Buying Property in Scotland as an American: A Complete Guide

For most American buyers, the process will look something like this.

Step 1: Decide Your Budget and How You Will Fund the Purchase

Before making offers, establish how much you are comfortable spending.

If you require a mortgage, start discussing this at an early stage. Mortgage options for buyers based overseas can differ between lenders, so obtaining appropriate advice before committing to a property is important.

McEwan Fraser Legal can refer purchasers to mortgage brokers where required.

Cash buyers should also consider currency movements and the timing of transferring US dollars into pounds sterling.

Step 2: Register With a Scottish Solicitor and Purchasing Team

Do not wait until you have found the perfect house before arranging your Scottish representation.

Getting set up beforehand means your identity and purchasing position can be established so that you are better prepared when the right property appears.

Like other regulated legal firms, McEwan Fraser Legal must carry out identity and anti-money-laundering checks. Buyers may be asked for identification, bank statements and evidence explaining the source of the money being used for their purchase.

This can be especially important where funds are being transferred internationally.

Step 3: Find the Right Property

McEwan Fraser Legal markets residential property throughout Scotland, so American buyers are not limited to Edinburgh or one particular region.

Your priorities may be very different depending on why you are buying.

You might be looking for:

• an Edinburgh apartment for regular visits to Scotland;
• a family home in or around Glasgow;
• a traditional property in the Scottish Borders;
• a coastal home in Fife;
• a house in Perthshire;
• a Highland property with more land and privacy;
• a second home on one of Scotland's islands; or
• a residential investment property.

For overseas purchasers, McEwan Fraser Legal can also provide acquisition assistance. Our overseas investment service can include viewing a property on your behalf and advising on potential offer levels.

Step 4: Review the Home Report

Before deciding how much to offer, look carefully at both the property's condition and its Home Report valuation.

Repairs identified by the surveyor, roof condition, damp, alterations, energy efficiency and other issues can affect both your enthusiasm for the property and your bidding strategy.

Do not assume that the advertised “Offers Over” price is the same as the Home Report valuation.

Step 5: Decide What to Offer

This is one of the areas where buying in Scotland can feel particularly different from the US.

Rather than simply increasing the asking price by a predetermined percentage, an offer should take account of the property, competition, valuation and seller's circumstances.

McEwan Fraser Legal's purchasing team can help develop a purchasing strategy and investigate the level of interest before an offer is submitted.

Step 6: Offer Accepted and Conveyancing Begins

If your offer is verbally accepted, your solicitor then progresses the legal transaction.

At McEwan Fraser Legal, buyers are allocated a solicitor for the conveyancing stage, with the legal agreement being documented through the exchange of formal letters known collectively as the missives.

Your solicitor will also deal with matters such as title, searches, lender requirements where relevant and the funds required for settlement.

Step 7: Conclude Missives and Complete the Purchase

Once the contractual terms have been agreed and missives are concluded, the parties have entered into their binding contract.

Settlement then takes place on the agreed date. The purchase price is transferred through the solicitors, ownership is transferred and the keys can be released once the necessary funds and legal requirements have been dealt with.

What Taxes Do Americans Pay When Buying Property in Scotland?

American buyers need to understand that Scotland has its own property transaction tax system.

The relevant tax is Land and Buildings Transaction Tax (LBTT) rather than the Stamp Duty Land Tax system used in England and Northern Ireland.

How much LBTT you pay depends on the purchase price and your individual circumstances. Revenue Scotland provides the applicable rates and a property transaction calculator.

Additional Dwelling Supplement

The Additional Dwelling Supplement (ADS) is particularly important for American buyers who already own a property in the United States.

ADS can apply when you purchase a residential property in Scotland while already owning another residential property anywhere in the world, unless an exemption or main-residence replacement rule applies.

For qualifying transactions, the current ADS rate is 8% of the relevant purchase price.

For example, if you own your home in the United States and intend to keep it while purchasing a second home in Scotland, ADS should be considered as part of your purchasing budget.

There are specific rules for people replacing their main residence, including circumstances involving disposal of a previous main residence within the qualifying 36-month period, so buyers should obtain advice based on their individual circumstances.

American buyers should also consider taking appropriate US tax advice, particularly if the Scottish property will generate rental income or may later be sold for a gain.

Buying a Property in Scotland Without Travelling From America

You do not necessarily have to fly to Scotland every time you identify a property you are interested in.

McEwan Fraser Legal already works with overseas buyers and investors and can provide local assistance during the acquisition process. Depending on the service required, this can include viewing properties on a client's behalf and advising on potential offer levels.

Video tours, Home Reports, property schedules and online communication also make it easier to carry out much of the initial research remotely.

That can be particularly useful if a suitable property comes onto the market while you are still in the United States.

Why Use McEwan Fraser Legal When Buying From the USA?

Buying property thousands of miles away can be difficult when your estate agent, solicitor, mortgage adviser and other parties are all working independently.

McEwan Fraser Legal is both an estate agency and a Scottish legal firm, with properties marketed throughout Scotland and dedicated purchasing and conveyancing teams.

For American and other international buyers, we can help with:

• searching for suitable properties in Scotland;
• reviewing your buying position;
• arranging property viewings;
• viewing properties on behalf of overseas clients where appropriate;
• reviewing Home Reports;
• discussing purchasing and negotiation strategies;
• submitting offers;
• Scottish conveyancing;
• identity and source-of-funds requirements; and
• introductions to mortgage brokers where required.

Our overseas acquisition service can also provide specialist assistance to international property investors.