Specialist Property Range Now for Expats

From first-time buyers, landlords through to overseas investors and expats. Double digit growth - as outlined in the latest Halifax House Price Index, which recorded an annual growth rate of +10.8% in February 2022, the strongest level since June 2007 – and rising rental demand contribute heavily to this interest.

This forms an attractive combination, and the historical virtues of the UK property market ensure that it continues to be viewed as a good place to invest by those who appreciate its merits and longevity. This remains apparent even for those living beyond its borders.

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From older generations of expats who have built up savings pots or cashed in on other investments, through to the younger generations who are currently working abroad but looking to establish or maintain a foothold in the UK housing market, as well as anyone in between with an eye on taking advantage of any favorable conditions and laying solid long-term foundations.

For those borrowers, specialist properties often offer appealing features: for example, newer properties can offer greater energy-efficient benefits and can often be easier to manage from afar. Other landlords may focus more on yield, whether it’s through a short-term let or an HMO. As an industry, we can now support them to pursue these portfolio ambitions whist still acknowledging green credentials.

Lending to expats

As in any marketplace, access to viable investment options remains crucial for a host of borrowers. Here at Foundation Home Loans, we have recently broadened our expat buy-to-let proposition, both in terms of the landlord borrowers who we accept, and the specific options available to them, including those who are looking to purchase or remortgage green short-term lets and HMO properties.

This is an often a complex lending arena, and criteria and underwriting changes have been made by many lenders operating in the specialist market in recent times to remove most of the administrative burdens for advisers and their expat clients, which means this is opening up more avenues for this investment type.

As always, the key for advisers is to fully understand the requirements of individual lenders to ensure that they can service the needs of such clients. In the past, many people living outside of the UK would have deemed this type of borrowing unachievable due to affordability constraints and many major lenders displaying strict lending policies which alienated this type of borrowing demands.

Fortunately, some lenders did remain active in this area and others have emerged to drive further competition and options, although it remains fair to say that this is largely the domain of specialist lenders who have the manual underwriting capabilities to service this area of the BTL market. There are also several key factors which borrowers and advisers need to understand which can impact eligibility and help speed up the application process.

Expat eligibility

As outlined in the launch of our recent product range, lenders will often only accept applicants who live in certain countries. At the time of writing, we will lend to applicants residing in a country ranked in the top 60 of the Corruption Perception Index. This can be checked on the Transparency International website at https://www.transparency.org/en/cpi. Applicants who are residing in a country ranked outside the top 60 may be considered, but it will be subject to referral.

Proof of income

This is self-explanatory, although lenders may need different types of income-related documentation but this can also differ for employed and self-employed borrowers. We also consider retirees but this may not be the case for all lenders, so it is certainly worth checking.

Credit footprint and UK bank account

All lenders will need the borrower to have some type of financial association with the UK, pay tax or have declared income for UK tax purposes. But the exact requirements may vary from lender to lender.

Lending to expats remains a complex transaction with a host of relevant documentation required to satisfy a range of lending demands. This is also not an area that all mortgage intermediaries may be familiar with. If this is the case, they could refer this to a specialist who will be able to thoroughly package the case and ensure that they tick all the right boxes for their chosen lending partner.

Whatever the approach, solutions are out there when it comes to meeting a range of expat lending requirements. Advisers simply need to ensure that they are asking the right questions and know where they can source the right answers.

Grant Hendry is Head of Sales at Foundation Home Loans

https://www.halifax.co.uk/assets/pdf/february-2022-halifax-house-price-index.pdf

*This article was originally published on Mortgage Introducer

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