With new investors from both the UK and overseas looking to enter the UK housing market, we sit down with Stuart Marshall, CEO of specialist expat mortgage broker Liquid Expat Mortgages, to ask what’s behind the rise. Alongside this, we’ll also examine how UK expats and foreign nationals are obtaining expat mortgages and what to look out for as a first-time buy-to-let investor.
“Since January 2020, and even more so since the start of the COVID-19 pandemic, the number of people searching for UK buy-to-let property has increased beyond our expectations and indeed beyond many top analysts’ estimates.” This trend, explains Stuart Marshall, is in-part due to the huge surge in appetite that we’ve seen from first-time investors and expat landlords since September 2020. “The number of UK expats and overseas buyers who have been enquiring about UK mortgages rose by 22% in September compared to August. It also increased by over 41% when compared to the same period last year.”
A Good Time to Invest.
Over the past few months, the UK housing market has seen a surge in demand. Many people who held off moving or buying earlier in the year were massively incentivised by the UK chancellor’s stamp duty holiday. This means that expat buy-to-let investors can save thousands of pounds in tax provided that they buy before March 2021.
“The current stamp duty breaks, which have a limited shelf life, have created a wave of investors looking to enter the UK property market. The range of products is greater than it has ever been and the historically low interest-rates are another key factor in this heightened interest in UK property” says John Squires, Head of Mortgages at Liquid Expat Mortgages.
“Current low interest-rates mean it’s a relatively cheap time to borrow, especially for expat and foreign national buy-to-let landlords. The attraction for first-time buy-to-let investors is further heightened by key hotspot growth cities such as Manchester, Liverpool and Edinburgh, and the relative security of the UK legal system” adds Stuart Marshall. “The already popular UK property market was given a further boost when the UK government announced a new immigration route for Hong Kong citizens and their dependants. This has created even more demand as many Hong Kongers are now looking to settle in the UK for a variety of reasons.”
A good number of expat first-time buy-to-let investors have also homed in on holiday lets which have grown in popularity in the last twelve months, in particular as international travel has been greatly restricted. “Since March, the number of enquiries coming across our desk for these types of products has increased by over 33% compared to this time last year. Even before the Coronavirus outbreak, the UK holiday market was thriving. Not only were more British residents booking “staycations”, but many UK expats and overseas buyers were taking advantage of the falling pound and rising UK property prices to accommodate this demand for UK property stays. There are a number of reasons for this. Firstly, mortgage lenders have extended their mortgage products to meet the demand from prospective investors. Secondly, short-term lets or holiday lets carry certain financial and tax benefits which your expat mortgage-broker can explain to you. All things considered, you can see why many expats and foreign nationals are looking at the UK short-term let market as an attractive investment option. Limited company expat buy-to-let mortgages have seen the sharpest rise in enquiries for anyone wanting to offer short-term holiday lets on a mortgaged property.”
A Note of Caution…
Whilst interest in UK property from UK expat and foreign national investors is nothing new in itself, Stuart Marshall has noticed a slight shift in the mortgage market and sounds a note of caution to anyone wanting to invest in UK property via a mortgage. “Mortgage rates currently remain low but they are starting to creep up as lenders look to stem the flow of business since they simply cannot cope with the unforeseen demand brought by the stamp duty holiday.” Some lenders are already reducing the loan to value, reflecting their nervousness about current financial markets and the impact this might have on the housing market. Ultimately, there’s no escaping the fact that we’ll be facing a very different financial landscape when the UK furlough scheme ends and when the stamp duty deadline ends. “In essence, we are seeing mortgage applications taking longer to process and the potential number of favourable loan to value offerings diminishing weekly. Any UK expat or foreign national who is looking to become a first-time buy-to-let investor would really benefit from talking to an expat mortgage broker as they’ll be able to offer independent, specialist advice. Customers who delay making a decision risk disappointment if they deliberate too long as the mortgage product they originally considered might not be there when they re-visit it a couple of months later.”
Liquid Expat Mortgages
Unit F2, Waterfold Business Park,
Bury BL9 7BR
Phone: 0161 871 1216