Last Updated on 24th September 2025
Bricks and mortar are a mainstay of the UK investment market. While the property market does experience fluctuations, many sectors have more potential for volatility, and it remains a stable, long-term investment option where price dips are usually short-term.
For many expats, retaining a British property as a rental asset when moving abroad is an appealing option. Likewise, holding an investment portfolio and adding to it over the years can be a way to accumulate an asset base with steady, reliable returns. However, as with any investment, there are costs to consider.
Progressive changes to taxation regimes for landlords, combined with the upfront costs of a property purchase, make it essential to budget properly before deciding on any real estate investment. In this article, the Chase Buchanan team summarises the key taxes and charges to prepare for, along with an indication of their impact on your investment budget.
How to Budget Correctly for a Property Investment
Firstly, it’s vital to work through all of the administrative and legal costs associated with any UK property purchase, because the expenses involved extend far beyond the listing price.
Some of the larger expenditures, and a rough estimate as to the average cost, are below, while noting that exact costs will very much depend on the value of the property, and whether you’re buying commercial or residential real estate or land:
- Surveys: An essential service that identifies any issues with structural integrity and typically costs from a few hundred pounds up to £1,500 – depending on the property’s size, type, and location.
- Conveyancing or legal fees: Required to transfer the ownership of the legal title or deal with charges or liens against a house or land. The average UK cost is from £1,200 to £2,500, again depending on the complexity.
- Valuations: Can be carried out independently of a survey. A valuation is mandatory if you take out a mortgage and may be conducted by a surveyor appointed by the lender, but it can also be seen as a health check on the property on behalf of the buyer. If the mortgage lender is not covering the valuation costs, these tend to be in the region of £300 to £800.
- Mortgage fees: Costs vary considerably due to changing interest rates, with arrangement or brokerage fees adding up to an average of £700 to £2,000.
The other significant cost to consider is Stamp Duty, payable on UK property purchases valued above £125,000. Buyers pay a rate of 2% up to £250,000, 5% on the proportion of the transaction between £250,000 and £925,000, 10% on the proportion between £925,000 and £1.5 million, and 12% on any residual purchase value above £1.5 million.
First-time buyers are exempt from Stamp Duty up to £300,000 and pay a 5% rate on the value between this and £500,000, but second home buyers and investors are liable for an additional 5% on top of these rates.
Additional Costs Associated With Investing in a Rental Property
If you’re investing in a rental property or expanding your portfolio, you’re unlikely to need to budget for removal costs, but you need to be realistic about other fees, such as:
- Redecorating, ongoing maintenance, and upkeep costs.
- Letting agent service charges to manage the tenancy on your behalf.
- Landlord’s insurance to cover the building itself (tenants are usually responsible for content insurance).
- Utility bills and council tax, if these are included in the rent.
Once you have a reasonable idea of the initial outlay required and the ongoing costs, you’ll be in a good position to evaluate the investment’s profitability and the returns you stand to make.
The Tax Implications of Owning UK Property as an Overseas Expat
If you live overseas, it’s essential to account for taxation. A lot depends on your tax residency status, because your tax position will differ if you live abroad as a permanent expat, or own a holiday home in another country where you live for part of the year.
Many investors assume they are exempt from British taxes if they are a permanent resident in another country. However, the reality is that there are several UK taxes you may be liable for, and additional taxes against any rental income or sale profits in your host country. These may include:
- Non-Resident Capital Gains Tax: A tax charge paid when you sell a UK property. Non-residents pay CGT at the same rates as residents, which are either 18% or 24% depending on your tax position.
- Taxes against rental income arising in the UK: You may be able to claim against double tax treaties if you also declare and pay tax on these earnings in your country of tax residency.
Foreign national residents or citizens will almost always be required to report their overseas income, including that linked with UK real estate ownership. The double tax treaties we’ve mentioned come into play if you are liable for tax in both the UK and your new home country, but they must be applied for correctly to claim the right to offset.
Exploring the Reforms to Tax Reliefs for UK Landlords and Investors
A staggered series of reforms has led to major changes in the tax relief that UK landlords can claim. In the past, if you were financing a property through a buy-to-let mortgage, you could deduct the interest from your rental income when reporting your earnings.
The changes to the tax rules mean that:
- Mortgage interest may no longer be deducted from your declared income – potentially placing you in a higher tax bracket.
- Interest costs are now eligible for a maximum basic 20% tax credit.
While this differs for investors who own properties through a limited company structure, it’s also important to consider the taxes in your country of residence, which can be substantially different from those in the UK.
For example, in France and Spain, your total global assets are considered in calculating whether you must pay wealth or real-estate wealth taxes, which could mean you become liable for the French Impôt sur la Fortune Immobilière and the Impuesto sobre el Patrimonio or Impuesto Temporal de Solidaridad de las Grandes Fortunas in Spain.
UK properties are included in this calculation for tax residents. A sizable portfolio or high-value property could mean your total asset value reaches the threshold, and you become liable for additional charges.
Evaluating the Investment Value of UK Property
There are numerous considerations when investing in property from a tax management perspective, which is why it’s always important to seek professional financial advice.
Assuming that rental income will exceed all running costs and tax charges is unwise, since you must analyse all of the long-term cost implications to make informed decisions. It’s also essential for expat investors to think about the impact in terms of succession planning and inheritance tax.
Many opt to move real estate assets into structures such as trusts or shift ownership to a limited company, but the best options will depend on your circumstances, overall wealth, and a detailed appraisal of your tax and residency position.
Should you be considering investing in the UK property market as an expat, or be deciding whether to keep hold of an asset, please get in touch with your local Chase Buchanan Private Wealth Management office for a private consultation with one of our experienced advisers.
All investments carry risk, including the potential loss of capital. You should carefully consider whether investing is suitable for you, taking into account your personal circumstances, financial situation, and risk tolerance.
*Information correct as at September 2025
