Buying in the UK: leasehold, surcharges and what the purchase really costs

Freehold and leasehold

Most flats in London are sold not freehold but leasehold — a long lease with a remaining term that may run from a few decades to several hundred years. A house with land is more often freehold.

The unexpired term drives value directly: a short remainder depresses the price and makes extension expensive, and below a certain point the flat becomes difficult for both a buyer and a lender. It is the first thing to check on a British flat.

The second is the annual service charge and the possibility of major works billed separately to leaseholders. Reform of residential leasehold is under way and moving in the leaseholder's favour, but the lease you are signing matters more than the direction of travel.

The real cost of entry

Stamp duty in the UK is progressive, and surcharges sit on top of it: one for an additional dwelling and, separately, one for a non-resident purchaser. Both are paid from your own funds rather than from a mortgage, and together they form a figure that has to be budgeted from the outset.

Add a solicitor, a survey and a broker — the last being routine in British practice rather than a sign of a difficult transaction.

Mortgage finance is available to non-residents but not from the large retail banks, whose processes are built around a borrower with a UK credit history. Specialist and private banks lend, and require a larger deposit. A buy-to-let loan is assessed primarily on whether the rent covers the payment with a margin, calculated at a stressed rate, rather than on your personal income.

What the end of non-dom changed

The remittance basis of taxation by domicile lasted more than two centuries and was one of the reasons wealthy foreigners chose London. From April 2025 it was abolished and replaced by a system keyed to the length of tax residence.

UK property has always been taxed in the UK regardless of the owner's domicile — the reform did not change that. What it changed is the surrounding economics: the cost of being resident in the country. Some owners are revisiting how long they spend here, and that shows up at the top of the market.

The practical takeaway for a buyer is to separate two questions: the taxation of the asset and the taxation of you as a resident. The reform touched the second, and structures built for the previous rules may no longer serve.

What the purchase does not give you

Status. Britain does not connect property ownership with a right of residence; the investor visa route was closed, and buying a home is not a basis for staying.

Automatic access to schools: a place at an independent school is a separate process with its own timetable, and access to a state school is determined by address and the admissions rules of the particular area.

And low running costs. Britain taxes property at every stage, including inheritance tax on residential property — historically the most sensitive point for foreign owners, and the one most worth advice on before rather than after.