Investment in UK property by Iranians

London is home to a large Iranian community, and investment in UK properties has historically been one of the safest ways to secure assets. Therefore, after the lifting of secondary US sanctions in January 2016, Iranians were expected to become major investors in London’s residential property market.

‘The lifting of sanctions on Iran could see £6 billion invested in overseas properties in the next 5-10 years, according to new research from Rokstone and New World Wealth,’ reported Ham High. It was even argued that ‘Iranians could rescue London's luxury property market’. However, this expectation has not materialized due to a major obstacle for Iranian Investors: transfer of their lawful funds from Iran to the UK for the purchase.

Conveyancing Process

Normally, the process of purchasing a property begins with estate agents. These agents introduce a buyer to a property which the buyer can consider. Should the buyer decide to proceed with the purchase, (s)he will make an offer. Thereafter, if the seller accepts the offer, the conveyancing process begins and each party instructs a solicitor to see that process through.

At the time of purchase, most buyers have access to the whole of their funds and it is a matter of a simple bank transfer to pay for the property. However, for Iranians, in most cases, the funds are in Iran and they need to transfer their funds from Iran to the UK and there is no direct banking relationship between Iran and the UK. This is an added complication for Iranian investors.

Method of Fund Transfer for Iranian Investors

There is no law that prohibits British banks from working with Iran and facilitating Iran-related transfers. In fact, many British officials have encouraged the reinstatement of UK-Iran banking relationship and the Bank of England reactivated licenses for UK-based Iranian banks in London in January 2016. However, nearly two years later, no direct banking channels (SWIFT) exist between Iran and UK, and British banks do not welcome Iran-related funds for two main reasons.

First, while secondary US sanctions on Iran were lifted in January 2016, primary US sanctions on Iran remain in place and many British banks have ties to the United States. Therefore, they need extremely detailed and costly compliance plans to facilitate Iran-related transactions in order to avoid heavy US penalties. As a result, many British banks have made a business decision that it is more profitable for them avoid Iran-related funds.

Second, the Iranian banking system is recovering from crippling sanctions and it has yet to ‘comply with international banking norms’. Therefore, most British banks view Iranian banks as high-risk partners who are not yet prepared for a banking relationship.

As a result, Iranians have no direct banking options to transfer their funds from Iran to the UK to purchase UK properties and they are forced to use money exchange companies. Money exchange companies normally have currency on both sides of the transaction i.e. in Iran and in the UK. Therefore, they receive rials (Iranian currency) in Iran and deposit pounds into the relevant UK bank account. In most cases, deposit of pounds is made into a UK bank account in multiple cash and third party payments. This is suspicious to banks and often results in a UK bank account being frozen or closed.

Bank Account Restrictions and Closures

Cash and third party deposits into an account provide a good basis for banks to review a bank account and request an explanation. Should a bank not undertake a proper investigation or disregard the explanation and proceed to close an account merely for receiving Iran-related funds, it may be acting discriminatorily. In most cases, Iranian investors have complete and clear documentation of source of funds and they can explain their account activity.

If the bank acts discriminatorily, through legal action, we can reinstate your bank account, and collect compensation on your behalf for injury to feelings and legal costs. In majority of cases, these are accomplished before issuing a court proceeding as most banks do not want the publicity of being slapped with a race discrimination claim.

Helpful Tips

As you prepare to purchase a property, you can take the following steps to minimise your risk of banking complications:

1. Hire a UK-based authorised money exchange company to facilitate your money transfers.

These companies can receive rials from you in Iran and then deposit pound into your UK bank account from their UK business account. Therefore, you can avoid multiple cash and third party payments into your UK bank account. It is not illegal to receive funds in this way but it triggers a review of your account and can lead to your account being closed or restricted. In addition, if the third party sender of the funds has complicated legal issues, you can be dragged into them.

If you need a list of UK-based money exchange companies, please contact our Iran Desk.

2. Prepare complete documentation of your source of funds.

Regardless of the method of transfer, you should have complete documentation to prove your source of funds such as a translated sales contract, tax returns, or rental agreements.

If you are unsure of what documents you need to prepare, please contact our Iran Desk and we will be happy to guide you.

3. Notify your bank in advance about any expected sudden increases or decreases in your account balance.

Banks commonly monitor accounts for sudden increases and decreases in account balance and may restrict an account or transaction when that happens. Therefore, if you expect to receive or send a large transaction, you should notify your bank in writing in advance.

4. Always have two bank accounts.

This will allow you to manage your finances if one account is suddenly restricted. The downside is that you are likely to recover less compensation for your injury to feelings since you will be less stressed and anxious but this will allow you to pay your bills and continue your life in the meantime.

5. Contact us immediately if the bank makes any enquiries regarding your account, restricts, or closes your bank account.

It is important that you provide correct and straightforward answers to the bank to avoid any issues with your account. Therefore, you need to make sure you have the correct documentation of source of funds and the sooner you contact our firm, the better we can assist you. Therefore, we advise you to contact our Iran Desk without delay.

About Us

Consistent with our core values, our firm has a real commitment to protecting your interest and providing you with the best possible advice.

For over fifty years, Ronald Fletcher Baker LLP has been providing expert advice from its offices in the City of London, the West End, Manchester, and internationally via its office in Istanbul and its Russia, Ukraine & CIS, and Iran Desks.

The firm has considerable experience acting for domestic and international governments, medium to large national and international companies, financial institutions, high net worth individuals and substantial corporate investors many of whom are based overseas.

Our service promises to be professional, responsive and competitive.


This article provides only general information and does not constitute legal advice. Every case is different and has to be evaluated on its own merit. To learn more about your rights and the options available to you, please contact our Iran Desk.

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