Expat property investors routinely rejected by UK mortgage brokers

Published:  22 Feb at 6 PM
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At a time when sterling is falling against a basket of foreign currencies, British expats wishing to invest in UK property are being routinely refused mortgages.

The recent sharp rise in interest in UK properties by British citizens working overseas is being fuelled by the falling pound and is resulting in increased interest in cheaper areas outside the capital. However, the opportunity to invest is being stymied by the difficulty of obtaining mortgages for buy-to-let real estate in the UK. Enquiries from overseas buyers including UK expats peaked in the last quarter of 2016 at 45 per cent higher than during the same period in 2015, but tougher requirements for buy-to-let mortgages are taking the gloss off the gingerbread.

Foreign buyers interested in investing in the UK’s buy-to-let market, including nationals from the Middle East, Europe, the USA and Asia, are also being refused mortgages. Interest from overseas is important to Britain’s property market at a time when domestic demand is shrinking due to uncertainly over Brexit and its effect on the UK economy, wages and inflation. Foreigners as well as Brit expats view property as a safe haven asset made more attractive since the pound’s steep fall. I

In the past, mortgage lenders have viewed expats as high risk irrespective of their salaries and assets, and the new lender affordability criteria of rental returns at 145 per cent plus of mortgage costs as against the previous level of 125 per cent isn’t helping. Given the slowdown in the UK’s domestic property market, refusals to finance expat mortgage loans could hit hard on the sector.

Older British sellers wishing to downsize their property needs as their children are now living independently may also be denied the opportunity to capitalise on their property wealth as a fence against soaring inflation post-Brexit.

Source: Property Investor Today
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