it as an investment in the buy-to-let sector or for personal use?
• Choice of location London is a city made up of 32 boroughs. For prime locations, consider areas like Mayfair, Knightsbridge, Belgravia, Kensington, and Chelsea. East London areas such as Shoreditch are popular with young, trendy individuals, while Canary Wharf is favoured by financial professionals. Although properties within Zones 1 and 2 are highly sought after, there is no shortage of tenants across the UK capital as residents enjoy the excellent connectivity and transport infrastructure of London.
• Property size Developers typically offer studios, one, two, and three-bedroom apartments, as well as penthouses. One and two-bedroom units are particularly in demand among tenants and often yield higher returns.
• Resale or new-build London offers a diverse range of properties, from classic Victorian houses to brand-new developments with cutting-edge amenities. Researching the benefits of both options will help you make a more informed decision.
  
  When purchasing property in London, it’s crucial to understand the difference between leasehold and freehold. Freehold property owners possess both the residence and the land it stands on, whereas leasehold ownership is different. Many homes in London are leasehold, meaning you share the cost of maintaining the building’s structure, roof, and communal areas with other residents. New developments often offer leases ranging from 125 to 999 years, although lease lengths may vary.

Know your budget

Buying a property in London involves more expenses than just the purchase price. Here's a breakdown of the additional costs you need to keep in mind

Mortgage fees If you're taking a mortgage, expect additional charges like arrangement, booking, and valuation fees.

Legal fees A UK solicitor is mandatory for handling legal matters such as conveyancing and drafting contracts. Costs typically range from £1,800 to £4,000.

Stamp Duty Land Tax (SDLT) For non-UK residents, the following tax bands apply based on property value

• £300,000 property - 6.67% tax (£20,000)
• £500,000 property - 8% tax (£40,000)
• £700,000 property - 8.57% tax (£60,000)

Maintenance charges Leasehold properties require annual ground rent and service charges, usually between £200 to £600 depending on the property size and services being provided.

Miscellaneous costs Budget around £500 to £700 for additional expenses like transaction fees, insurance, and legal paperwork.

Furnishings While optional, furnishing costs should be considered for both personal use and rental investments.

Remember, these are estimates, and actual costs can vary.

Viewing & shortlisting properties

To make an informed decision about which property to purchase and where you must get a proper look and feel of it before investing. With 21 branches across London and a dedicated team in Singapore, we can arrange both physical and virtual viewings for you or your family members, even if you can’t be present in person.

• Physical viewings Our team of local property experts, located throughout London, can arrange in-person property tours for you. Once we have your travel dates, we will create a personalised itinerary for guided tours of your shortlisted properties. These viewings will give you a firsthand experience of the properties, allowing you to explore their amenities and assess the surrounding areas.
• Virtual viewings We can also organise virtual property tours using Zoom or WhatsApp video calls. Our customised virtual tours include sharing photos, videos, floor plans, apartment options, and views from the apartments and the building.

Sending an offer & reservation

Once you've chosen the property you wish to purchase, we will convey your offer to the developer or seller and guide you through the subsequent steps. Before submitting your offer, here are a few important considerations

• Existing or ready properties When purchasing a pre-owned or completed property ready for possession, you will need to pay the full amount upon making an offer and signing the contract.
• Off-plan or under-construction properties For properties still in the planning or construction phase, you can reserve your chosen unit by paying a small fee upfront, known as the token amount. This payment secures the property in your name, and you will typically need to make the remaining 10% payment during the exchange of contracts, which usually takes up to 28 days.

Instructing the solicitor

A UK-based solicitor is required for all property deals in London. At Benham & Reeves, we can recommend and get you in touch with skilled solicitors or conveyancers. After you've booked the property, your instructed solicitor will handle all the paperwork and ensure your rights are protected throughout the purchase process.

The documents your solicitor will need include

• Proof of identity A current passport (a valid UK visa is not required).
• Proof of address Acceptable documents include utility bills, a driver’s license, bank statements, building society statements, credit union statements, or a tenancy agreement, dated within the past three months.
• Proof of funds Provide 3-6 months of bank statements from the account used to purchase the property.
• Supporting documents Additional documents to show the source of funds, including evidence of income from employment, business, gifts, savings, inheritance, property sales, investment sales, or other income sources.

Acceptance of the offer

Once your offer is accepted, you have to pay the reservation fee and sign the necessary paperwork. Your solicitor will then start preparing the contract. To ensure a smooth process

• Adhere to set timelines Contract exchange typically happens within 28 days, but the exact timeframe depends on the agreement.
• Keep the deposit ready The deposit amount should be readily available and accessible at the time of contract signing.
• Final payment Be prepared to cover the total purchase amount (minus the deposit already paid) upon completion of the property deal or on the agreed possession date for off-plan properties.

Conveyancing

Your instructed solicitor manages the legal aspects of buying a property, a process known as conveyancing. This includes

• Checking the property's history Your solicitor will review the property's title deed provided by the seller's solicitor, outlining the property's legal terms and conditions.
• Handle documentation Your solicitor will draft the agreement depending on the ownership structure you opt for, whether 'joint tenancy', usually opted for by married couples purchasing property together or 'tenants in common' where each owner independently owns a defined share of the asset. All the necessary paperwork for a smooth conveyancing process is handled by your solicitor.
• Local searches Solicitors conduct searches in the local area to gather essential information about the property and its neighbourhood, including inquiries about pending council fines (if any) and upcoming rail, road and other infrastructure projects in the vicinity.

Exchanging contracts

Prior to the exchange of contracts, neither the buyer nor the seller is legally bound to the terms of the agreement. However, once the contracts are exchanged, both parties enter a legally enforceable agreement.

Key points to remember when exchanging contracts include

• Contract exchange timeframe The contract exchange typically occurs within 28 days of the property reservation.
• Deposit payment Upon contract exchange, a deposit, usually between 10% and 20% of the purchase price, must be paid.
• Payment schedule for off-plan properties For properties under construction, payment instalments are typically linked to construction milestones as outlined in the agreement.

Property inspection (snagging)

As an overseas property buyer in the UK, conducting a thorough inspection before taking ownership is crucial. Commonly referred to as "snagging" or a pre-purchase inspection, this process identifies and addresses any property defects or shortcomings.

Here's what a typical snagging process includes

• Inspection meeting The builder or seller will arrange a meeting where you can express concerns about the property and get issues resolved before taking possession. From paint stains to broken doors, water leaks or any other defects, a list of grievances is compiled and provided for necessary repairs or improvements.
• Demonstration of features During the inspection meeting, the developer will explain all the features of your new property. This includes demonstrating the central heating and hot water systems, as well as lighting, switches, electrical consumer units, and other features.
• Identifying issues Any lapses or shortcomings discovered during the inspection can be brought to the developer's attention for quick resolution.

Completion of purchase

Completion happens when you make the final payment to your solicitor, which is the total purchase price minus the deposit paid during the contract exchange. Your solicitor will then transfer the remaining funds to the seller's solicitor.

After the funds are successfully transferred, the process is complete. Congratulations, you are now the proud owner of a property in London!

Stamp duty payment

Within two weeks of completing the property purchase, you must pay the required SDLT which is a defined portion of the property's value. SDLT is applicable for property purchases above a certain threshold in the UK, with an additional 2% surcharge for non-UK residents.

To qualify as a UK resident for SDLT purposes, you must have spent at least 183 consecutive days in the UK during the preceding tax year. You can prove your residency by providing documents like utility bills, bank statements, or phone usage records. The surcharge will also not apply if you are leasing the property for seven years or less from the day you take possession.

If there are multiple buyers and at least one is a non-UK resident, all buyers are considered non-UK residents and will incur the surcharge. However, if you are married or in a civil partnership and one person is a UK resident, both are treated as UK residents for the transaction. Your solicitor will calculate the SDLT amount and prepare your stamp duty land tax return.

Use our stamp duty calculator to estimate your SDLT liability.

One stop service

At Benham & Reeves, we offer an all-inclusive service tailored specifically for Singapore property buyers in London, ensuring a seamless investment experience with our extensive range of solutions. These include the following

• Furniture and refurbishment Through our sister company, InStyle Direct, we provide furnishing and interior design services for both investment and personal properties. Whether you need budget-friendly designs or complete interior solutions, InStyle Direct handles everything, including refurbishment services like painting, bathroom and kitchen upgrades, and full renovations.
• Letting services We offer a comprehensive suite of letting services to help you secure reliable tenants who pay competitive rents. With 21 branches across London, we can assist investors in any location where they wish to buy or rent properties.
• Rent management Our team will ensure rent is collected on time and credited to your account. We also take care of all maintenance issues and make sure tenants take good care of your property.
• Bill payments We handle timely payments of service charges, ground rent, and utility bills on your behalf, ensuring these essential expenses are managed without any hassle for you.
• Tax return service We assist our non-resident clients with preparing their tax returns, ensuring they are completed accurately and on time amidst the complexities of tax regulations.