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

Arranging your finances

The financing arrangements for Turkish residents looking to buy a property in the UK can vary based on several circumstances, such as your credit history, income, and the type of property you are trying to purchase. Here are some common financing options:

Cash Purchase: If you have sufficient funds in your bank account in Turkey, you can opt for cash purchases without taking a mortgage. Such a purchase will eliminate the need for financing arrangements and simplify your buying process.

International Mortgages: Turkish residents may be eligible to opt for international mortgages in the UK provided by various banks and financial institutions. These mortgages are specifically designed for non-UK residents.

Bridge Loans: Bridge loans usually provide a short-term loan until a long-term financing option is available. Turkish buyers or investors can also look for bridge loans while waiting to secure a mortgage or arrange for some other forms of financing.

Private Financing: Turkish residents can explore private financing options, such as loans from family members or private investors, to finance the purchase of UK-based properties. However, these arrangements depend on the individual agreements and terms negotiated between the parties involved.

Turkish residents must seek advice from financial advisors or real estate professionals with adequate knowledge about international property transactions and finances to explore the right options based on specific circumstances and preferences. One must also consider factors like currency exchange rates, tax applications and legal requirements.

Mortgage eligibility

The mortgage eligibility criteria for Turkish residents looking to buy a property in the UK are subject to some specific rules and regulations. Here is an overview of the key points to keep in mind:

Specific stipulations: Before sanctioning a loan in the UK, lenders consider several factors, including your income, the type of property you own, and its condition. To be eligible for a mortgage, Turkish nationals must fulfil specific conditions, such as providing documentation of their status and place of residence and putting in a sizable deposit.

Loan-to-Value (LTV) ratios: Mortgage lenders in the UK often impose a loan-to-value ratio ranging commonly around 70% or lower, necessitating a substantial downpayment of up to 25-30%.

Documentation required: Turkish residents may need to provide the proper documentation that clearly shows their ability to repay the loan; usually, it includes proof of income from domestic sources or international assets.

Cross-border transactions: Turkish residents seeking mortgages for UK properties might encounter additional challenges, including currency exchange considerations and potential legal complexities associated with cross-border transactions. Prospective buyers should consult with both Turkish and UK-based financial advisors or mortgage brokers who can provide tailored guidance and assistance throughout the process.

Documentation

As a Turkish investor, if you are looking to buy a property in the UK, you will need to provide several documents. The exact requirements may vary from time to time depending on certain circumstances and the policies with which both parties are involved, but generally, the following documents are typically expected:

• Proof of identity: This normally includes a valid passport or a national ID card. (A valid UK visa is not mandatory)
• Proof of funds: You need to prove that you have the necessary funds to purchase the property. This includes all your bank statements or letters from financial institutions that confirm your ability to pay.
• Proof of address: A utility bill or bank statement showing your current address is mandatory.
• Tax identification number: As per the requirements of the UK Government and certain financial institutions, you may be required to provide your TIN from Turkey.
• Additional documents: You may also need to provide some additional documents, such as business licences, letters of reference, or investment profiles, depending on the specifics of the transaction and the requirements of the parties involved.

You will also need to ensure that all these documents are certified by a practising professional in the UK, such as a licensed conveyancer or solicitor, chartered accountant, qualified lawyer or notary.

Narrowing down your search

We have a local office in Turkey, which makes it easy for you to buy property in the UK. But first, you need to assist us in determining these factors:

• Reason for buying: Whether you are buying for self-use or as a rental investment for the future.
• Size: How many bedrooms and bathrooms do you need? (Note: It is easier to rent out and get better rental income for one- and two-bedroom units when investing in real estate.)
  
• Where to buy: London is a big city with 32 Boroughs to choose from when buying a property; you can pick central London or a bit further away depending on your needs and budget.
• What kind of property are you looking for: An older one, a new one that hasn't been built yet (but will be in the future), or a recently finished property in a new development? Many homes in London are leasehold, but that doesn't mean you can’t own them. Simply put, the property is leasehold because it is part of a community where multiple people live together and must share the cost of repairing the building, roof, or communal areas. Most new properties are allocated leases that span between 125 to 999 years, but the lease terms can differ.

Know your budget

If you are a first-time property buyer from Turkey, understanding the financial requirements is important. The net cost of a London property can be much higher than the listed price if you factor in additional costs, such as legal fees, mortgage processing charges, legal expenses, property taxes and other expenses.

Here are some of the expenses you will need to budget for:

• Deposit: Whether you are a cash buyer or seeking a mortgage, you will need to keep the deposit amount ready which can range from 25% to 40% based on the terms of the developer and the lender (for mortgage).
• Mortgage fees: If you take out a mortgage there are certain fees associated with it, like arrangement fees, booking fees, or valuation fees. These costs can vary depending on the lender and the specific terms of the mortgage.
• Legal fees: All property transactions in London mandate the service of a UK-based solicitor to prepare the contract drafts and other legal obligations. The cost for such services can range from £1,000 to over £2,000, depending on the property area and value.
• SDLT Property Tax: Next up is the property tax that needs to be calculated and kept ready. Understanding these tax bands is important for future budgeting purposes. Usually, there is an SDLT Stamp Duty Land Tax (SDLT) that is levied on properties over £125,000, with rates ranging from 2% to 12%.
• Moving costs: Don't overlook the moving costs while purchasing a property in the UK. The expenses related to these costs involve hiring a removal company and temporary accommodation that you need to bear while deciding whether to purchase or shift in the UK to the property you bought.
• Other costs: Ongoing costs such as maintenance, insurance, and property taxes need to be considered and factored into the budget. These recurring expenses can have a potential impact on the long-term affordability of the investment.

Viewing & shortlisting properties

Viewing properties is very important when choosing which ones to consider. Our team in London can set up appointments for you or your friends or family to view places, even if you can't be there yourself.

• Physical Viewings: With 21 local branches covering all of London and a team of property experts, we can arrange in-person property tours for you. Once we receive your travel dates to London, we will create a tailored itinerary for guided physical tours of the properties you have shortlisted. These viewings will provide you with a firsthand experience of the properties, allowing you to explore their amenities and assess the surrounding areas.
• Virtual viewings: We can also give you a virtual tour of properties using Zoom or WhatsApp video calls. We offer customised virtual tours that include sharing photos, videos, floor plans, apartment options, and views from the apartments and the building.

Make an offer & reserve

Once you are ready to buy the property of your choice, we will guide you in presenting your offer to the developer or seller and assist you through the entire purchase process. Before you make an offer, there are a couple of important things to know about:

Resale or completed properties: When you want to buy a pre-owned or finished property, you need to pay the full amount when you make an offer and sign the contract.

Under-construction or off-plan properties: For properties that are still being built or planned, to reserve the property you want, you will have to pay a small fee upfront, also known as token money. This payment is to hold the property for you. After the reservation, there is typically a 28-day period to exchange contracts and make a payment of 10% of the property purchase price.

Our team is here to guide you through the offer and reservation process, ensuring that you are well-informed and supported every step of the way.

Instructing your solicitor

All property deals in the UK need a solicitor to be involved. We have connections with different independent lawyers who focus on property deals and can give you a list of skilled solicitors or conveyancers. After you have booked a property, your legal representative will take care of all the paperwork and make sure your rights are protected as you buy your new home.

You need to give the following documents to your lawyer or conveyancer:

• Identity proof: You need a current passport (you do not have to have a valid UK visa).
• Residential proof: You can prove your address by showing a utility bill, driver's licence, bank statement, building society statement, credit union statement, or tenancy agreement. The document needs to be dated within the past three months.
• Financial proof: To show that you have enough money, you need to give 3-6 months of bank statements from the account where the money will be sent for buying the property.
• Supporting documents: Additional documents are needed to prove where the money came from. These papers need to show how the money was earned or acquired, like through a job, business, gifts, savings, selling property, selling investments, or other sources of income.

Acceptance of the offer

After the seller agrees to your offer, the next thing you need to do to buy the property is to pay the reservation fee and sign the reservation form.

Once the property is reserved, your lawyer will start preparing the documents contract exchange.

• Adhere to the timeline: Normally, the exchange of contracts must happen within 28 days of reserving the property, or as both parties agreed on during the reservation process.
• Ensure deposit availability: As the buyer, it is your responsibility to make sure you can easily access and have the deposit amount ready when you sign the contract.
• Final payment: After the property deal is completed, or on an agreed possession date for off-plan properties, you must have the funds ready to cover the total purchase amount, minus the deposit already paid.

Conveyancing

In the UK, conveyancing refers to the process through which your solicitor or lawyer oversees real estate transactions. Typically, this process includes the following steps:

• Title Deed: The seller's solicitor hands over a copy of the Title Deed to your solicitor, which contains the property's legal terms and conditions.
• Documentation process: Your conveyancer or solicitor handles all the required paperwork while diligently advocating for your best interests. They handle any inquiries or concerns and act as a reliable advocate for you.
• Local searches: Lawyers can perform searches in the local area, inquire about the amenities, furniture, and other items, and gather important information about the property and its neighbourhood.

Exchanging contracts

Until now, the progress made by both the buyer and seller was not legally enforceable. Once the contracts are exchanged, both parties must follow the agreed terms and conditions by law.

Here are a few key points to remember when exchanging contracts:

• Timeline: Usually, the contracts are exchanged 28 days after you reserve the property.
• Deposit payment: When the contract is exchanged, the deposit that was agreed upon, which is typically 10% to 20%, is paid.
• Off-plan properties: For off-plan or under-construction properties, payment is usually made based on previously arranged schedules.

Snagging or inspection of the properties

As an overseas property buyer in the UK, you should inspect the properties before moving in. This process, sometimes known as snagging or pre-inspection, ensures that any issues or flaws are fixed before you take ownership of the property.

Here's how you can ensure a smooth snagging process:

• Inspection meeting: Usually, the builder arranges a meeting to check the property, and a list of any problems is provided. This list has many things that need to be repaired or improved. It covers various issues, like paint stains, broken doors, or water leaks.
• Property features demonstration: During the inspection meeting, the developer will explain all the features of the property you purchased. This includes showing the various parts of central heating and hot water systems, along with lighting, switches, electrical consumer units, and other items.
• Identifying issues: Any lapses or shortcomings identified during the inspection can be brought to the developer's attention for prompt resolution.

Completion of purchase

Completion is when you make the last payment to your lawyer, calculated as the Total Purchase Price minus the Deposit paid when exchanging contracts. Your lawyer will send the remaining payment to the seller's lawyer.

Your lawyer will then move the rest of the funds to the seller's lawyer's account. Well, you are done! You now own a property in London! Congratulations!

Stamp duty

After you finish buying your property, it's important to pay stamp duty, which is a percentage of the property's value. Your solicitor will help you calculate how much stamp duty you need to pay and handle the tax return. You need to make the payment within 14 days of exchanging the contract.

One-stop service

At Benham & Reeves, we offer a comprehensive one-stop service tailored for overseas property buyers in London. Our range of essential solutions ensures your investment journey is seamless:

• Furniture and Refurbishment: Our sister company, InStyle Direct, specialises in furnishing and interior design solutions for both investment properties and self-use properties. From cost-effective designs to complete interior design solutions, InStyle Direct handles everything, including refurbishment services such as painting, bathroom or kitchen upgrades, and full renovations.
• Letting services: We offer a full range of letting services, making sure we find good tenants who are willing to pay competitive rents. We have 21 branches across London, so we can help investors in all areas where they want to buy or rent properties.
• Rent Management: Our lettings team makes sure to collect the rent and credit it into your account right away. We also take care of any maintenance problems and ensure that tenants take good care of the property.
• Bill Payments: We can help with timely payments, such as service charges, ground rent, and utility bills by making the payments for you, so you don't have to worry about it. You can be sure that these important expenses are being handled without causing you any trouble.
• Tax return assistance: We help our non-resident clients prepare their tax returns as part of our services. We know it can be complicated, but we make sure your taxes are done right and on time.