With most properties marketed online, they are visible to a global market and you may find that your property is of interest to someone who lives overseas. Whether they are planning to relocate, or purchasing as an investment (perhaps through a company), you may have some additional questions and concerns if you receive an offer from someone in another country.
‘If you have received an attractive offer for your property from a buyer who is based overseas, the good news is that the legal process is similar to selling to a UK buyer,’ explains Kate Faust, a Senior Associate in the Residential Property Team with Nalders. ‘However, there are some additional factors to consider. So, you should instruct a solicitor experienced in international sales to ensure things run smoothly.’
Here, Kate Faust, answers some of your questions about selling to an overseas buyer.
What laws will apply?
Generally, the applicable law will be that of the country where the property is situated and so English law will apply. Indeed, the sale contract and other documents will be the same as for a sale to a UK based buyer. To be legally effective, the transfer to the buyer will need registering at HM Land Registry, the same as for a UK buyer.
However, there may be additional formalities to observe because of their overseas status.
Considerations when selling to an overseas buyer
You should assess any offer you receive on its individual merits. However, overseas buyers are often high-net-worth individuals, and many are cash buyers. They are more likely to be chain-free and can often complete quickly, although this will also depend on other factors.
Overseas investors are typically less influenced by the UK economy than domestic purchasers and may be less sensitive to mortgage rate increases or attracted by favourable exchange rates.
However, a foreign buyer may be less familiar with the UK property market and how conveyancing works which may slow down the process. Language and cultural differences can also sometimes be a barrier.
While there is no restriction on foreign individuals or companies owning property in the UK, there may be restrictions in their own country that affects this.
UK anti-money laundering and other regulatory requirements mean that overseas buyers are subject to a greater level of scrutiny. This is particularly so with buyers from countries considered ‘high risk’ because of factors such as weak internal regulation or political instability.
In addition, their funding arrangements can be complex. So, the requisite due diligence checks and tracing the source of their funds, can sometimes slow things down. In some cases, it can add to the risk of the transaction falling through.
Are there additional checks my solicitor will need to make?
Although the conveyancing process is the same as for a UK buyer, your solicitor will need to conduct some additional checks.
For example, they will need to ensure your buyer has legal capacity to enter into the sale agreement and complete the purchase. The exact requirements will depend on their nationality and whether they are purchasing through a company. Your solicitor may ask for an opinion letter from a lawyer qualified in their country that confirms the buyer’s capacity to complete the transaction.
Your solicitor will also need to ensure the transfer, and any other documents, are properly executed; the formalities may be different for a non-domestic buyer. It is also common for overseas buyers to use a power of attorney, which allows a third party to execute a document on their behalf. In this case, your solicitor will need to check the efficacy of that power, which will depend on the laws of another country. This is usually done by way of an opinion letter from an overseas solicitor.
Finally, if your buyer is an overseas entity (essentially, an overseas company or partnership) then your solicitor will also check its inclusion in the register of overseas entities. This is necessary to ensure there will be no issues with registration of the buyer at the Land Registry. While this primarily concerns your buyer’s solicitor, your solicitor will also want to ensure your name is removed from the register following the transfer.
How can I ensure my sale to an overseas buyer proceeds smoothly?
The best way to boost your chances of a successful sale is to engage the right professionals.
Your agent or chartered surveyor will check any would-be buyer’s proceedability and conduct the requisite due diligence. Time spent at the start of the transaction can save you the stress of problems later. It also reduces the chance of your sale falling through, and the risk of fraud.
Instructing a solicitor with experience in this area is equally as important. This will ensure the necessary legal checks are conducted efficaciously so you can be confident the buyer can complete the transaction.
Selling to an overseas buyer can be challenging, particularly if there are language or cultural differences. So, it is also important to choose someone who is a good communicator and who fully understands the subtleties involved.
How we can help
Having experience in all types of property transactions, dealing with buyers and sellers of all nationalities, we are well placed to help ensure your sale proceeds smoothly.
For further information, please contact Kate Faust in the Residential Property Team on 01326 316655 or email KKF@nalders.co.uk. Nalders LLP has offices in Truro, Falmouth, St Austell, Newquay, Helston, Penzance and Camborne, Cornwall.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.