The UK has a strong investment culture and is home to one of the world’s biggest financial hubs in its capital, London. Investing in the UK is not only a popular activity among the British population, but also among foreign investors looking for the most lucrative return on their investment.
In this guide, we look at some of the ways that you can invest in the UK. Importantly, when exploring UK investment opportunities, it is strongly advised to seek expert financial advice specifically tailored to your unique set of circumstances. This is because when it comes investment opportunities and ideas in the UK, some potential options may be better suited to your designated investment sum and risk approach, not to mention how quickly you would like to see a return on your investment.
Buying a UK property
There are a number of investment opportunities in the UK when it comes to property or real estate. The yields from rental income on UK properties can be high, while property prices tend to rise in the UK, making this a potentially lucrative way to invest your money in both the short and long-term, whether you are looking for a buy-to-let scenario or to renovate and sell for a speedy profit instead. UK property opportunities can include:
Buy-to-let properties
Buying a property to rent out can be a fantastic medium to long-term investment idea as an overseas investor, provided you have the cash to buy a property outright.
There are mortgage providers in the UK who will lend to non-UK residents, although you will typically pay a larger deposit and higher interest rates than those living in the UK. However, it is worth shopping around, where a good mortgage broker will be able to explore the different buy-to-let providers and products available. You will also need a good letting agent to take on the responsibilities on your behalf as a foreign landlord, including tenant credit and right-to-rent checks, as well as collecting rent and undertaking repairs.
Property development
Despite recent concerns in respect of falling house prices, the UK housing market continues to boom, where there is still money to be made for investors in buying, renovating and re-selling a property at a sizeable profit within a relatively quick turnaround time. This is essentially about buying a cheap property that needs work doing to it and then undertaking the necessary works to turn this into a far more desirable home for an owner-occupier.
However, if you are wanting to buy a property and undertake the renovations in person, you would need a suitable visa to do so. Equally, you must be familiar with UK building and planning regulations, which must be complied with or the property will not only become a potential safety hazard, but will also be potentially unsaleable. This means factoring in the cost of renovation works, as well as the cost and time involved in applying for any necessary permissions from the local authority in which the property is based.
Still, while renovating property for re-sale is not for the faint-hearted or inexperienced, where a renovation project can unearth all sorts of problems along the way, it can be a very lucrative way of making money. Alternatively, for those looking to avoid the problems associated with property development, there are properties available on the UK market in which there may be a profit to be made on re-sale with minimal or no renovations required. This could be properties in areas which themselves are due to be redeveloped, where the value of property generally will steadily increase with time, regardless of condition. In some cases, you may even be able to buy a new-build off-plan from a UK developer at a cheaper price, and then sell this at a profit once the property has been completed.
Investing in a UK business
There is a diverse business culture in the UK, with large numbers of multinational corporations, small and medium enterprises (SMEs), together with a growing number of start-ups and micro businesses. As such, opportunities for business investment in the UK include investing as a partner in a private limited company, buying shares in a public limited company (PLC) or even starting your very own UK-based business.
Investing in a publicly-traded company is generally far easier than investing in a private company. PLCs can be bought and sold on the stock market and so have better liquidity, whereas a privately-held company may take years to be sold. Direct investment in a private company is also not always a viable option for most, although there are several indirect methods to invest in private firms as either a UK or overseas investor.
Although private companies cannot list their shares on the stock exchange, their shares can be offered directly to individual investors, such as angel investors or through crowdfunding. An angel investor is usually a high-net worth individual who funds start-ups with their own money in exchange for a minority stake, typically 10% to 25%. In contrast, crowdfunding refers to the practice of funding a venture by raising money from lots of different people who each contribute a relatively small amount, typically via an online platform.
Buying stocks and shares
Shares offer you a way of owning a direct stake in a company, where there is money to be made, both in the form of any profit share payout, known as dividends, or in any increase in fund value on re-sale, known as capital growth. However, the value of shares can quickly and unpredictably rise and fall in line with a number of factors, including the company’s recent performance, but also general market and economic conditions at any given time. As such, investing directly in shares can be a risk strategy for first-time investors.
A far more popular and safer way to invest in stocks and shares is indirectly through an investment fund. These are a type of collective investment where, rather than putting your money into one pot, your cash will be pooled to purchase a portfolio of assets with other investors. Funds typically comprise a diverse range of assets including shares, property and even currencies, all of which will be managed by a professional fund manager. The service provided by the fund manager will attract certain fees, but having their experience and input in diversifying and risk-pooling monies, can help to guarantee a return on investment.
Starting your own business
As an overseas national, you can potentially set up and run your own business in the UK, although you would need a business visa to come to the UK and start your own venture. You will also need sufficient funds to be able invest in your new business.
If you already have the funds available to invest in your business venture, then you can start to concentrate on the practical aspects of how to establish a business in the UK, for example, from setting up a limited company or partnership and registering with Companies House, to registering with Her Majesty’s Revenue and Customs (HMRC) as a sole trader.
If you would like to start a business in the UK, investing some of your own money, but would still need additional funds to be able to successfully launch your business, you would need to approach other investors with your idea. There are various financial providers in the UK that would provide borrowing or investment to an overseas entrepreneur although, as with buy-to-let mortgages, you may find that the terms and conditions of any arrangement are far more restrictive and onerous than for UK-based residents. Still, it is worth shopping around to establish the availability of lending for a new business.
UK investment visa
When making an investment in the UK, you will not necessarily need a visa to do this. You may not even need to visit the UK, where many investments can be easily set up and managed online from the comfort of your own overseas residence. However, where a visa is needed, below we set out the two key visa options available to overseas investors:
UK business visitor visa
You can visit the UK under a standard visitor visa for a number of different business-related purposes including, for example, buying property. Many property investors will first want to see the property themselves before making an offer and proceeding with any sale, where a visit visa will give you up to 6 months to undertake enquiries and view different properties. This type of visa should also give you enough time to complete a property purchase, known as the conveyancing process, although it can occasionally take longer in complex cases.
To be eligible to apply for a business visitor visa, you must:
- intend to leave the UK at the end of your stay, even if your enquiries are incomplete or any sale process has not been finalised
- financially support yourself while in the UK without recourse to public funds
- fund the costs of your return or onward journey at the end of your time in the UK
- not intend to live in any property that you buy in the UK for extended periods through frequent or successive visits, or make the UK your main home in this way
- not undertake any prohibited activities while in the UK, including paid employment.
If you are from a country permitted to visit the UK without applying for a visa in advance, known as a non-visa national, you will still need to request entry clearance on your arrival in the UK. This means that you must be able to satisfy border officials as to the purpose of your trip. Importantly, buying a property is not prohibited under the visitor rules, but you must have in your possession sufficient documentation to demonstrate that this will be an investment property and not a property that you intend to live in yourself. You may also be asked about how you propose to support yourself financially while in the UK and where you will be staying, so you should have sufficient paperwork to support what you say.
UK work visa
If you are looking to come to the UK to start a new business, you will need to apply for the new innovator founder visa. While you may be able to use a visitor visa to meet with investors, inspect premises and sign any contracts, this cannot be used to run a business.
There are various strict requirements when it comes to successfully securing an innovator founder visa, not least the requirement to first secure an endorsement for your business idea from a Home Office approved endorsing body. It is these organisations that will be tasked with assessing the viability of innovative business ideas for the purposes of a visa.
It is only once your business idea has been endorsed, and you have been screened as a fit and proper person suitable for endorsement, with a legitimate source of investment funds, that you can then go on to apply for an innovator founder visa. At this stage, you will also need to satisfy an English language and additional financial requirement.
Importantly, there is no minimum investment required for an innovator founder visa, although your endorsing body will assess whether or not your have sufficient funds to make a success of your proposed business venture. In addition to and separate from your investment funds, you will also need to show the sum of £1,270 in your bank account within the 28-day period prior to applying for your visa to prove that you can support yourself on arrival in the UK. Provided you are approved for a visa, and due to a recent relaxation in the rules around secondary employment, you will be permitted to undertake a second job in the UK to help support yourself while your business is taking off.
Tips for investing in the UK
Before making any investment decisions, regardless of the country in which you are looking to invest your money, it is always a good idea to think about your end goals, and whether these are short-term, medium-term or long-term. You should also consider the level of risk that you are willing to take when investing your money.
Most importantly, however, if you are thinking about ‘investment opportunities UK’, not least if this is a country where you are currently unfamiliar with its many rules and regulations, you should always seek expert financial and legal advice.
Still, despite the various challenges involved with each potential UK investment opportunity, with the right advice and realistic expectations, there is definitely money to be made for the astute and savvy overseas investor thinking about investing in the UK.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
