Can International student purchase properties in the UK? Achieve zero-cost studying abroad
19. September. 2023
Photo by London School of Economics and Political Science
How can purchasing a property support international students in paying their tuition fees? To put it simply, the rental income covers both the loan for the property and even the tuition fees. Originating in 2006, this innovative study abroad investment concept aims to offset the substantial cost of studying abroad by investing in real estate overseas and capitalizing on the appreciation of the property’s value.
Can non-UK Residents Buy Property in The UK?
The answer is yes! All you need are the necessary funds and required documents to make a purchase, without the need for a visa or permanent residency. You can even complete the transaction online with the assistance of a lawyer, without physically being in the UK. There are no special restrictions on property ownership in the UK. However, one important note is that if parents wish to register the property in the name of their children, British law stipulates that the individual must be over 18 years old to legally hold property rights. The documents required for buying property in the UK include:
- Proof of identity (passport)
- Proof of address (utility bill or bank statement showing name and home address)
- Proof of deposit (usually 3 to 12 months’ bank statements, demonstrating the balance to cover the property’s down payment)
- If you and your partner are purchasing a home jointly, both parties will need to provide proof of identity, address and marriage
Non-residents can also get mortgages from local banks in the UK. For detailed loan information, please visit: The Process of Getting a UK Mortgage for International Residents
The Cost and Return on Property Investment in The UK
The most crucial aspects of investment are the cost and rate of return. The high rate of return on real estate in the UK primarily stems from increasing rents.
According to a recent rental market report released by Zoopla, one of the UK’s largest real estate portals, rental prices in London are projected to increase by 12% in 2023 compared to the same period in 2022, while in Manchester, the increase could be as high as 14%, reaching a 14-year high. The average monthly property rent in the UK stands at £1,126, with London’s rent as high as £2,001 and these figures are expected to continue rising in the future.
Resource by Richard Donnell｜Zoopla
Additionally, the vacancy rate has dropped by 30% compared to the five-year average, with an average of 30 tenants inquiring about and expressing interest in renting each London property. These data affirm that the rental market in major UK cities, especially London, remains highly undersupplied.
What Are The Necessary Expenses?
To calculate the cost of housing to support education, non-UK residents typically need to make a down payment of 30-50% when purchasing a property. For instance, in the case of a £500,000 two-bedroom apartment, the down payment would range from £100,000 to £300,000. In addition, consider the following miscellaneous expenses to determine the overall cost:
- Stamp duty
- Lawyer fees
- Land registration fee
- Transfer registration fee
- Property maintenance costs
- Ground rent
- Council tax
- Bank approval and loan brokerage fees (only applicable if mortgage is needed)
By factoring in these expenses along with the down payment, you can estimate the initial cost of housing purchasing.
Purchase Cycle and Preparation Time
Since many real estate properties in the UK are off-plan, meaning they will be handed over in 1-3 years, parents and students have the flexibility to choose between purchasing an existing house or an off-plan property based on their financial situation. Preparing to apply for a loan typically takes around 6-12 months.
Students can strategically utilise the time between preparing to apply for school or receiving a school offer and coming to study in the UK. During these intervening months, they can consider purchasing real estate as a means to address future tuition and living expenses.
Why Invest in the UK Instead of China?
Photo by Paul Fiedler｜Unsplash
- Stable and Convenient to Buy
- Over the past decade, the British real estate market has demonstrated remarkable stability, surpassing that of most developed countries. Its rental income far exceeds that of Beijing, Shanghai, and other major cities.
- For instance, the rent-to-sale ratio in Beijing, Shanghai, Guangzhou, and Shenzhen typically ranges from 1% to 1.8%, while the average rent-to-sale ratio in London hovers around 2.5% to 4%. Furthermore, compared to investment schemes in other international property markets, UK tax legislation is straightforward. Chinese investors can purchase properties in the UK with no purchase restrictions, nationality requirements, visa obligations, or residency prerequisites.
- Educational Resources/ Funding Education with Housing
- The UK boasts an excellent education system and is home to some of the world’s top universities. For families with children studying in the UK, a long-term real estate investment offers a unique opportunity to secure a home for their children and establish an international base for the family. Additionally, it provides a stable rate of return, making it a highly popular investment method that utilises housing to support education.
- Scarcity and Value Preservation
- Due to the limited availability of land in London and the soaring land prices, government approvals for new real estate projects are exceptionally stringent, curbing the development of fresh properties. Consequently, existing real estate assets tend to retain their value, especially large-scale new projects within the London Zone 1, which are becoming increasingly scarce.
How to choose the right property that suits your need?
- If you decide to purchase properties primarily to support education costs or as an investment, it’s advisable to prioritize properties located near tube stations and universities. This ensures convenience whether you intend to rent, sell the property, or convert it into a long-term residence for yourself in the future. Due to the high demand and limited supply in the London rental market, properties within school zones can be rented out more easily and quickly or sold at higher prices.
- The appreciation benefits of London real estate are particularly significant. The annual appreciation rate of London’s house prices is conservatively estimated to be around 5%.
For instance, the value of a house could increase from £600,000 to £695,000 in just three years. If the property is sold at this point, the £95,000 gain can cover three years’ worth of tuition fees. If tuition fees are not high or if there is a scholarship, the surplus can be considered as additional income. Moreover, students can avoid the hassle and extra expenses associated with moving while they continue to reside in the same property.
Photo of 18 Holland Park
Each property and its surrounding school district have unique characteristics. Researching UK properties on your own can be time-consuming and labor-intensive, the information you obtain may also be limited. Therefore, Lux Living offers a comprehensive one-stop service. We assist you in selecting developments that meet your specific needs and support you through the entire process until you are fully satisfied. Not only does this save you a significant amount of time and energy, but also free of charge in any consultation fees throughout the process. Contact Lux Living today to embark on your UK education journey at zero cost.
