Submitted by a guest contributor
The U.S. and the UK property buying process have many similarities. Both involve land surveyors, red tape and legal professionals. How well your sale works out and how smoothly it goes depends, in part, on your knowledge of the differences in real estate buying in both countries.
Title is the chain of ownership to the property. Your title must be cleared during the buying process so you don’t run into problems later, such as an undisclosed owner.
Title systems in the U.S. vary by state. Some states use a chain of filed deeds, sometimes referred to as “abstract,” with title professionals researching the property. Others use the Torrens system. As in the UK, the Torrens system involves the registration of land with a central authority.
If you’re buying in the U.S. in an abstract state, the process may take much longer than you’d expect. Since the land isn’t registered, a title company must document the ownership chain by going through land records. You won’t be able to close the sale until the title is cleared.
Buying unregistered land in the UK presents a similar problem. Expect delays, especially if there’s a dispute in the title. You’ll have to get the property registered before you can complete the deal in most cases.
Taxes on rental property income and property ownership differ greatly in the U.S. and the UK. Both have individual tax systems you’ll need to learn. In the U.S., for example, you can expect to pay taxes when you buy the property and possibly each year to the federal, state and local government.
Consider speaking to a tax adviser before buying property in the U.S. or the UK so you know what to expect and how much you’ll be expected to pay. Not paying taxes can lead to the loss of your property.
A key consideration if you’re buying in the U.S. is any foreign occupancy restrictions. While not a significant trend in the UK, some U.S. states have limits on how long a foreign owner can stay in a property each year.
Known as buy to let in the UK and renting in the U.S., if you’re buying a property to rent it out continuously or on occasion, you’ll have extra homework to do. Local tax laws for rentals, for example, differ by state in the U.S, as opposed to the more streamlined standards in the UK.
Resort areas in the U.S. often have extra fees beyond taxes and local charges. Get all fees in writing before buying. Don’t forget to hire a property management company if you’re renting out your property for part of the year.
In both countries, getting a buy to let mortgage may be more difficult. Shop around, such as looking at buy to let mortgages with moneysupermarket before settling on a loan. Compare interest rates so you get the best offer.