Navigating property law in the UK: a guide for Americans

If you're an American looking to buy property in the UK, you'll quickly realize that British property law works differently from what you're used to in the US. The costs associated with property ownership can also add up in ways you might not expect.

This guide covers the essentials of the property law in the UK for Americans, including how property ownership works in England and Wales, what taxes and fees you'll face as a foreign buyer, the rules around renting out your property, and a few other considerations to keep in mind.

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What are the core property ownership forms in England & Wales?

When you buy property in England and Wales, you're buying one of three types of ownership: freehold, leasehold, or commonhold. Each one comes with different rights and responsibilities.

Freehold

Freehold means you own both the building and the land it sits on.

There's no time limit on your ownership, and you don't pay ground rent to anyone. In return, you're responsible for maintaining the property and the land around it.

Most houses in the UK are sold as freehold, which is the closest equivalent to typical American homeownership.

Leasehold

Leasehold means you own the right to live in the property for a set number of years, such as 99, 125, or even 999 years.¹

However, someone else owns the land underneath it.

That someone is called the freeholder or landlord, and you typically pay annual ground rent to them and may also pay service charges if they maintain shared areas or the building's exterior.

Flats (apartments) are usually sold as leasehold.

Commonhold

Commonhold is a newer ownership structure that the UK government created to address some of the problems with leasehold.

You own your individual unit outright, similar to freehold, but you share ownership and responsibility for common areas with other unit owners through a commonhold association.

It's somewhat similar to a US condo association.

Costs and taxes associated with owning a property in the UK as an American

As an American who owns property in the UK, you'll have to deal with both UK and US taxes.

You'll owe taxes to the UK government based on their rules, but you'll still need to report everything to the IRS because the US taxes its citizens on worldwide income.

Here are the main taxes you'll see when you buy, own, and sell property in the UK:

All of these taxes have relatively complicated rules and possible exemptions that you may qualify for, so they're worth investigating closely for your particular situation.

In addition to UK taxes, the IRS still expects you to report any income your British property generates. For example, you'll need to include UK rental income on your US tax return and report capital gains when you sell.

However, you can often claim either a Foreign Tax Credit or a deduction for the UK taxes you've already paid, which helps prevent double taxation on the same income.

That said, the bottom line is that you'll need to file both UK and US tax returns annually as long as you own the property.

Laws around renting out property in the UK as an American

If you're planning to rent out your UK property, you'll need to follow UK landlord laws. They can be quite complex.

Before you list your property, research these requirements:

• You're legally required to verify that your tenants have the right to live in the UK before they move in by checking their passport, visa, or other immigration documents
• You need to register with HMRC's Non-Resident Landlord Scheme, otherwise your letting agent or tenant must withhold 20% of your rental income and send it to HMRC⁶
• Your property needs an Energy Performance Certificate (EPC) with a minimum rating of E before you can legally rent it out⁷
• You're required to protect your tenant's deposit in a government-approved tenancy deposit scheme within 30 days of receiving it⁸

This isn't an exhaustive list—depending on your property and legal status in the UK, there are other requirements that you'll have to comply with.

Many American landlords hire a UK-based letting agent to manage the property, handle repairs, and deal with tenant issues. This costs money, but it simplifies things considerably when you're managing a property from far away.

Other considerations to keep in mind when owning a property in the UK as an American

The UK doesn't restrict foreigners from buying property, but you may face extra scrutiny during the purchase process.

UK law requires extensive anti-money laundering (AML) checks on all property buyers, and these checks are typically more thorough for foreign nationals.

You may need to confirm the source of your funds and prove that the money you're using to buy the property comes from legitimate sources.

You should also be prepared for the fact that getting a mortgage in the UK as a foreigner can be difficult and often impossible, especially if you don't have a long-term legal status in the country.

Most UK lenders won't offer mortgages to non-residents, and the few that do typically require much larger deposits and higher interest rates.

Owning a property in the UK and renting it out comes with good rental yields, but there are also many property law considerations that can be complicated at times.

However, with research and, ideally, help from a knowledgeable lawyer, it's possible to successfully own a British property as an American.

That said, there's also a consideration that many American property owners in the UK miss.

It's usually very expensive to send money between the US and the UK because of bank fees and currency exchange rate markups, especially when it comes to regular transfers or large amounts.

As a property owner, you'll likely have to do both, so it's important to investigate alternative ways of sending money internationally, such as Wise.

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Sources

1. UK Government - Buying or owning a leasehold home
2. UK Government - Rates of Stamp Duty Land Tax for non-UK residents
3. UK Government - Annual Tax on Enveloped Dwellings
4. UK Government - Capital Gains Tax
5. John Charcol - Tax on Rental Income and Landlord Tax
6. Capitax Financial Ltd - Non-Resident Landlords
7. UK Government - Domestic private rented property: minimum energy efficiency standard - landlord guidance
8. UK Government - Tenancy deposit protection

Sources checked 09/29/2025