Concept
London is the most open major housing market in the world. The registry and the state don't care what passport the buyer holds or where they live: a foreigner purchases an apartment on the same terms as a British citizen, without permits or quotas. All the regulation is hidden elsewhere—in the entry tax, which for a non-resident is assembled from three layers, in the public register of beneficial owners for companies, and in inheritance tax, from which a London apartment cannot be shielded by any structure.
Before counting the money, it's worth understanding the title structure. Freehold is full ownership; this is how houses are sold. Almost all London apartments are leasehold, long-term leases for 99–999 years. The shorter the remaining term, the cheaper the apartment and the more expensive the extension.
Leasehold reform — the Leasehold and Freehold Reform Act 2024 (2024 c. 22, Royal Assent 24 May 2024) — was adopted back in 2024, but its key valuation provisions (abolition of marriage value, the new premium calculation in Schedule 4) are brought into force by separate regulations of the Secretary of State under section 124(3) and, as at 20 August 2026, still have not come into force.
The deferment and capitalisation rates, without which the new methodology cannot be switched on, remain undecided: the government consultation Leasehold enfranchisement valuation rates was published on 15 July 2026 and, after a four-week extension, closes on 21 October 2026, while the Commonhold and Leasehold Reform Bill that is to fix the flaws in the Act was still in draft as of August 2026. So if you're offered an apartment with a short lease "pending reform," this is a matter for negotiation with the seller, not a reason to hope for the legislature.
The key parameters of the purchase in one table.
| Restrictions for foreigners | None: the same terms as a British citizen, without permits or quotas |
|---|---|
| SDLT, non-resident individual | Basic scale plus 5% for an additional property and 2% for non-residence |
| SDLT, company | Flat 17% where the price is above £500,000; 19% for a non-UK resident company |
| ATED, company | £32,200 per year for a property valued at £2–5 million, 2026/27 rates |
| Tax on sale | 18/24%; return and payment within 60 days after completion |
| Inheritance tax | 40% above the £325,000 threshold, regardless of the owner's residence |
| Leasehold reform status | Valuation provisions not in force as at 20 August 2026 |
How the Transaction Works
For the purchase itself, nothing is needed—no tax number, no British account. The UTR number will be needed later, when rental income or a sale occurs, and the money for completing the transaction passes through the solicitor's client account. The solicitor is the central figure here: they verify the title, order searches, file the tax return within fourteen days after closing, register the transfer of rights, and—under anti-money laundering law—thoroughly verify the buyer's source of funds. The source of funds package should be assembled before you start negotiating.
The process itself is two-stage, and this must be understood from the very beginning. An offer doesn't obligate either party to anything: the seller can raise the price, the buyer can walk away. Obligations arise only upon exchange of contracts, when a ten percent deposit is paid. Completion occurs two to four weeks after exchange. The entire transaction for cash typically takes eight to twelve weeks.
Entry Taxes
The basic SDLT scale from April 2025 starts at zero on the first £125,000 and reaches 12% on the portion of the price above £1.5 million. Two surcharges are added to this, each on the entire price: five percent for an additional property and two percent for non-residence. The non-residence test is simple—fewer than 183 days in the UK during the twelve months before the purchase.
Let's calculate for a specific apartment at £2 million.
| Tax layer | Amount |
|---|---|
| Basic scale | £153,750 |
| Surcharge for a second property | £100,000 |
| Non-resident surcharge | £40,000 |
| Total, effective rate 14.7% | £293,750 |
This is the real cost of entry into prime London.
If a company is buying and the price is above £500,000, instead of the scale a flat rate of 17% applies; a non-UK resident company also pays the 2% surcharge on top, 19% in all, while reliefs, for example for a property rental business, can remove the flat rate. This comes with an obligation for the foreign company to register in the Register of Overseas Entities with disclosure of beneficial owners and annual data updates: without an active number in this register, a company cannot buy, sell, or mortgage British real estate. The register is public—anyone can search for an apartment owner by name.
What the Purchase Provides
Nothing immigration-related. The investor visa was closed in February 2022, and no replacement "for passive money" has appeared. A tourist can stay in the country for up to six months per visit. There's also a flip side: owning property is an additional "tie to Britain" in the tax residence test, which reduces the safe number of days in the country. The owner of a London apartment who spends a lot of time there risks becoming a British tax resident sooner than planned.
Ownership and Rental
Ongoing expenses for the owner come to three annual payments.
| Payment | Amount per year | When it applies |
|---|---|---|
| Council tax | Several thousand pounds | Apartment in a good area |
| Levy on property worth more than £2 million | £2,500 – £7,500 | From April 2028, depending on value |
| ATED | £32,200 | Property valued at £2–5 million held by a company, 2026/27 rates |
ATED is an annual tax on "enveloped" housing: there's an exemption for genuine rental business, but a return must be filed anyway.
Rental income of a non-resident is subject to British tax at the standard scale, and from April 2027, separate, slightly higher rates are being introduced for rental income. If you don't register in the scheme for overseas landlords, the agent will withhold twenty percent at source. The economics of rental have also changed: from May 2026, the Renters' Rights Act is in effect—contracts have become open-ended, and eviction without cause is a thing of the past. London buy-to-let has become a business for the patient.
Why Offshore Wrapping Died
The classic scheme of the nineties and noughties—a London apartment in a BVI company—provided anonymity and protection from inheritance tax. Today it provides neither. Since 2017, shares in offshore companies whose value sits in British housing are themselves considered a British asset for inheritance tax. The ROE register discloses the beneficiary publicly. Only costs remain: nineteen percent on entry for an offshore company (17% plus the 2% non-resident surcharge) and ATED every year.
Therefore, housing "for oneself" is now purchased personally. A company—usually already a British Ltd—is justified only for a rental portfolio: corporate tax instead of a progressive scale and full deduction of loan interest, which has long been cut for individuals. Trusts don't save from inheritance tax on British housing either—they have their own regime of periodic charges.
Exit and Inheritance
Upon sale, a non-resident pays capital gains tax at rates of 18/24% and must file a return and pay within sixty days after closing—even if sold at a loss. For property purchased before April 2015, the gain is calculated from the 2015 value.
Inheritance Tax
The real hidden risk of London real estate is inheritance. A British property falls under inheritance tax at forty percent above the £325,000 threshold regardless of where the owner lived or whose resident they were, and heirs will have to go through English probate. The 2025 reform replaced the non-dom regime with a long-term residence test, but for the apartment itself this changed nothing—it's always in scope. Other instruments work: life insurance for tax liquidity, leverage, joint ownership, and a properly drafted will. More details in the breakdown of foreign real estate succession.
Russian Passport
Russian citizenship alone does not create a blanket UK property-purchase ban. Check the applicable sanctions, including designated persons, ownership or control and the payment chain, as well as the bank’s and solicitor’s compliance requirements. Two practical checks follow. (Sources: UK sanctions guidance).
- The £50,000 deposit limit announced in 2022 was subsequently dropped; it is not an operative general cap for Russian buyers. Confirm the bank’s actual sanctions and onboarding requirements rather than relying on a supposed visa exemption. (Sources: UK Parliament).
- Banking compliance: solicitors and agents are required to check sanctions lists, and the origin of Russian money is scrutinized particularly carefully.
How to structure a payment route is covered in the hub on purchasing real estate abroad.
London is easiest on entry and most expensive over generational horizons. The decision about what form to purchase in and what will to accompany it should be made before the transaction—based on the forty percent inheritance tax, not just SDLT.
This material is for reference purposes and does not constitute individual legal advice.
Q/A
Which SDLT layers can apply when a non-resident buys an additional home?
The bill can combine the residential base bands, the 5% higher-rates surcharge for an additional dwelling and the 2% non-resident surcharge. Status and reliefs must be tested at completion because the SDLT residence test is not identical to ordinary UK tax residence.
Can an individual reclaim the 2% non-resident SDLT surcharge?
Yes, if every individual buyer meets the presence test: at least 183 UK days in a continuous 365-day period within the prescribed two-year window around the transaction. The claim is made by amending the SDLT return within HMRC's deadline.
Does an overseas company conceal the owner of a London property?
Usually not. An overseas entity acquiring UK property must register in the Register of Overseas Entities, disclose verified beneficial-owner information and file an annual update. Separate protection routes exist where disclosure would create a legally recognised risk.
Does an offshore company remove UK inheritance tax from a home?
No. The IHT rules look through a non-UK company or similar wrapper to the UK residential property behind it. Holding the home through that vehicle therefore does not take its value outside the UK charge; debt, reliefs and payment liquidity require separate modelling.
What must a non-resident do when selling UK property?
A non-resident must report a disposal of UK land or property to HMRC within 60 days of completion even where no tax is payable. The applicable tax, rebasing, losses and reliefs are then calculated separately; non-resident companies fall within the corporation-tax regime.