Buying guide for Taiwanese property investors in London

Financial planning

Before entering the property market, prepare a well-structured financial plan. Whether you proceed with a cash purchase or secure a mortgage, ensuring you are briefed on the various costs associated with the buying process is ideal.

Cash investments

With ready capital, you can purchase a property outright, eliminate mortgage-related complexities and strengthen negotiation power — however, factor in foreign exchange fluctuations and liquidity considerations when transferring funds to the United Kingdom.

Leveraging existing assets

Taiwanese investors who own local properties can release equity to fund their UK purchases. More information on refinancing options can be collected through Taiwanese banks.

It is essential to factor in interest rates and repayment terms before committing.

Mortgage options

• Selected banks in Tawain assist buyers with overseas mortgage services, simplifying the process for nationals using domestic credit history.
• Most London banks cater to overseas buyers. The eligibility for mortgages is based on the applicant’s deposit size, income stability and financial background.

Pick the best financing option for you by evaluating and comparing the options mentioned above.

Mortgage eligibility

You must meet certain mortgage eligibility criteria to buy a high-value property exceeding £1 million. A minimum deposit of 25% will be required to demonstrate your financial stability. You can also consult a mortgage broker familiar with international lending, who can streamline the process and secure the best terms.

Documentation

To keep the property buying process in London smooth and hassle-free, prepare the following documents well in advance

• Proof of identity includes your passport (you do not need to have a UK visa for the purchase process)
• Proof of address is all your utility bills, bank statements or driver's license (dated within the last three months)
• Proof of funds are the recent bank statements and supporting documents that verify the source of your funds
• Certified documents are crucial and include notarization by a solicitor or accountant

Refine your search

With a vast property portfolio in London, we can assist you with finding the best opportunity for you based on your budget, preference and usage. However, before we start with the hunting process, there are a few things you need to keep in mind

Investment or personal use

• Investment properties are also known as buy-to-let properties, where the focus is on rental yields and property appreciation. One and two-bedroom units are advisable for swift rental income.
• Personal use includes using the property for relocation, student housing or as a secondary residence.

Prime London location for Taiwanese investors

• Luxury areas Mayfair, Knightsbridge, Kensington, Chelsea
• High-growth areas Shoreditch, Canary Wharf, Nine Elms
• University proximity Bloomsbury, South Kensington, Stratford

Property types

Investors in London have a wide range of properties to choose from. Depending on their investment purpose, budget and preference, they can choose from new-build developments, Victorian and Georgian properties and large mansions.

Ensure the distinction between leasehold and freehold properties is clear — Freehold is when you own the property as well as the land it sits on. Leasehold ownership is when you will be required to share the cost of building maintenance, including structural, roof and communal areas, with other residents. Most new developments in recent times have begun offering lease periods from 125 to 999 years.

Investment costs breakdown

Buying a property involves a few more expenses beyond the purchase price. Here’s a breakdown of the costs that you need to account for when you purchase a property in London as a Taiwanese investor

If you are taking a mortgage, the associated charges include

Arrangement fees are for setting up the mortgage. Booking fees to secure a specific mortgage deal and valuation fees for assessing the property’s worth.

Legal fees should also be factored in as you will need to employ a UK-based solicitor to handle the paperwork on your behalf, including conveyancing and drafting contracts. The fees for this service range from £1,800 to £4,000.

As a non-UK resident, the Stamp Duty Land Tax (SDLT) depends on the property’s value - for a £300,000 property, you must pay 6.67% tax (£20,000). For a £500,000 property, an 8% tax (£40,000) will be incurred and for a £700,000 property, the SDLT stands at 8.57% tax (£60,000).

Maintenance charges need to be paid if you purchased a leasehold property. These charges include annual ground rent and service charges, which range from £200 to £600 depending on the property size.

Set aside £500 to £700 for miscellaneous expenses, including transaction fees, insurance and legal paperwork.

You can also consider furnishing costs if you plan to furnish your London property before renting it out.

Viewing and shortlisting properties

Finding the right property is a crucial step to secure a high-performing investment. As a Taiwanese investor, you can opt for Benham and Reeves’ virtual and physical viewing services and make informed decisions.

Once you finalise your travel to London, we will arrange guided tours of the shortlisted properties for you and your family. We offer in-depth insights into each neighbourhood, facilities and amenities and investment potential.

We can also set up virtual walkthroughs and include detailed video calls, 3D virtual tours and real-time Q&A sessions to help you understand the layout, condition and location appeal.

Secure your investment

Once you select a property, submitting an offer is the next step. The approach to putting an offer forward depends on the property type

• You must typically pay the full amount for ready-to-move-in properties while exchanging contracts.
• Off-plan developments may need some time for completion; hence, you must pay a reservation fee initially, followed by scheduled payments throughout the construction process.

Hiring a legal representative

All overseas property transactions require a UK-based solicitor to conduct due diligence, verify ownership and draft legal contracts. Benham and Reeves works with trusted legal experts who are experienced in assisting Taiwanese investors.

Conveyancing process

Once your submitted offer is accepted, the conveyancing process begins. This includes title verification, ensuring the property is legally owned and free of encumbrances. Your solicitor will examine all paperwork on your behalf for a smooth buying process.

Finalising contracts

Once conveyancing is completed, your appointed solicitor and the seller’s solicitor will exchange and review the final contract and all legal documents. At the time of exchanging the contracts, you are required to pay a 10-20% deposit. The contracts are usually exchanged within 28 days of property reservation.

Snagging - Final checks before handover

Before taking ownership of a property, inspecting the space thoroughly is essential. This process is known as snagging or a pre-purchase inspection. This process is carried out as it helps identify issues and fix them before you move in.

• The first step in the snagging process is for the builder or seller to arrange a meeting where you can visit the property and flag any issues that need fixing.
  • Issues can be paint stains, broken doors, water leaks or faulty fixtures. A list of concerns will be prepared and shared with the developer for repairs.
• It’s crucial for developers to walk you through the entire property at the time of snagging, including explaining how the central heating, hot water system, lighting, switches and electrical consumer unit work.

Completing the purchase process

This is a step where the final balance is paid, legal ownership is transferred to you and you officially become a London property owner! Congratulations!

Understanding Stamp Duty Land Tax

• All property buyers in London must pay Stamp Duty Land Tax (SDLT) — a percentage of the property’s value. This tax amount must be paid within two weeks of completing the purchase process. As a non-UK resident, you must pay an extra 2% surcharge in addition to the standard SDLT rates.
• To qualify as a UK resident and avoid paying Stamp Duty, you must have spent at least 183 consecutive days in the United Kingdom within the previous tax year. Proof of residency can be obtained by examining utility bills, bank statements or phone usage records. If you meet this criteria, the 2% surcharge won’t apply.
• If you’re co-buying a property in London and one of the buyers is a non-UK resident, the entire purchase is considered non-resident. This implies that the surcharge applies to all buyers. However, if you are married or in a civil partnership and one partner is a UK resident, both are treated as UK residents for SDLT purposes.
• If you lease the property for seven years or less from the date of possession, you are exempt from paying the 2% surcharge.
• Your solicitor will handle the complete Stamp Duty return process on your behalf.

Use our Stamp Duty Calculator to estimate your tax liability.

Comprehensive services for Taiwanese Buyers

Benham and Reeves’ services are designed to offer domestic and overseas property buyers a seamless investment journey

• Through our partners at InStyle Direct, we can furnish and style your property for personal use or rental
• We offer complete lettings and property management services, which include everything from tenant sourcing to lease management and rent collection
• Our professionals can also handle your accounts as well as offer assistance with service charges, ground rent and tax compliance