Buying property in the US has always been an attractive prospect for British homebuyers, especially considering the language and cultural similarities of our transatlantic cousins as well as the abundant opportunities for jobs.
One of the first things you’ll need to consider before buying a property is knowing what it will be used for - for vacation, business, an investment or long-term residence?
If you are looking for permanent residency in the States, it is important to note that simply buying a property in the US will not provide you with residential status. In order to sort out your Green Card it is advisable for you to contact an immigration lawyer.
Although you don’t actually need citizenship or a green card to buy a property you will need an Individual Taxpayer Identification Number, a tax-processing number issued to you by the Internal Revenue Service.
What is state of the US property market?
Since its collapse in 2007, the landscape of the American property market has changed dramatically. Understandably, trust in the market took a considerable knock; however in the past 18 months there have been signs of slow and steady recovery:
- Rise in house prices – after falling by more than 30% since 2006, home prices have now risen in 225 of 276 cities according to Clear Capital, a data provider for American real estate. The increase in house prices means the overall value and trust in the market is once more on the increase.
- Sales are increasing – according to the latest data from CoreLogic, home sales increased 6% year on year in December. This is a clear signal that once again the US property market is a major contributor to the world’s largest economy.
- Foreclosures are down – foreclosure is the term given for when a homeowner is unable to meet their mortgage payments, so the lender – usually the bank – seizes their property.
So is now the right time to invest?
With house prices generally lower compared to the UK market, you’ll certainly get more bang for your buck investing in American real estate, especially considering the favourable pound to dollar exchange rate - £1 to $1.67 at the time of writing.
For investors thinking about future gains, it also seems now is a good time to invest. Clear Capital are forecasting only a gradual increase in house prices in 2014, meaning homebuyers won’t be paying over the top odds for property now, yet will be investing in a market that is growing stronger.
Even though the prospect looks good, there will be concerns over recent mortgage reforms which have placed stricter requirements on mortgage lenders. This means taking out a mortgage will require you to provide more financial qualifications and credit checks, so it is important for you to have all your financial requirements sorted.
Sending money to the USA
Most banks require foreign homebuyers to have a certain amount on deposit with the bank (usually $100,000 or more) while others set loan limits to $1-2 million. Sometimes you may be required to provide a minimum of 3 months of bank statements.
It is therefore advisable that you set up an American bank before buying your property, so you can transfer the money from your UK bank in advance.
There are a few options available to you when transferring money to the USA, such as using a UK bank or money transferring bureau. Unfortunately when using these services you will have to pay costly transaction fees and may also find that exchange rates are poor.
With a foreign exchange broker like Xendpay, you will find that rates are considerably lower and you are able to track your transfer during the entire process. Knowing when your money has arrived in your US bank account will provide you with invaluable peace of mind as you begin climbing the first few steps of the US property ladder.
British Expats USA – This website provides a forum for all British nationals considering a move to the USA.
U.S Department of Housing and Urban Development - This American government website provides updates on all housing and urban development issues.