UK Property Investment from Singapore

The first real decision is not which property to buy. It is how you hold it, because that determines how you are taxed for as long as you own it.

Which route applies to you

There are two ways to hold a UK investment property. Most of the investors we work with use a UK limited company, but the right answer depends on your circumstances.

Which of these two routes is right for you is a question for a tax specialist or accountant, not a sourcing company. We are happy to introduce you to one.

What it costs to buy

Stamp duty is the largest cost on top of the purchase price. Buying an investment property from Singapore, two surcharges usually apply on top of the standard rates.

Standard rates (England and Northern Ireland)

The surcharges on top

Both can apply to the same purchase, on top of the standard rates above.

Holding through a UK limited company

This is the route most of our Singapore investors take. It is not automatically better, but three things tend to drive the decision:

• Lenders. Many of the lenders who will lend to a non-resident prefer, or require, a company borrower.
• How profits are taxed. Corporation Tax rather than personal Income Tax, and profits can be retained in the company rather than drawn each year.
• Holding and passing on. Shares can be transferred without the property itself changing hands, which matters if you are building something for the family.

Corporation Tax on company profits

The same Corporation Tax applies to a gain when the company eventually sells, rather than personal Capital Gains Tax.

What it involves in practice

• A UK company, usually set up specifically to hold the property
• UK directors are not required. Directors and shareholders resident in Singapore are normal
• Annual accounts and a Corporation Tax return, handled by an accountant
• The company is on the public register at Companies House, including the names of directors and anyone controlling more than 25%

Whether the company route suits you depends on your income, how many properties you plan to hold and your position in Singapore. That is a conversation for an accountant, not a web page.

Buying in your own name

Some investors, particularly with a single property, buy personally. Two UK rules then apply that do not apply to a UK company.

Tax on your rental income

Living outside the UK for more than six months of the year puts your rental income under HMRC's scheme for landlords abroad.

• Your letting agent must deduct tax at the basic rate of 20% from the rent before passing it to you
• With no agent, a tenant paying more than £100 a week must do the same
• You can apply to HMRC to receive rent without deduction and declare it yourself. Most overseas landlords do this
• Allowable costs are still deductible, so the 20% is not your final bill

Tax when you sell

Non-residents pay UK Capital Gains Tax on gains from UK residential property: 18% within the UK basic rate band and 24% above it. The sale must be reported to HMRC within 60 days of completion, even where no tax is due.

Your Singapore position

The UK side is only half the picture. Three things are worth raising with an adviser who understands both systems:

• How Singapore treats foreign income and gains. Treatment depends on your own circumstances and how the investment is held, and should be confirmed rather than assumed.
• The UK-Singapore double taxation agreement. The 1997 agreement has been in force since 19 December 1997 and was amended by protocols in 2010 and 2012. Relief may be available for tax already paid in the UK, depending on your circumstances.
• Currency. The Monetary Authority of Singapore runs a managed float: the Singapore dollar is managed against a trade-weighted basket of currencies within a policy band, rather than fixed against any single currency. The rate against sterling therefore moves on its own terms. On a purchase of this size, the rate and the timing of your transfer can move the total cost more than a small difference in purchase price.

Why Singapore investors look overseas

Singapore property is expensive per square foot, and buyers holding more than one home face significant local duties. Many investors therefore look abroad for rental yield rather than capital growth alone. UK property in the regions we source can produce a higher rental return relative to the purchase price than comparable Singapore residential property.

Mortgages for Singapore buyers

Financing is usually available, arranged through specialist lenders rather than the high street, and normally placed by a broker who handles these cases regularly. Compared with a UK resident, expect:

• A lower loan-to-value, so a larger deposit
• A smaller pool of lenders, and rates above standard UK residential deals
• More documentation, including proof of income in Singapore dollars and source of funds
• Many lenders preferring, or requiring, a company borrower

Rates and loan-to-value move constantly and vary by lender and applicant, so we do not publish figures that would be out of date within weeks. We can introduce you to a broker for current terms.

How the process runs from Singapore

1. 1Your objectives. Budget, finance route, target income, intended holding period, and how you will hold the property.
2. 2Sourcing. We find and pre-qualify properties that fit, rather than sending you everything available.
3. 3The deal sheet. Full address, photographs, floor plan, area brief, sold and rental comparables, condition, refurbishment estimate and all costs.
4. 4Your decision. A clear yes or no. If the numbers only work on best-case assumptions, we will say so.
5. 5Purchase. Solicitors experienced with overseas buyers handle the legal work. Documents are signed remotely.
6. 6Refurbishment, where needed. Managed on the ground, with progress updates and photographs.
7. 7Letting and management. We introduce a trusted letting agent who places tenants and manages the property day to day.

The seven to eight hour time difference is handled by working to your schedule for calls and by documenting decisions in writing, so nothing waits on a phone call at an awkward hour.

Common questions