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Opportunities and Advantages in the UK Property Market for Expats and Foreign Nationals

The UK property market remains a highly appealing destination for expats and foreign nationals seeking to invest or establish a new home. The United Kingdom has plenty of diverse cities, a thriving economy, and an appealing cultural heritage, the country offers a unique blend of investment potential and lifestyle appeal. This attractive combination presents plenty of purchasing opportunities in terms of residential or buy-to-let properties using specialised mortgage providers like Expat Mortgages UK.

Current State of the UK Property Market

While the UK property market has historically been strong, recent data suggests that it is currently facing some challenges and underperforming. According to the latest figures from the Office for National Statistics (ONS), the average UK house price was £285,000 in December 2023, which was £4,000 lower than 12 months previously. This marks a significant slowdown from the steady growth witnessed in previous years and has raised concerns among investors and homeowners.

One of the primary drivers behind the market’s downturn is the interest rate hikes implemented by the Bank of England to combat inflation. Rate increases have made mortgages less accessible, pricing out many potential buyers out of the market and dampening demand. The cost of living crisis has also inflamed the situation, as households struggle to manage rising costs and have less disposable income available for property investments or purchases.

While the national average paints a gloomy picture, the impact of the market downturn has been uneven. Areas like London and the South East, which have traditionally been property-buying hotspots, have experienced more significant price declines compared to regions like the North East and Scotland. Amidst declining consumer confidence, many buyers are being cautious, adopting a “wait-and-see” attitude, before committing to any large property investments.

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Opportunities for Expats and Foreign Nationals

Despite these challenges, the current conditions may present opportunities for those with strong financial positions and long-term investment plans. Softening prices and reduced competition could allow them to secure properties at more favourable valuations. This could offer good returns on future growth when the market rebounds.

However, navigating the current UK property market landscape requires careful consideration and expert guidance. Expats and foreign nationals would be well-advised to work closely with specialised mortgage providers like Expat Mortgages UK, who can provide tailored advice and strategies to mitigate risks and capitalise on opportunities.

Those wishing to establish a new home or explore investment avenues in the UK can take advantage of the following:

Residential Mortgages

Residential mortgages can used to purchase a dream home in the UK. With the right guidance and support from specialised mortgage providers like Expat Mortgages UK, the process of securing a mortgage can be streamlined, taking into account their unique financial circumstances and income sources.

Buy-to-Let Mortgages

The UK’s thriving rental market offers lucrative opportunities for property buyers to invest in buy-to-let properties. With steady rental demand and attractive yields in many areas, these investments can generate significant passive income and long-term capital growth.

Currency Advantages

For people earning income in currencies other than the British pound, currency fluctuations can work in their favour. A weaker pound can make UK property more affordable, amplifying their purchasing power and potential returns on investment.

Diversification

Investing in UK property can serve as an effective diversification strategy, allowing investment portfolios to be spread across different asset classes and markets.

Benefits of Residential Mortgages for Expats

Securing a residential mortgage in the UK can be a complex process, but potential property buyers who wish to invest can work with an experienced mortgage advisor to take advantage of: 

Tailored Mortgage Solutions

Mortgage providers that understand the unique financial circumstances of expats and foreign nationals can offer tailored mortgage solutions that cater to specific needs and income sources.

Access to Competitive Rates

By working with a wide range of lenders and having whole-of-market access, property buyers benefit from competitive interest rates and favourable mortgage terms.

Residency Flexibility

Many expat mortgage providers understand the transient nature of expat life and offer flexible residency requirements, allowing clients to secure mortgages even if they plan to relocate in the future.

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Advantages of Buy-to-Let Mortgages for Expats

Investing in buy-to-let properties in the UK can be lucrative, and securing a buy-to-let mortgage from an experienced mortgage company offers several advantages:

Maximised Rental Yields

With their in-depth knowledge of the UK property market, mortgage providers can help to identify areas with high rental demand and attractive yields, maximising their investment returns.

Tax Efficiency

Experienced mortgage providers can guide clients on tax-efficient strategies for buy-to-let investments, helping buyers maximise their returns while complying with UK tax regulations.

Property Management Support

Some providers offer additional services, such as property management and tenant screening, making it easier for expats and foreign nationals to manage their buy-to-let investments from abroad.

Other Things to Consider

Apart from securing the necessary funds and mortgage instruments, there are also some other things that foreign nationals and expats need to be aware of before purchasing a property in the UK. 

  • Legal and Regulatory Considerations Navigating the legal and regulatory landscape in the UK can be complex. It’s essential to understand the various laws and regulations governing property ownership, rental agreements, and landlord-tenant relations. 
  • Property Management Challenges When investing in buy-to-let properties, managing the properties from abroad can be a significant challenge. 
  • Long-Term Residency Plans Expats and foreign nationals should consider their long-term residency plans when investing in UK property. If they intend to eventually relocate to the UK, purchasing a residential property can be a wise investment. However, if they plan to remain abroad, buy-to-let properties may be a more suitable option. 
  • Exit Strategies While investing in UK property can be lucrative, it’s essential to have a well-defined exit strategy in place, such as selling the property outright, refinancing, or transferring ownership to family members or trusts. 

For those seeking to invest in a UK residential or buy-to-let property, working closely with Expat Mortgages UK will help expats and foreign nationals navigate the UK property market with confidence and expert guidance.

Contact Expat Mortgage Broker today for Free Foreign National and Expat Mortgage Advice.

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What the new non-dom rules mean for foreign property buyers

This week’s spring budget revealed that the current non-dom rules would be changed, so how could this affect people investing in UK property?

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In Chancellor Jeremy Hunt’s spring budget, announced on Wednesday this week, one of the big changes he revealed was in the way those living in the UK but with permanent homes elsewhere – also known as non-doms – would be treated for tax purposes.

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Under existing non-dom rules, an individual with non-dom status does not have to pay UK tax on overseas income or gains, unless the income or gains are brought to the UK. They were also not liable for inheritance tax on the value of their foreign assets, unless they became “domiciled” in the UK.

To view full article please click the link below.

Source: Buy Association

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Why UK Expat and Foreign National Investors are Looking North in 2024

With another excellent year ahead for UK expat buy-to-let property investment, the North of the UK stands to perform best in 2024.

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2024 looks to be another great year for UK expat and foreign national investors to buy UK buy-to-let properties.

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With the rental market still exceptionally busy as a result of incredible demand and high mortgage rates stopping first-time buyers getting onto the ladder, buy-to-let property owners stand to make big profits.

To view full article please click the link below.

ein news

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UK house prices rise at fastest rate since January 2023

UK house prices rose 2.5% in the year to January, recording the biggest increase since January last year, as lower mortgage rates and fading inflationary pressures led to increased buyer and seller confidence, Halifax has said.

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January marked the fourth consecutive monthly rise, with a 1.3% uplift on December, the UK’s biggest mortgage lender said, with the average home costing £291,000, £3,900 more than in December.

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Kim Kinnaird, the director at Halifax Mortgages, said: “The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labour market has contributed to increased confidence among buyers and sellers.

To view full article please click the link below.

Source: The Guardian

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Exploring the UK Property Market and Recent Mortgage Rate Cuts

The UK property market has long been a hub for both domestic and international investors, characterized by its resilience and dynamic nature. Recently, a significant development has emerged in the form of mortgage rate cuts, particularly notable with HSBC’s decision to offer rates partly under 4% for the first time since the TRUSS mini budget.

This move reflects a broader trend in the UK’s financial landscape and opens new avenues for potential buyers, including foreigners, to consider property acquisition in the UK. The following sections will guide you through the intricacies of buying a house in the UK as a foreigner, considering current market conditions and regulatory frameworks.

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Who Can Buy Property in the UK?
In the UK, there are no legal restrictions on who can buy property, regardless of nationality or residency status. This openness makes the UK a particularly attractive market for international investors and homebuyers. Whether you are a resident or non-resident, foreigner or citizen, you have the equal right to purchase property. However, foreign buyers should be aware of certain financial and legal considerations, including potential additional taxes and the need for thorough legal advice to navigate the UK’s property laws.

Can Foreigners Buy Property in the UK?
Yes, foreigners can buy property in the UK. The process for foreign buyers is straightforward, though it involves specific steps, such as obtaining a National Insurance number and opening a UK bank account.

Foreign buyers must also comply with certain financial requirements and may face additional scrutiny, especially in terms of funding sources.

It’s advisable for non-residents to seek advice from property experts and legal advisors familiar with the UK market.

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Impact of Brexit on Foreign Property Buyers
Brexit has introduced changes that affect foreign property buyers, especially those from the European Union (EU). While the fundamental right to buy property in the UK remains unaffected, EU citizens no longer enjoy the same ease of movement and residence rights.

This change means that EU citizens might need to comply with immigration controls and visa requirements. However, Brexit hasn’t dampened the appeal of the UK property market to foreign investors, and the market continues to see robust interest from overseas buyers.

Source: Talk Business

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Expat property enquiries up following rate holds

Offshoreonline, an online mortgage adviser for expatriates, has observed a significant upswing in expat mortgage enquiries, attributing this to the Bank of England’s decision to hold the UK Base Rate steady in November.

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At the same time, a straw poll of estate agents conducted by the expat online mortgage broker revealed a steep rise in enquiries during the second week of November, indicating a growing interest in the UK expat buy-to-let market and house buying in general.

The current stability in the UK Base Rate has created a favourable environment for potential buyers of UK buy to let properties in 2024, according to Offshoreonline.

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With this positive outlook, expat mortgage holders are presented with a critical decision—whether to opt for a fixed or variable rate mortgage, the firm said.

Source: Best Advice

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Huge Surge in Chinese Interest in UK Property Investment

UK Housing Market Ripe for Overseas Buy-to-Let Investment

With good-value property prices and rental growth exceeding wage growth, UK houses are attracting huge interest from overseas investors.

Read on for more information on how this affects buy-to-let property markets in the UK.

How Many Chinese Investors Want to Buy UK Property?

Chinese investors are getting into overseas property investment in a big way, according to Juwai IQI.

The property portal states that the top four destinations for overseas investment are English-speaking countries: the United Kingdom, the United States, Canada and Australia.

Juwai IQI indicates a massive increase in overseas property investment enquiries among Chinese investors. In Q3 2023, Juwai IQI saw a 76% increase in interest in buying UK property as a non-resident to Q2. In addition, those figures were 35% higher than Q1.

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How Are Chinese Investors Spending Their Money in the UK?

According to Juwai IQI’s email newsletter, these Chinese investors are from an upper-middle-class background and are interested in buying townhouses and apartments.

It’s easy to see why.

Some of the UK’s major cities are seeing huge rises in rental prices for city centre apartments.

City Residential Estate Agents state that the average rental price for apartments for sale in Liverpool City Centre has increased by 12%. Meanwhile, property price growth has slowed due to low activity in the market, making UK property investment both attainable and lucrative for overseas investors.

Why Do Foreign Investors Want to Invest in the UK Property Market?

So, why would a Chinese investor want to purchase property in the UK?

According to a report by Irwin Mitchell, the country has an international reputation as a ‘favourable and open global destination for investment, offering a robust legal framework and business-friendly environment, despite recent economic and political changes’.

As such, foreign investment is rising throughout the UK. Activity in 2022 was substantially higher than in previous years. An influx of Chinese property investors is highly likely in 2023 and beyond.

Interestingly, overseas investment in the North West property market is up by 20% over pre-pandemic levels, with investors looking to cities like Manchester and Liverpool thanks to their local infrastructure, local skills and regeneration plans.

The North West currently leads the way for capital growth projections. Savills predicts an 11.70% capital growth in the region between now and 2027, meaning property investments stand to see substantial appreciation during that period.

According to the HM Land Registry UK House Price Index, the average property price in the UK costs £291,044. However, the average property price in Liverpool is £180,268. Liverpool – and the North West region – offers better value property investments than many other places in the UK.

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Huge Rise in Chinese Buyers Over the Last Year

Earlier this month, Juwai IQI saw a huge increase in Chinese spending on overseas property, reaching $3.4 billion – $1 billion more than in 2022.

Juwai IQI attributes this growth to “revenge buying” – when buying rates rise rapidly after a period where investors cannot purchase due to restrictions or difficulty.

According to an EY report, the number of households that can afford to invest in property in China is set to rise by 50% in 2025. In addition, Chinese consumers have typically high savings rates, while investors are also moving to diversify their investment portfolios.Why not read the Rwinvest Top UK Cities for Overseas property investment report for futher insights.

With UK property price growth down to 0.2%, gross rental yields continuing to rise, and property prices not expected to go up until 2025, we can expect to see more foreign investors purchasing property on UK shores in the near future.

By Dale Barham

Source: RWinvest

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UK Expat and Foreign National Investors Use Re-Mortgage Products to Improve the Energy Efficiency of Buy-to-Let Property

As we move into the colder months in the UK, energy efficiency starts to become a bigger consideration for tenants. This is not an insignificant consideration, with many tenants still concerned about the rising cost of energy, in addition to high inflation and the rising cost of living more generally.

‘A low energy efficiency rating is enough to dissuade many desirable tenants from renting a property’ says Stuart Marshall of Liquid Expat Mortgages. ‘This means that owning a property with a bad EPC rating can be very costly for UK expat and foreign national investors because of a loss of rental income. Further, the need for good energy efficiency is likely to be reflected in legislation too. While the government recently announced that it was scrapping its requirement for rental properties to have an EPC rating of a C or above by 2025, it’s likely that this plan will be replaced by other, similar legislation if the UK is to reach its target of net zero by 2050.’

Because of the increasing focus on energy efficiency in rental properties, it’s important for UK expat and foreign national investors to make their property as energy efficient as possible. This will make sure that their investment property remains attractive to desirable tenants, while also making sure that the property is compliant with any potential environmental legislation.

5 Ways UK Expat and Foreign National Investors Can Make Their Investment Property More Energy Efficient.

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  1. Switch Lightbulbs. Switching to LED lightbulbs is one of the simplest ways to increase the energy efficiency of a rental property. Not only do they last five times longer than traditional halogen lightbulbs, but they also use significantly less energy to produce the same light, while emitting lower carbon dioxide emissions.
  2. Draught Proof. Another very easy and affordable way to improve energy efficiency is to reduce heat waste through draught proofing in common problem areas like doors, chimneys and skirting boards.
  3. Energy Efficient Appliances. Replacing old appliances with more energy efficient ones is another very easy way for UK expat and foreign national investors to improve the energy efficiency of their rental property. Appliances with an A+++ rating are the best performing. Having higher rated appliances will improve the property’s EPC rating and will also improve the energy efficiency of the property.
  4. Insulation. Improving insulation is one of the most common ways for UK expat and foreign national investors to improve the energy efficiency of their property. There are many ways to do this, from improving insulation in roofs and cavity walls to installing double glazed windows and thermally efficient doors. An easier way to improve insulation is to install thick curtains or have existing curtains lined.
  5. Replace the Boiler. A more costly way to improve the energy efficiency of a property is to replace the boiler with a more efficient one. While this is more expensive than many of the other methods mentioned above, installing an efficient boiler can make a significant difference to the energy efficiency of the property and equate to massive savings for potential tenants.

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Utilise a Re-mortgage Product.
While improving the energy efficiency of an investment property is pretty much essential now, conducting a number of renovations can be costly for UK expat and foreign national investors. This is especially true for portfolio investors who have a number of properties that require green renovations.

‘One of the best ways to fund these renovations is through a re-mortgage’ says Stuart Marshall. ‘This is a course of action that we’ve discussed with many of our clients looking to conduct green renovations. This is because there are plenty of quality re-mortgage products available for UK expat and foreign national investors. These products allow UK expat and foreign national investors to utilise their existing equity in their property to raise capital for green renovations. But using a re-mortgage product can also pay dividends elsewhere as increased equity can make it easier to negotiate a better mortgage deal. So, UK expat and foreign national investors can often benefit from green renovations and also from reduced mortgage rates and lower monthly repayments.’

‘Utilising the services of an expert UK expat or foreign national mortgage broker is the best way to negotiate a better deal and gain access to exclusive broker-only deals. This can really make all the difference in maximising the quality of an investment venture. But we’ve seen re-mortgage products work time and time again in improving the terms of buy-to-let mortgages while also raising capital to conduct green renovations that will pay dividends long into the future.’

By Ulysses

Source: EIN News

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Foreign Property Investment in the North West Up 20%

According to law firm Irwin Mitchell’s latest FDI (Foreign Direct Investment) report, the North West property sector is primed to see significant investment from overseas buyers.

Irwin Mitchell has compiled the summer 2023 report in collaboration with leading economic consultancy Cebr. It offers foreign investment analysis and ‘on the ground’ commentary on the UK’s largest cities and key sectors.

The UK real estate section of the vital sector insights states that the property industry (grouped in with hospitality) had an investment position of £209 billion in 2021. However, this figure took a hit due to COVID-19, Brexit, and the war in Ukraine.

While not immune to these challenges, the appetite for investment in the UK from overseas has proved to be resilient.

According to the report, the property market in London remains desirable to foreign investors, especially when it comes to Grade A office space.

There has been an increase in taxes for property investors, and regulations have tightened, but this hasn’t put off international buyers, who continue to choose the UK over other countries.

In particular, strong growth has been observed in the North West and the West Midlands. There were 88 new investment projects in the North West last year, up 20% compared to before the pandemic, which suggests the region has quickly recovered from the lull in investment over the past few trying years.

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The Key to More Foreign Property Investment is ‘Levelling Up’

According to Adrian Barlow, the firm’s National Head of Real Estate, ‘continued levelling up is key to maintaining investor interest in areas outside the capital’.

With many exciting regeneration projects in the North West, the future of foreign property investment in the region seems promising.

This includes massive plans such as Liverpool Waters and the Atlantic Gateway scheme.

As part of Liverpool Waters, Canadian investor Starlight Investments is taking on a 31-story residential tower. This build-to-let scheme has a development value of £50m and will add to the company’s £20bn North American portfolio, showing that overseas companies are eager to be involved in the North West property market.

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Why Are Overseas Investors Interested in the North West?

There are plenty of attractive factors for overseas buyers regarding North West property. This includes the region’s much more affordable property prices than other areas, such as those in the South of England.

For example, the UK House Price Index shows that the North West region’s average house price is £215,648, while the average house in the South East goes for £394,096.

Another reason the North West appeals to foreign real estate investors today is the prediction for high capital growth in the area. According to property experts Savills, the region’s mainstream capital value is forecast to grow 11.7% over the next few years leading to 2027, while the South East is set to hit just 3% growth in the same timeframe.

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What do high rates mean for HNWIs seeking mortgages?

Interest rates have dominated the headlines in 2023. As inflation remains sticky and well above its 2 per cent target, the Bank of England’s monetary policy committee has voted on 14 consecutive occasions to hike the base rate.

The impact on mortgage customers has garnered a great deal of political and media interest.

Understandably, the fate of high-net-worth individuals seldom enters the conversation, but within the mortgage market we cannot afford to overlook the issues affecting such borrowers.

Indeed, now is an opportune moment for lenders and intermediaries to take stock of the challenges that HNWIs face when looking to secure, and in the current climate repay, a mortgage.

Moreover, we must consider what can be done to ensure wealthier borrowers are offered suitable support in the higher interest rate environment.

The challenges involved in HNW mortgages

It may seem entirely counter-intuitive to think that HNWIs will regularly struggle when it comes to securing a mortgage. Yet this remains the reality; they run a surprisingly high risk of being turned away by conventional lenders.

For context, Butterfield Mortgages conducted research in the past, surveying more than 500 UK adults who all had a net worth in excess of £1mn. We found that 12 per cent had been rejected for mortgages in the preceding decade.

But why are so many HWNIs turned down for a mortgage?

It comes down to the often complex and diverse nature of HNWIs’ wealth – their income, investments and liquidity.

As a rule of thumb, the wealthier an individual is, the more complicated their income structure and finances are likely to be.

For instance, HNWIs tend to have their capital locked up in illiquid assets, spread across multiple jurisdictions. Meanwhile, they may have irregular or no formal source of income, and perhaps have not built up an attractive credit profile by repaying regular debts.

As a result, the process of applying and being approved for a mortgage can be far more complex for these individuals.

The standard ‘tick-box’ methodology applied by many high street lenders can pose unexpected complications, simply because how HNWIs make, spend and invest their money typically differs significantly from most prospective borrowers.

Further, HNWIs may not be UK residents, and they may also differ in the reasons they want or need a mortgage, both of which would create additional obstacles.

Many lenders will not supply finance for a property that will not be an individual’s primary residence, nor to an overseas buyer.

As such, HNWIs seeking finance for a buy-to-let investment or a second home will often struggle to find a mortgage on the high street.

Lenders and brokers require skill and experience

HNWIs being rejected for mortgages remains a prevalent issue.

As noted, they are ill-suited to the methodology that many mainstream, high street lenders apply to assess mortgage applications.

Meanwhile, their desire for a loan to purchase an investment property naturally rules out a swathe of other lenders.

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Clearly, HNWIs need to find specialist lenders and brokers who are well-versed in this type of client.

More specifically, they need lenders and brokers that have the skill, experience and resources to review each borrower and application on a case-by-case basis; to take in the full picture of the person’s financial profile, to understand the type of property they want to buy and why, and to assess their ability to repay a loan.

In essence, a more bespoke approach is required when working with HNWIs.

Lenders and brokers reliant on processing huge volumes of applications will, generally speaking, not have the structures and processes in place to operate in such a flexible manner.

Returning to the matter of rising interest rates – this economic shift over the past 20 months has only heightened the challenges that exist for HNWIs, thereby placing a greater onus on lenders and brokers to assist wealthier borrowers as they seek to navigate the mortgage market.

How higher rates affect HNWIs

For more than 13 years – between March 2009 and May 2022 – the BoE’s base rate resided below 1 per cent. It was never going to remain at such historic lows, which were largely indicative of economic turbulence stemming from the global financial crash, Brexit and the pandemic.

That rates would rise at some point was a given. As many who are longer in the tooth would also note, a base rate of 5 per cent or higher is also normal in the grand scheme of things – this was the general benchmark for much of the 1990s and 2000s, while the 1980s saw a base rate predominantly in double figures.

However, while a higher base rate is by no means atypical, the speed at which it has risen has undoubtedly created challenges for borrowers.

Jumping from an all-time low of 0.1 per cent in December 2021 to 5.25 per cent by August this year is a sharp rise, and coming after a prolonged level of such low rates, has placed a strain on many people who will have purchased properties with little consideration as to how such a shift could impact them.

HNWIs are no exception here. Again, while not featuring in the general discourse around higher rates and the impact on mortgage customers, HNWIs warrant attention and support.

Broadly speaking, HNWIs direct their investments towards high-value properties, such as those in prime central London. They may, for example, require a £5mn mortgage for the purchase of a £7.5mn townhouse in a prime central London postcode.

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Coupled with the size of the mortgages HNWIs take on is the length of their terms. HNWIs investing in a second home or BTL property may take on mortgages that have five or 10-year terms, unlike the 25 or 30-year terms that most UK homebuyers will be able to access.

If not on a fixed-term loan, the hikes to the base rate since the end of 2021 will have taken a notable toll on even very wealthy borrowers. With less time to spread out increased costs on an already large mortgage, some HNWIs will be struggling to make repayments.

Again, the complicated nature of their finances and investments comes into play. HNWIs might be asset-rich (owning all manner of assets) but have limited access to liquid cash.

Seeing their mortgage repayment skyrocket will require them to release equity from other investments or access cash from other sources.

As with the application process, it is important that preconceptions do not cloud the due attention that HWNIs require. Those lenders and brokers who are used to operating in this space will likely be acutely aware of this point.

Improving support for HNWIs

Butterfield Mortgages recently conducted a survey of mortgage customers in the UK. It revealed that just 44 per cent of borrowers feel they have received satisfactory guidance and communication from their mortgage providers since the initiation of the interest rate hiking cycle in December 2021.

This underscores the importance of lenders working with borrowers to recognise potential issues as they arise and, whenever possible, bringing forward solutions.

The necessity for this aid extends to HNWIs regardless of their affluence, and lenders must be unwavering in their dedication to aiding borrowers who need to continue to invest in property with a sense of assurance.

Alpa Bhakta is the chief executive of Butterfield Mortgages

By Alpa Bhakta

Source: FT Adviser