Posted: 07/11/2017
This article was originally published as a blog on leading sports law website LawInSport in October 2017. It has since been updated for accuracy and comprehensiveness both here and on the LawInSport website.
Wherever you wish to buy or rent a home, signing any contract relating to property is a risky business and the UK is no exception. In this blog in our series for overseas athletes and their advisers, residential property expert Duncan Taylor outlines the options available when moving to the UK and considers the related pros and cons.
This can vary from the very short term let such as those available via the increasingly popular Airbnb to a longer-term rental agreement.
They can range from 12 months to three years or more. If you can afford to pay your rent annually in advance it may help you negotiate a better deal in terms of the monthly average. In most cases you pay the first month’s rent in advance together with a deposit to the letting agent equivalent to between one- and two-months’ rent (sometimes more if you have a pet).
If you are taking the tenancy in your own name (and not in the name of a company) then it is very likely you will be taking an assured shorthold tenancy agreement (AST) as long as the rent you are paying is no more than £100,000 per annum. This will set out the rules and regulations for staying in the property for the length of term you have agreed. Your solicitor will go through the agreement with you and point out the obligations in the AST that you are required to comply with, in particular with regard to the condition of the home and your use and enjoyment of it. If you are unable to hand the home back at the end of the term in accordance with these obligations you may lose part or whole of your deposit.
If you take an AST for your home your landlord is required by law to put your deposit in one of the government-backed tenancy deposit schemes. Your landlord must put your deposit in a scheme within 30 days of receiving it. At the end of the tenancy, your landlord must return your deposit within ten days of you agreeing what sum is repayable. If you are in dispute with your landlord about this, the scheme must retain the deposit until it is resolved. In theory as long as you have met the terms of your AST, have not caused any damage to the property and paid your rent and bills, then the deposit should be repaid to you in full.
Yes, the landlord is required to check that a tenant can legally rent a home in England before the start of a new tenancy. The landlord could face an unlimited fine or go to jail for renting a property to someone who is not allowed to stay in England. The obligation on landlords to check immigration status does not yet apply to the rest of the UK.
It is worth spending some time in the local area of your potential home before you commit to an AST for any length of time. The home may be near your training facilities, but is it near a railway line or busy road? I acted for one client who chose to take a two-year tenancy in Richmond near London only to find on his first night that it was directly under the flight path for Heathrow Airport!
It is always advisable to negotiate an annual break clause in your favour in the tenancy agreement as this will enable you to determine the AST on each anniversary of the term, on say three months written notice by you. If your AST does not have any break provisions, then contractually you are required to pay the rent until the end of the term whether you have moved out or not.
It is possible that in England and Wales, stamp duty land tax (SDLT) (land and buildings transaction tax (LBTT) in Scotland) is payable on the rent you pay and you need to take tax advice on this from your solicitor before you commit yourself to any tenancy. You will need to speak to your solicitor regarding any other tax consequences of taking accommodation in the UK.
There is no legal reason why not, but we suggest that tax advice is taken from your solicitor before you do so. It usually proves to be a good long term investment. It is very likely that you will have to pay SDLT/LBTT on the purchase price (which is now comparatively high in the UK when measured against the rest of the world) and, if have an interest in residential property anywhere else in the world, then you may have to pay a 3% surcharge on top of the standard rate of tax. This means, for example, in England and Wales that if you purchase a home for £1 million, you will pay SDLT at £43,750, but if the surcharge applies another £30,000 will be payable to make it £73,750.
From 1st April 2021, a 2% stamp duty surcharge was also introduced for overseas buyers on the purchase of residential property in England. The surcharge also applies to certain UK resident companies that are controlled by non-UK residents. An individual is UK resident for these purposes where they have spent 183 days in the UK (judged by their location at midnight) over any consecutive 365-day period beginning 12 months before the transaction and ending 12 months after.
Typically, if you buy a house it is called a ‘freehold’ property and if it is a flat or apartment then it is called a ‘leasehold’ property. If you buy a flat or apartment you will have to pay a nominal ground rent in most cases and a service or maintenance charge on top for running the building and its environs. In either case you will have to pay personal council tax to the local authority for the provision of its services.
We would recommend that you enter in to a will dealing with your UK property asset but bear in mind that capital gains tax (CGT) may apply upon a disposal during your lifetime and inheritance tax (IHT) upon death.
Yes, you can do that and that company need not be based in the UK if that suits your tax position. You should take tax advice from your solicitor before you do so. Whilst this can be beneficial as far as IHT is concerned, an annual tax charge may be payable by both onshore and offshore corporate entities. This tax is called annual tax on enveloped dwellings (ATED) and affects residential property valued over £500,000. The annual tax currently ranges from £3,500 at the lower end to over £200,000 at the top. SDLT is also charged at 15% on residential properties costing more than £500,000 bought by certain corporate bodies.
There are options available depending on whether you are looking for a short term or long term solution for your accommodation needs. It follows that buying a property does not have all the benefits of flexibility that renting a property in the UK provides. Talk to your solicitor before you commit to any arrangement to ensure it will suit your own particular circumstances and tax position.
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