Buying Rental Property In The UK As A US Citizen

buying rental property uk as us citizen

The UK is a lovely place to live, and it is understandable why there are so many people who want to rent a nice place in the UK. In fact, in 2021 there were 106,000 US nationals residing in the UK

Buying a rental property in the UK as a US citizen will not only mean you have a new way to make money through rental income, but it could also be a nice retreat for you to visit with family and friends in between tenancies. 

US and non-EU citizens are allowed to purchase buy-to-let properties in the UK, even if the process isn’t always straightforward and plain sailing. To help you out, here we have come up with this guide to buying a rental property in the UK as a US citizen. 

Real Estate Agents Operate Differently In The UK 

In the UK, it is on you as the buyer to find yourself suitable properties and contact the property agent to arrange a viewing. This can be pretty inconvenient if you don’t live near the area or are still in the states. Whereas, in the US real estate agents tend to find properties and show buyers around ones which match their criteria, making finding your dream rental property easier and smother. 

Secure A Mortgage 

Securing a mortgage to purchase a rental property in the UK can be a bit tricky for US citizens since it involves lots of paperwork and jumping through various hoops. However, they are enough mortgage lenders out there willing to give a mortgage to US citizens. 

Of course, securing a mortgage means you need to provide certain documents. For US citizens with indefinite leave to remain in the UK, the basic requirements to apply for a mortgage are for you to have: 

• Lived in the UK for at least 3 years 
• A UK bank account 
• A permanent job in the UK 
• A deposit 

US citizens without indefinite leave to remain looking to get a UK mortgage must be able to provide evidence of: 

• A UK residence card 
• UK ancestry visa 
• Student visa 
• A family visa 
• A tier 2 work visa 
• A tier 5 work visa 

Your UK mortgage application is much more likely to be successful if you can convince lenders you have adequate funds to do so. Your employment contract or a list of the income you earn from contracts / clients if you are self-employed could help you get accepted by a lending institution for a mortgage in the UK as a US citizen. 

Use A Bank With Tailored Expert Knowledge To Guide You Through The Buying Process 

As mentioned previously, it can be a little complicated for US citizens to secure a mortgage in the UK, although it is certainly doable. What you really need is to use the services of a bank which specialises in dealing with mortgages for foreign investors in the UK. Using the services of a bank with tailored knowledge will increase your chances of purchasing a rental property with a mortgage in the UK. 

On the other hand, if you are buying a property in cash, then you won’t need to worry about applying for a mortgage in the UK. 

Declare Your UK Property To The US Tax Authorities 

You need to remember that you must fall in line with the US tax legislation when buying a rental property in the UK as a US citizen. The 2010 Foreign Account Tax Compliance Act brought in by the Obama administration means US citizens must report their non-U.S. financial assets annually to the IRS (Internal Revenue Service) in 2022. 

Get Your Hands On Landlord Insurance 

Renting out a property to tenants always comes with risk factors for landlords. Therefore, it’s important for you to get your hand on a robust landlord insurance policy as soon as you purchase your UK rental property before any tenants move in. Landlord insurance is specifically designed for buy-to-let properties and can cover buildings and contents, fixtures and fittings, accidental damage, loss of rent, theft or malicious damage by tenants, and more. 

Are you looking for a UK landlord insurance provider you can truly depend on? Go and check out CIA Landlords. This landlord insurance company are experts in the field who offer flexible, comprehensive insurance for a wide variety of tenant and property types in the UK. 

Find A Property With An Impressive Rental Yield 

Of course, you will want the step of becoming a landlord in the UK to work out as a profitable business venture for you. To ensure you manage to gain impressive rent yields from renting your place out to tenants, before purchasing a property be sure to carry out plenty of research on rental yields for properties in the local area. Like when buying property anywhere in the world, location, location, location is everything when it comes to how much money you will make as a landlord of a property in the UK. 

For instance, houses in London are especially expensive to buy, so getting good rental yields will be tougher in the capital. Do research to look at locations in Northern England and Scotland, you may well find you can make better yields over there. 

Buying property in another country as a US citizen can be daunting at first. However, you are not alone, there are plenty of highly successful foreign property investors and landlords in the UK.

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