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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.

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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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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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Overseas-owned London homes forecast to climb over coming year

Overseas buyer appetite for London’s housing market is set to climb this year despite the mortgage crisis, offering a boost to prices as figures revealed the estimated value of foreign-owned homes in the capital stands at £55.2 billion.

There are 103,425 homes in the capital, including houses and flats, that are currently registered with an overseas correspondence address or to an overseas company.

The total value is based on current average prices and calculated by estate agent Benham & Reeves.

The firm said that equates to non-UK buyers accounting for 2.76% of London’s total existing housing stock (valued at just over £2 trillion).

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In the City of Westminster, foreigners own nearly 13% of all homes. In Kensington and Chelsea it is more than 10%.

Benham & Reeves submitted a Freedom of Information request to the Land Registry on properties with the title registered to an overseas correspondence address, and also looked at Government data on properties registered with an overseas company.

The research found the value of overseas-owned property in London is highest in the borough of Westminster at nearly £14.9 billion, and that represents a estimated 12.8% of total dwellings.

The study estimates that foreign homeowners are sitting on £84.2 billion worth of property across England and Wales. The total stock in those countries is valued at £7.9 trillion.

Marc von Grundherr, director of the estate agency chain, said: “Foreign home ownership levels have climbed by 3.2% in the last year alone and the vast majority of this activity is individual buyers, rather than offshore entities.”

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His firm expects a further 4% to 5% increase nationally over the coming year, with London being a big contributor. That comes as activity picks up post-pandemic “whether it be as an investment for their child’s education, for professional reasons, or to relocate completely”.

Von Grundherr said many international parties are less exposed to the impact of lenders passing on the Bank’s interest rate rises since they usually buy with cash. He said there are a number of “primarily cash buyers undeterred by increasing interest rates. Secondly, those who may be looking to borrow in order to buy still see the cost of doing so in the UK as fairly favourable compared to their own domestic markets”.

He added: “There are those who will protest over the increasing presence of foreign buyers within the London market, but it’s fair to say that they are very much delivering a well needed boost to current market sentiment and we certainly haven’t seen prices skyrocket as a result of this demand from foreign shores.”

He added that some buyers could also help provide rental homes at a time when many buy-to-let landlords look to sell up amid rising borrowing costs.

Looking at the new build sector, Amy Meyrick, head of international sales and marketing in real estate consultancy CBRE‘s residential team said: “There is a preference for developers to sell a proportion of units off-plan before construction starts, and international buyers are typically more willing to commit to this. Those who are equity-driven and cash buyers play an important role as they are less affected by the current mortgage rate environment.”

By Joanna Hodgson

Source: Evening Standard

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BTL mortgage drought hits UK expats

A growing number of UK homeowners working overseas are finding themselves grappling with skyrocketing mortgage rates when renting out their properties, the Financial Times reports.

The newspaper says that these individuals are often required by lenders to switch from standard residential loans to ‘consumer buy-to-let mortgages’ – usually at higher interest rates.

In recent months, these rates have experienced a sharp increase, fuelled by the expectation that the Bank of England will push up rates to tackle inflation.

The situation is further complicated by the falling number of products in the expat mortgage sector.

Banks discontinued expat mortgages in early 2020

The FT says that many major banks discontinued expat mortgages in early 2020, as the UK’s exit from the EU imposed fresh regulatory challenges for British banks providing financial services throughout the bloc.

When expat borrowers reach the end of their fixed-rate agreements and seek refinancing, they may encounter interest rates as steep as 8% or 9%, according to lenders and mortgage brokers.

Some banks have even started rejecting expat remortgage applications or requests for larger mortgages.

And while some banks continue offering mortgage transfers – where borrowers receive a new rate offer from the same lender – the rates are significantly higher than before.

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BTL mortgage market for non-UK residents

Lorraine McLean, head of BTL mortgages at Skipton International, which is based in Guernsey, said the bank had seen strong demand from expats who had been offered ‘a ludicrous rate’ when renewing – or nothing at all.

The bank said it had seen a 40% rise in completions in the first quarter of this year, compared with last year.

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UK-based lenders lost the so-called ‘passporting’ rights

The FT article says that when the UK left the single market for financial services, UK-based lenders lost the ‘passporting’ rights that saw them to do business in any EU country with minimal extra authorisation.

One director at a major lender told the newspaper that before Brexit, lenders in the UK lending to EU or UK citizens across the EU had to show they were following lending rules in the UK.

Now they must follow the regulations in the borrower’s country of residence – and lenders don’t have the appetite or capacity to do this.

The lender was offering transfers on expat buy-to-let mortgages, the director said, but no longer offered loans to new expat customers and did not allow expanded mortgage borrowing for current customers.

Source: Property 118

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Expert Mortgage Brokers are Helping UK Expat and Foreign National Investors to Combat Rising Mortgage Rates

What’s Happening to Mortgage Rates?

Mortgage rates are on the rise again, with the Bank of England continuing to increase interest rates to combat high inflation. The Bank of England’s base interest rate is now at 5%. The future outlook does not look to bright either, with analysts now predicting that interest rates will peak at 6% before they start to come down in mid-2024. ‘In short’ says Stuart Marshall ‘rising interest rates are massively increasing the cost of borrowing for UK expat and foreign national investors. It’s also reducing availability in the mortgage market, with lenders being forced to withdraw hundreds of products to keep pace with the changing cost of borrowing.’

How are the Higher Mortgage Rates Affecting Landlords?

Higher mortgage rates are obviously increasing the monthly cost of managing an investment. However, they are disproportionately affecting the 20-30% of landlords with higher LTVs of between 50 and 75%. For these investors, huge amounts of rental income are having to be devoted to mortgage repayments. And in some cases, rental increases cannot cover these higher costs.

The higher mortgage rates should discourage many UK expat and foreign national investors from investing in higher value areas like London and the South East. In fact, because these regions are so expensive, sales in these regions account for 51% of all landlord sales. These areas already offer lower rental yields because of their prohibitive price, even more reason to look toward more affordable areas.

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How Can Expert UK Expat and Foreign National Mortgage Brokers Help?

Because of the way the market’s moving at the moment, having an expert UK expat or foreign national mortgage broker on hand is a necessity. The mortgage market is moving quickly but the UK expat and foreign national mortgage market is moving even quicker. There are a number of ways that expert UK expat and foreign national mortgage brokers are helping both new and existing UK expat and foreign national investors at the moment.

‘One way that expert UK expat and foreign national mortgage brokers are helping UK expat and foreign national investors at the moment is to help lock in a fixed rate mortgage deal in advance. With interest rates climbing so rapidly at the moment, locking in a fixed rate deal can mean massive savings. It also helps UK expat and foreign national investors to plan their finances, as they’ll know exactly how much they will need to pay month-to-month. In a turbulent market, stability goes a long way to success! An expert UK expat or foreign national mortgage broker will have the best awareness of the available deals and access to exclusive deals too, which can make huge differences with current mortgage rates. Mortgage rates can be booked in in advance too, which can be useful in avoiding higher rates if the existing deal is coming to an end.’

‘We are also advising some customers to opt for a longer mortgage term. This can help to offset the increased cost of higher mortgage rates, keeping monthly payments lower. While this amounts to more interest payments over the term of the mortgage, for savvy investors, overpayment options mean that UK expat and foreign national investors can still pay off their mortgage in a significantly shorter time than the term of the mortgage. Overpaying is also another fantastic way to reduce the cost of managing an investment. Find out how much overpaying could save by using our overpayment calculator.’

‘Injecting additional equity when refinancing is another good option for UK expat and foreign national investors, and something we’re suggesting to many customers seeking advice from us. This will lower the LTV and mean that the higher mortgage rates will have a lessened effect. However, for UK expat and foreign national landlords with a low yielding property or a depreciating property value, it’s likely that this option will not be preferable. For some investors, the best option will be to sell and use this money to buy a more lucrative and manageable property. An expert UK expat or foreign national mortgage broker will be able to assess the needs of an investor and decide whether this is necessary, and how best to conduct this.’

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Not All Doom and Gloom

‘Despite the rising mortgage rates, there are still plenty of reasons for UK expat and foreign national investors to invest in the UK property market. An expert UK expat or foreign national mortgage broker can help to find the right deal on the right property, making sure that the investor can manage the cost of the investment and take a profit too. It is also a good market for UK expat and foreign national investors are there is a strong demand for private rental properties at the moment. There are currently 33% less homes available to rent than the five-year average, while demand is 50-85% higher than the five-year average. Further, according to Zoopla, there are more homes being lost from the rental market than are being replaced by the flow of new investment. This presents an opportunity for UK expat and foreign national investors to invest in the right property and capitalise on strong demand in the UK rental sector. Rents are also rising fast as a result of this demand – now at 10.4% growth from last year. Further, UK expat and foreign national investors can pick up a bargain as the sales market is currently weak and there are bargains to be had, especially with a quality mortgage deal in place, which will increase UK expat and foreign national buyer power.’

Source: Newswires

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Fall in demand expected in UK property market from overseas buyers

THE downturn in house prices is likely to lead to a fall in demand from foreign buyers in the UK property market, a leading expert has predicted.
New data revealed earlier this month revealed that more than 70 per cent of ‘prime central London’ properties sold so far this year have been bought entirely in cash.
The report by estate agents Savills has fuelled concerns that rich overseas buyers are snapping up properties at the expense of working Londoners.

But Jonathan Rolande, from the National Association of Property Buyers, said demand from overseas investors was likely to become “subdued”.

He said: “London has continued to attract investment from the wealthy despite the downturn in prices in the last year. The minor fluctuations can be overlooked by those who still see the UK, and central London in particular as a safe place to leave their money. For many buyers, an inflation rate of 9% is nothing compared to rates in some countries.

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Outlining what he thinks will happen next, he continued: “With the hope of substantial gains in the property sector fading fast, demand from foreign cash buyers will soon be more subdued. However, the trusted nature of Britain’s legal system around property means London will still be an attractive prospect for those who stand to lose more by leaving capital in their home country.

To redress the inequality felt by many Londoners, another increase in Stamp Duty for these buyers may well help to do so but the Government walks a tightrope. The huge wealth that these investors bring to the UK would be missed if taxes were set so high, and they were deterred from coming here in the first place.

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Mr Rolande added: “It is therefore more likely that the general downturn in prices will serve as its own deterrent. Ironically, this also means that many locals will still be unable to afford a city property as mortgage lending rules tighten and higher interest rates make borrowing even more expensive, despite lower asking prices.”

A total of 71 per cent of prime central London have been bought mortgage-free in the seven months from January. That compares with about 35 per cent for the UK as a whole.

It comes as soaring inflation has led the Bank of England to push interest rates to a 13-year high of 5 per cent, which has in turn led banks to raise mortgage rates, making large home loans increasingly difficult to afford.

Source: Evesham Observer

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Hong Kong buyers dominating foreign homeownership in England & Wales

House hunters from Hong Kong have been found to be the most prolific overseas buyers operating in the nation’s residential market, accounting for over 13% of all foreign-owned homes in England and Wales, according to newly released market analysis.

London lettings and estate agent, Benham and Reeves, submitted a Freedom of Information request to the Land Registry to ascertain the 50 most prominent foreign nations represented among individual residential property owners in England & Wales, and how many properties they own.

According to the data, buyers from the 50 most represented foreign nations among owners of homes in England & Wales combine to own 187,275 properties.

Hong Kong buyers most prominent nation

Buyers from Hong Kong own the largest proportion of these properties, with 24,759 homes representing 13.2% of the aforementioned total.

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Buyers from Singapore own 15,752 properties or 8.4% of the total; while buyers from the U.S. account for 6.4%.

Buyers from the UAE account for 5.7% of the total, while buyers from Ireland (5.3%), Malaysia (5.2%), China (4.6%), Australia (4.4%), Kuwait (4.3%), and France (3.7%) are also strongly represented on the national housing market.

Increase in foreign buyer numbers

These figures come after the total number of properties owned by buyers from the top 50 foreign nations increased by 3.8% between January 2022 and January 2023.

Ownership for Chinese buyers has increased the most in the past year, rising by 18.8% to own 8,736 properties.

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Hong Kong nationals have increased their presence by 11.6% since 2022, and Israeli buyers have increased their footprint on the national housing market by 9.8%.

Significant increases have also been recorded among buyers from Gibraltar (6.7%), Austria (6.7%), Turkey (6.7%), Egypt (6.3%), Norway (5.1%), Germany (4.8%), and Sweden (4.7%).

Among the top 50 most represented nations in England & Wales’ housing market, three have actually seen their ownership proportion decline in the past year.

Buyers from Ireland now own -3.5% less property, buyers from Taiwan have reduced ownership by -3.3%, and Russian buyers now own -0.5% less property than they did at the start of 2022.

Director of Benham and Reeves, Marc von Grundherr, commented:

“It’s no secret that England & Wales is a hugely attractive market for overseas property buyers, with London being a particularly desirable location. The stability of our property market offers reliably a profitable space for investment buyers, and our country, with its rich history and culture, has long held great appeal for people looking to buy outside of their home countries.

“Many experts believed that Brexit would result in there being fewer overseas owners as access to the EU was reduced and the anticipated economic struggles removed some of the profitability of investing in our great nation. Our exclusive research reveals that none of this has come to fruition and that, in fact, our market has only become more popular.

“While this popularity isn’t limited to one single nation, it’s certainly being driven by Hong Kong buyers who continue to be the most prominent foreign nations operating within our bricks and mortar market.

“This is certainly no new trend and Benham and Reeves has had a local Hong Kong office since 1995, helping those who are looking to purchase in England and Wales. However, it’s fair to say that our team of experts in Hong Kong have never been busier and we expect this to remain the case going forward.”

Source: Property Reporter

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BTL mortgage drought hits UK expats

A growing number of UK homeowners working overseas are finding themselves grappling with skyrocketing mortgage rates when renting out their properties, the Financial Times reports.

The newspaper says that these individuals are often required by lenders to switch from standard residential loans to ‘consumer buy-to-let mortgages’ – usually at higher interest rates.

In recent months, these rates have experienced a sharp increase, fuelled by the expectation that the Bank of England will push up rates to tackle inflation.

The situation is further complicated by the falling number of products in the expat mortgage sector.

Contact us today to discuss Expat Mortgages and how we can assist you.

Banks discontinued expat mortgages in early 2020

The FT says that many major banks discontinued expat mortgages in early 2020, as the UK’s exit from the EU imposed fresh regulatory challenges for British banks providing financial services throughout the bloc.

When expat borrowers reach the end of their fixed-rate agreements and seek refinancing, they may encounter interest rates as steep as 8% or 9%, according to lenders and mortgage brokers.

Some banks have even started rejecting expat remortgage applications or requests for larger mortgages.

And while some banks continue offering mortgage transfers – where borrowers receive a new rate offer from the same lender – the rates are significantly higher than before.

BTL mortgage market for non-UK residents

Lorraine McLean, head of BTL mortgages at Skipton International, which is based in Guernsey, said the bank had seen strong demand from expats who had been offered ‘a ludicrous rate’ when renewing – or nothing at all.

The bank said it had seen a 40% rise in completions in the first quarter of this year, compared with last year.

Discover our Expat Mortgage Broker services.

UK-based lenders lost the so-called ‘passporting’ rights

The FT article says that when the UK left the single market for financial services, UK-based lenders lost the ‘passporting’ rights that saw them to do business in any EU country with minimal extra authorisation.

One director at a major lender told the newspaper that before Brexit, lenders in the UK lending to EU or UK citizens across the EU had to show they were following lending rules in the UK.

Now they must follow the regulations in the borrower’s country of residence – and lenders don’t have the appetite or capacity to do this.

The lender was offering transfers on expat buy-to-let mortgages, the director said, but no longer offered loans to new expat customers and did not allow expanded mortgage borrowing for current customers.

Source: Property 118

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Buy-to-let mortgage repayments up 32% in the last year

The cost of maintaining a monthly buy-to-let mortgage interest payment has climbed by 75.7% in the last year, with those making a full mortgage repayment each month seeing an increase of 31.6%, according to new research from Octane Capital.

Octane Capital analysed the current cost of the average buy-to-let mortgage and how this monthly repayment has increased in the last year as interest rates have climbed.

The research shows that currently, the average buy-to-let investor is borrowing £217,364 after placing a 25% deposit on the average UK property price of £289,819.

With a current average buy-to-let mortgage rate of 5.32%, this would see the average investor pay back £1,312 when making a full monthly repayment.

The average mortgage rate has increased by 2.12% in the last year alone, meaning that the average monthly cost of a full mortgage repayment has increased by 31.6%, adding £315 to the cost of buy-to-let borrowing.

However, many buy-to-let investors will opt to simply maintain the mortgage secured on an investment property by way of monthly interest-only repayment

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The figures from Octane Capital show that in the current market, the average interest-only monthly repayment has climbed to £964 per month, an annual increase of 75.7%, or £415 per month.

Despite this increased cost, investor appetites for buy-to-let investment remains strong and previous research by Octane Capital shows that the total value of loans issued to buy-to-let investors has climbed by 12% over the last year, one of only two sub sectors to see positive movement two years in a row.

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CEO of Octane Capital, Jonathan Samuels, commented: “It’s not just residential buyers that will have shuddered at the news of an eleventh consecutive interest rate hike last week, with buy-to-let investors also seeing the cost of borrowing climb substantially.

“These increased mortgage costs will further reduce a profit margin that has already been dented due to numerous government legislative changes in recent years.

“Despite this, we’ve actually seen an increase in the total value of buy-to-let loans issued in the last year which suggests that, despite all that’s been thrown at them, the nation’s landlords are still largely undeterred and the buy-to-let sector itself remains a lucrative one for those looking to invest in the right areas and with the right financing in place.”

By ROZI JONES

Source: Property Reporter