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Expat mortgage market growing as lenders expand offerings

Buyers from overseas continue to seek UK property investments, and obtaining an expat mortgage is no longer the barrier it once was.

British citizens who do not reside in the UK have been increasingly seeking loans to purchase property here, according to Dudley Building Society. As a result, the lender has enhanced its expat mortgage availability to cater for its growing client base in this field.

The firm has increased its maximum loan size for expats from £1 million to £1.5 million, which will make a significant difference to the types of properties that can be purchased by those living abroad. It is also offering a two-year fixed rate expat mortgage with an LTV of up to 80% at 3.89%.

While borrowing can sometimes be more of a challenge in the “underserved” and “niche” area of expat mortgages, Dudley Building Society’s new offering aims to open up the market for more buyers. The lender has also enhanced its holiday let loan offering at the same time.

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New expat mortgage opportunities for 2022

Commercial director, Kieron Blackburn, said: “We see continuing demand from expat and holiday let customers and it seemed appropriate that we look to enhance our offering in line with our recent increase in maximum loan sizes for our standard large loan product. There are now only two other lenders who can currently match our new loan sizes for expats, and two other lenders that can match our loan sizes for holiday let mortgages.

“Dudley can be very pleased with the progress it has made this year. Thanks go particularly to our introducers for their continuing support. It is satisfying to know that as we approach 2022, the Society is in great shape to go on providing a robust proposition based on strong products, innovative solutions in underserved niche areas like the expat market and underwriting that always seeks to understand the human story behind each application. We are looking forward to being on the road next year and taking our proposition to more brokers.”

Many of the country’s mainstream banks now offer mortgages specifically for expats, alongside a number of specialist lenders. Expat buy-to-let mortgages can also be obtained for property investors living abroad.

Buy-to-let from abroad

If you want to buy a property to generate rental income while you live abroad, you’ll need a “buy-to-let expat” mortgage. But property you purchase to be your primary residence will require a “residential expat” mortgage.

To apply for either, you’ll need a substantial deposit (ideally held in a UK bank account) and evidence of the deposit’s source. You’ll also need proof of residency (for the past three years) and proof of income for a residential mortgage. For a buy-to-let mortgage, borrowers will be assessed on their expected rental income.

You should also take the repayment currency into account. The Mortgage Credit Directive (MCD) means that lenders must monitor exchange rates to ensure foreign currency loans remain affordable for the borrower. Some specialist lenders also have an “approved currency” list.

Where are overseas investors buying?

According to the Centre For Public Data (CFPData), who compiled the research from HM Land Registry, more investors than ever are branching out from the traditional London market. While a decade or more ago, London was the go-to spot for a lot of foreign investment, many are seeing the value of backing new areas elsewhere.

The data shows that, in particular, Liverpool, Manchester, Salford and Leeds are attracting bigger numbers of overseas investors now. All of these areas are notable for their regeneration, redevelopment and investment overhauls in recent years, making them a genuinely attractive alternative to pricier London. The CFPData believes most of the foreign investment in these cities is in flats, supporting the thriving rental demand in these areas.

By Eleanor Harvey

Source: Buy Association

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Kensington and Chelsea tipped to lead UK property market in 2022 as overseas buyers return to London

The return of overseas buyers means expensive central London houses should lead the British property market next year when it comes to price growth, according to estate agent Winkworth.

Prime London real estate suffered during the pandemic as overseas buyers fled and some Londoners moved out of the capital. But international buyers are now returning, with booming demand in areas like Kensington and Chelsea.

Winkworth Chief Executive Dominic Agace said demand for prime central London properties was up 44% on pre-pandemic levels in the last quarter, compared to just 4% for suburban properties.

Agace said on the company’s podcast: “We will see the return of prime central London. It has been most affected by the pandemic and it hasn’t gone anywhere for the past six years. There will be significant pick up.

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“We are likely to see six to seven per cent growth next year. The country markets will continue at a lower rate, driven by a lack of supply, at around four to five per cent, with suburban London staying steady at three to four per cent, apart from the super suburbs that generally outperform.”

House prices have been rocketing during the pandemic as people search for bigger properties to accommodate the shift to working from home. Supply has failed to keep up with demand.

Prime properties in central London boroughs like Camden and Kensington have failed to keep pace with national price growth but the market is starting to pick up.

Last month estate agent Knight Frank said prime central London prices had risen by 1.1% so far this year thanks to the return of rich international buyers. Prices have risen consecutively for the last six month — the first time that has happened since before the Brexit referendum.

By Oscar Williams-Grut

Source: Evening Standard

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The opportunity in the changing nature of overseas landlords

There is a new wave of overseas investors looking to buy into the UK rental market. We are seeing an emerging trend of moderately wealthy individuals who are looking for a relatively safe place to invest with a strong currency.

These are not the Pandoras Papers billionaires looking to hide cash in premium property, these people can only buy with a mortgage and even then, they need a tenant to pay rent to cover the cost of borrowing.

These new investors are similar to smaller UK landlords and are filling a gap in the private rental sector being left by a fall in domestic landlords.

The new overseas buyers look for somewhere safe to put their money that will produce sufficient income to cover their investment. Developers know this and this demand is underpinning the viability of larger and more impressive schemes. These developments boast top quality leisure facilities, hotel style concierge services and unrivalled communal areas.

This creates opportunities for British young professionals to rent quality accommodation and for UK management companies to let and manage the units on behalf of these investors. Developers are creating quality accommodation in city hubs such as Manchester and Leeds, knowing that many buyers will be investor landlords who will rent them out to the local population. This works well for the local area as the properties are filled quickly and the residents can engage with and be part of the community.

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However, these more modest investors need a mortgage in order to buy, which creates an opportunity for the mortgage finance market. There are very few lenders in the UK who have expertise in dealing with overseas buyers like this, with BC Invest being one of them. It is important to work with a specialist who can help smooth the borrower journey and deliver swiftly – for example committing to providing a loan offer within seven days of payment.

There is an opportunity here for the mortgage broking community to tap into this growing client base and advise foreign buyers on UK buy-to-let mortgages. They will need your advice, as this is a complex area and there are few products available.

In our own experience, we find that these clients make good credit-worthy borrowers but have difficulty accessing property finance due to their non-resident status. We see a growing demand from our developer relationships to have funding for their buyers, which we can provide, but there is an advice gap in this space.

Many lenders will support applications from expatriates who hold a UK passport with a UK bank account. It is a completely different ballgame with genuinely overseas investors when this may be their first significant transaction in the UK with no financial footprint here. Getting a UK bank account can be nigh on impossible and proving income can be challenging.

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This is why we work with a network of experienced brokers who have identified the opportunity within this space. UK property transactions can be incredibly opaque and frustrating at times, even when you have grown up here,. Whilst we may take our understanding of the legal system for granted it is not always user friendly and can be a worryingly slow process for international buyers used to immediacy of information. This is why the broker plays such a crucial role in the process and the efforts of these brokers to translate and smooth the process is hugely appreciated.

This year has demonstrated the resilience of the residential property market against a backdrop of economic uncertainty. Transaction volumes have at times hit record amounts and despite increase taxation, the international investor appetite has remained unwavering. We believe this international demand is set to grow and hence the demand for financial advice and support in these transactions will increase too.

Together we believe we are forging strong partnerships to support a challenging but rewarding market in a space where domestic landlords are scaling back. Providing transparency to an extremely opaque environment will allow the property market to continue to expand and the quality properties for the domestic rental occupiers will continue to improve.

By Richard Boyle

Source: Mortgage Strategy

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Overseas buyers return to London with apartments in high demand

Since the first UK national lockdown in March 2019, the presence of overseas buyers in the London market has been severely impacted, however, with the return of international travel, demand is returning to pre-pandemic levels, where two-bedroom apartments are proving most popular.

According to research by London buying agency Astute Property Search, overseas buyers are ‘hedging’ 2021 prices in anticipation of a stronger 2022 market.

Matt Turner, Founder of Astute Property Search, says: “Many of my clients are British expats, with plans to move back to the UK in 3-5 years’ time. They are mainly looking for homes that can double up as rental investments to cover themselves before they’re ready to move back but are essentially buying now to attempt to hedge 2021 prices before the market fully recovers in 2022. In the past few months we have seen a huge rise in enquires from expat couples that are coming over and block booking viewings for properties that fit their profile.

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“One of our best transactions this year was secured in St John’s Wood, for a client based in Europe and looking for a city pied a terre. Due to travel restrictions, they were not able to physically be in the London and “their viewing” was undertaken through video calls. Close to 50 per cent of all apartments in prime central London were sold to international buyers pre-pandemic and it’s this inability to travel that has seen a lull in the market, so having us on hand to verify and negotiate allowed them to secure a fantastic deal.”

Astute Property Search predict that apartments will see a renaissance and an increase in demand will see prices rise sharply 2022, especially for two-bedroom apartments, so now is the time for investors to secure the best deal. Furthermore, the return to offices is predicted to recover the near pre-pandemic levels in 2022, which may lead to some finding their new commute to be too lengthy that will further increase demand for London flats.

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One lasting impact of the recent lockdowns is the increased demand for space, which has seeped from the house market to flats, with overseas buyers seeking value in larger apartments.

Turner adds: “The studio and one-bedroom flat market has dropped significantly and will take the longest to recover, so currently we are encouraging our clients to purchase apartments with a minimum of two bedrooms in locations where value is still there to find.

“Space and square footage are key and I would go further to say that for now two bedroom apartments will be in higher demand from prospective tenants. Working from home has become the norm with tenants sleeping in one bedroom and then using the other as an office. Units with dedicated outside space such as balconies, communal gardens, terraces all carry a premium on the rental market, so are proving popular with international investors looking for strong yields.”

Source: Property Funds World

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Major overseas investor shifts to long-term lettings from short-lets

A lettings agency with links to Saudi Arabian investors has produced a case study of how faith is returning to the long term lettings sector after the worries of the pandemic.

London and Manchester agency Orlando Reid cites one Saudi Arabian client, for whom they manage 26 properties in apartment blocks located in Belgravia and Knightsbridge.

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The prime central London portfolio ranges from one bedroom flats of 431 square feet to three bedroom apartments boasting 2,250 square feet, and with rental values starting at £2,100 pcm up to £8,000 pcm.

Orlando Reid managing director Baljit Arora comments: “Our investor client has recently moved his entire rental portfolio, located in Lyall Street, Lower Belgrave Street and Hans Place SW1, from short to long term lets.

“Having experienced unprecedented void periods during the pandemic from offering only short term lets, a switch to long term rental makes a lot of sense. The long term rental market has come back fighting and demand is consistent with the summer 2020 market.”

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Arora says that as travel restrictions have started to shift, London is welcoming back wealthy overseas students to attend universities, which is driving up rental property prices across prime central London.

This, along with more people returning to live and work in the city, is increasing demand across the rental sector, he says.

By Graham Norwood

Source: Letting Agent Today

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New UK Expat Buy-to-Let Investors to Profit from the City Centre

After last year’s depressed city centre rental market, city centre rents are steadily rising again. This trend is of particular interest to new UK expat buy-to-let investors, who are now starting to see the value to be had from city centre investments, whether off-plan or on a resale property.

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Pandemic Life Vs The ‘New Normal’.

‘What the pandemic created’ says Stuart Marshall ‘is a whole wave of people looking to move away from the city centre. During lockdowns where people were confined to their homes, the city centre lost out to rural and suburban areas as people searched out more space and proximity to green spaces. Consequently, the price of properties in the city centre fell a little in value, whilst rents also suffered from the falling demand. However, what this fall in cost has created is an opportunity for those UK expat and foreign national investors who recognise that normal life will eventually return to city centres – and in a big way. Along with the range of UK expat mortgages available to UK expats, city centre property is a very good way of entering the UK property market. Now that life is approaching the ‘new normal’, city centres are regaining some appeal. Their vibrant social scenes proving enticing for those who have been deprived for over a year. Workplaces are also welcoming back their staff for at least part of the working week, incentivising workers to move back to the city to avoid long commutes from the suburbs.’

How is the Rental Market Affected?

These changes are translating directly to the rental market and yields have risen because of a fall in the cost of city centre property and a subsequent rental recovery. For investors who bought in a city centre this year, the average gross yield has risen to 5.3% – up from 4.7% in 2020.

London.

‘London was of particular interest during the height of the pandemic. In effect a two-speed market came into being – with London growing negatively compared to the rest of the country. This was also true of London’s rental market. However, we did also note that the fall in the value of London property did present an opportunity for UK expat and foreign national investors looking to invest in the capital. Now that opportunity is beginning to manifest itself in the rental yields that investors are seeing. 35% of investors who purchased in London this year are reaping yields of over 5%, up from 30% in 2020. With prices still somewhat depressed, UK expats can still profit from a rental recovery in the capital. Rents fell to their lowest in London in April 2021, when they were 20.4% lower than the same time in 2020. However, by June rents had recovered slightly and were only 16.5% lower than the same time in the previous year. This upwards trajectory in rents points to a profitable future in the city for those UK expat investors canny enough to invest.’

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Across the Rest of the UK.

London is not the only area that is growing. The rest of the UK’s cities are also seeing growth similar to pre-pandemic levels. For new buy-to-let investors in cities outside of the capital, the average yield has risen to 6.2% from 5.9%. ‘And the future looks bright’ says Stuart Marshall, ‘with average gross yields in cities outside the capital at their highest level since 2016.’

New UK Expat Buy-to-Let Investors Take Note.

While cities are performing strongly, the areas outside of city centres have waned sightly as a result. New buy-to-let investors in areas outside of the city centre are also seeing 6.2% yields. However, this is down from 6.4% in 2020. Property is also more expensive in these areas with city centres still offering great bargains for savvy UK expat and foreign national investors, especially those who have access to some of the great funding deals available.

‘Expense and accessibility are the main thing for UK expat investors’ advises Stuart Marshall. ‘With Zoopla reporting that the average cost of a house has risen by 7.3% in the last year, desirable houses – typically a three-bed suburban family home – are getting harder to justify as an investment property. On the other hand, flats – typically in the city centre – have only risen by 1.4%. With many options available for flats including new build, re-sale and off-plan developments, city centre flats are a great choice for first-time UK expat investors. The lower cost of such properties only contributes to an easier investment and higher rental yields – especially as a return to pre-pandemic rental growth is on the horizon.’

Rental growth in the city is expected to continue to strengthen too. With the steep rise in property prices, prospective buyers are stuck in the rental market as they are unable to afford their own house. This shift means renting has become cheaper than buying and is the only option for many. Further, younger people are favouring renting in city areas to facilitate a strong social lifestyle revolving around clubs, bars, restaurants, live music, and many other attractions. Younger people are also living more fluidly, more willing to move, travel and change jobs, which is leading to a whole generation choosing to rent to avoid being ‘tied down’ with a mortgage.

Where to Look.

It goes without saying that city centre flats will be the properties of interest for new UK expat investors. They are affordable and there is good stock availability, along with good access to UK expat mortgages to allow funding of most property purchases. Further, they are currently being snapped up quickly in the rental market. However, the question remains where to invest. There is great regional variation in the price growth for flats and this will help to decide where to invest. The major UK cities are always a good place to start as they perform consistently well with rental yields and capital growth in those areas will contribute to the long-term profitability of the investment. In Wales, price growth for flats is only up by 0.9%, which presents an excellent opportunity for UK expats looking to invest – with Wales highlighted as a serious growth market in the near future. Other areas of interest are the North West, home to two of the most popular rental cities – Manchester and Liverpool – where price growth for flats is up only 3.4%.

Meanwhile, as noted above, London is in the midst of a rental recovery. However, price growth for flats in the capital is down by 0.5% – so London could present one of the best opportunities for UK expats looking to invest.

Source: EIN News

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UK Expat Buy-to-Let Investors Look North

In the search for higher returns, UK expat buy-to-let investors need to look beyond the capital to offset the impact of profit-eroding legislation.

Buy-to-let UK property has long been seen as a lucrative investment, often used to provide an inheritance for the investor’s children, as a pension alternative, or as an ancillary form of income. Buy-to-let investors are looking North. And UK expat buy-to-let investors need to be looking North too! There’s also been a clear growth in the number of buy-to-let landlords operating as a limited company compared to last year.

According to research from the BVA BDRC Landlord Panel for Q1 2021, this is the first time in over 4 years that a higher proportion of landlords are intending to expand their portfolio rather than reduce it (19% vs. 17%). The same research has also shown that 61% of landlords plan to use a buy-to-let mortgage to fund their next purchase and 29% of buy-to-let borrowers intend to remortgage in the next 12 months.

The Need for Higher Returns.

Due to legislative tax changes in the last few years, landlords are having to seek out areas that offer higher returns. In 2016, a 3% stamp duty surcharge was introduced for the purchase of second homes. In April 2020, it was announced that landlords could no longer claim mortgage interest as a tax expense. These changes have slowly eroded some of the profitability for UK expat and foreign national landlords. Despite this, landlord optimism in the near-term prospects for capital gains and rental yields has significantly increased year-on-year, by 26% and 24% respectively.

Landlords operating in London are most likely to have seen a fall in tenant demand in Q1 2020 and Q1 2021. So, where are UK expats and foreign national property buyers now looking? The answer is in so called ‘UK hotspots’ where higher returns offset the impact of the changing legislation and price entry points are a lot lower than some of the more traditional buy-to-let property areas.

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London Investors Looking Outside the Capital.

Between January and July 2021, 12% of UK property purchases were by investors. This was the highest since 2016 and is testament to the strength of UK property investment. ‘As a UK expat or overseas investor, it’s vital to see where investments are being made’ says Stuart Marshall. ‘Keeping track of these trends will help you to recognise where the most profitable areas will be when looking to invest.’

So, where should potential UK expat and overseas buy-to-let investors keep an eye on?

‘What’s really interesting to see’, continues Stuart Marshall, ‘is where the capital’s property investors are putting their money. 63% of homes bought by London-based property investors in 2021 have been bought outside the capital. This figure has been steadily rising for years – more than doubling from the 26% we saw ten years ago in 2011. The main driver for buying outside of London is obvious – the returns are higher elsewhere!’

Although a rental recovery is happening in the capital, it’s not enough to keep London-based investors there. Only 35% of investors who bought in London this year are seeing rental yields above 5%. Further, as of June 2021, rents in London were 16.5% lower than the same time a year ago, meaning investors who purchase in the capital are losing out on rental earnings. Though this has recovered from the 20.4% depression that we were seeing in April, it’s still not enough to keep UK expat and foreign national investors from looking elsewhere. For example, the average yield in cities across the rest of the UK is 6.2%. This figure is also the same for the average rental yield in areas outside of cities across the UK. So, London is falling far behind other areas of the UK and it’s forcing UK expat and foreign national investors to look elsewhere in the search for higher returns.

Where to Look for UK Expat and Foreign National Investors.

One area of interest, particularly when charting the behaviour of capital-based investors, is the North East. Here, landlords were responsible for almost a quarter of all purchases between January and July this year. ‘Both rental yields and capital growth in London are being far surpassed by Northern regions. And, increasingly, London’s investors are looking toward these areas for greater returns. For UK expats and foreign nationals looking to invest, taking note of this trend is important as it’s a strong indicator for where the best rental yields are going to be found. For example, in Middlesbrough and County Durham, London’s investors bought 28% and 25% of properties sold respectively in those areas in the last year. It’s clear to see why these areas have garnered such recent popularity with Middlesbrough and County Durham earning yields of 9.2% and 9.6% respectively.’

North West.

The North West continues to perform strongly when it comes to buy-to-let property investment. Though the average rental yield in the North West is currently lower than the North East – 7.8% compared to 9.1% – the North West is still a consistent favourite for UK expat and foreign national investors. ‘This may be to do with the incredible regional growth that we see in the North West’ muses Stuart Marshall. ‘In fact, the North West has the highest level of regional growth of anywhere in the UK. Regional growth in the last year has reached almost 12% in the North West, compared to the North East’s 9%. So, many UK expat and foreign national investors are favouring the North West because, in effect, you’re earning twice on your investment – once from the rental yield and once from the capital growth. As always, the best thing to do when looking to take out a UK expat buy-to-let mortgage is to talk to a specialist who can help to point you in the right direction and navigate some of the pitfalls.’

Source: EIN News

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Overseas investors ‘gearing up for return to UK property market’

More overseas investors could be poised to enter the UK property market following the disruption caused by the coronavirus pandemic, figures from an estate agent suggest.

Knight Frank said its web traffic data showed nearly a quarter (24%) of users looking at sales and lettings properties in August were based abroad.

This was the highest number since its figures started in January 2020. The average proportion in the 18 months to June was 17%.

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The number of international web users looking at lettings properties in August also exceeded those based in the UK for the first time since the start of 2020.

Demand has been driven by overseas students acting before the start of the academic year and returning corporate tenants as offices reopen, Knight Frank said.

Tom Bill, head of UK residential research at Knight Frank, said: “As the feeling grows that the worst of the pandemic is behind us, normal service will resume in the UK property market and I expect overseas investors and tenants to make their presence felt in the final quarter of this year.”

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By Vicky Shaw

Source: Independent

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Overseas Property Investors Conclude the Best Potential Sits Outside of London Property Market

For years, overseas property investors have concentrated mainly on the London property market. However, this is beginning to change. Indeed, Hong Kong and Saudi Arabia investors saw the potential in the regional markets outside London and have taken advantage of excellent price gains since 2020.

For the last 30 years, overseas property investors have pumped money into the London property market. Lots of jobs, a robust economy, and a booming property market made it an obvious choice.

But across the country, a similar story is emerging. Investors evaluate the property market searching for value and conclude that Manchester, Newcastle, and Leeds offer great potential.

Where are Overseas Property Investors Investing Outside London?

Between April 2020 and April 2021, home prices across the UK increased by 8.9%. In London, properties appreciated by 3.3%. However, in the northeast of England, house prices rocketed up by 16.9%.

But it’s not just appreciation rates that are making investors sit up and take notice. London house prices are twice that of the national average. In a pre-pandemic world, these discrepancies could be justified by proximity to employment. However, several factors have changed the game.

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Work-from-home has caused buyers to exit London in search of properties with more space. With fewer people obliged to commute daily, suburbs and regional cities are more appealing.

Meanwhile, successive governments have committed to a policy of decentralisation. While much of this process involves granting power to local governments, there are grants to encourage companies to set up regional offices. Indeed, Goldman Sachs announced a technology centre in Birmingham this April.

Where are Overseas Property Investors Going?

The majority of overseas property investors are focused on private homes for rent, particularly homes for young professionals. The business model is relatively straightforward: develop the property and keep the asset for rent, or sell it on, generally within Asia.

According to Savills, the combined investment into the property market in Manchester, Birmingham and Leeds was over £1bn in 2020. This figure constitutes a staggering £630m growth in two years. Better yields offered in the regions are one of the most significant factors in these increased investment flows.

Indeed, as long as regional cities offer better investment opportunities, the pattern will continue. Many major UK banks and finance are not interested in regeneration because of the risks involved. Without the help of overseas property investors, the UK’s housing shortage would be much worse.

Conclusion

For investors, finding opportunities outside London is producing higher yields. For many professionals, work from home is here to stay, which will allow a more flexible approach to buying housing in different areas.

With many cities around the country benefiting from the work of overseas property investors, other cities have begun to take note. With many areas in need of regeneration, these investment flows could be precisely what the country needs.

Written by Kelly Geeson

Source: Property Forum

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UK’s Expat Demographics & Latest Mortgage Trends

Introduction

As of 2019, people born outside of the UK – typically referred to as expatriates or expats – made up around 14% of the UK’s residents. That adds up to just under 10 million people. Now, all of these people need somewhere to live, so there is a lot of movement in the UK expat mortgage market every year. At the same time, many of these expats come with a fair amount of money in the bank, and UK property has long been seen as a sound investment. As a result, the number of expat buy to let mortgages on the average expat mortgage broker’s books has been rising steadily.

But what do we know about these expats? Where are they coming to the UK from, how are they affecting the UK’s demographics, and how are they coping with a mortgage market that is reeling from both Brexit and COVID?

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Overview of Expat Mortgage market

Expat Mortgage Brokers, banks and other property market professionals are seeing growing interest in expat buy to let mortgages and UK expat mortgages generally. Brexit may have cooled the desire for EU citizens buying 2nd homes in the UK, but it has done nothing to discourage EU nationals, whether expats, expat-hopefuls or not, to buy investment properties in the UK.

There are many reasons for this. The pound is weak relative to many major world currencies at the moment, and those whose currencies are more bullish – expats and investors from East Asia, Canada and the US, among many others – are eager to take advantage of that. After all, when the pound recovers, the value of their investment in their own currencies will rise dramatically. Overall confidence in the UK’s COVID vaccination program and economic recovery are high.

Other factors driving demand for UK expat mortgages and expat buy to let mortgages include the political troubles weakening China’s markets and the UK’s new Visa scheme, which allows BNO passport holders from Hong Kong to relocate to the UK easily.

Specialty Expat Mortgage Brokers are seeing a sharp increase in demand

Many mortgage brokers, banks and financial professionals who specialise in serving clients who work primarily in non-GBP currencies or who hold primarily offshore assets have seen a spike in interest beginning around January or February and continuing into the summer.

Some expat mortgage brokers have reported 3 times as many Hong Kong-based expat buy to let mortgage completions in the first quarter of 2021 than in a typical first quarter. Specialty expat mortgage brokers are seeing a corresponding increase in interest. It is not uncommon for enquiries for Residential Expat Mortgages and Expat Buy to Let Mortgages to have doubled recently, even discounting the extra interest from Hong Kong. Many tell us that even EU mortgage inquiries are on the rise, with around 30% more interest from that region in the last 6 months compared to the 6 before that.

Expat mortgage clients need special support, as it can be tricky to find lenders who are happy to accept payments that aren’t in sterling, or who have the necessary expertise to appreciate the value of offshore collateral.

Beyond Hong Kong, Expat Mortgage Brokers are seeing a lot of East Asian interest

Many overseas buy-to-let and residential expat mortgage specialists have reported year-on-year increases of 10% to as high as 20% from East Asian property buyers. Part of the reason for this is a kind of ‘perfect storm’ effect between London property prices actually falling by 3.4% across 2020 (measured in GBP) and the strength of their own currencies.

Over the course of 2020 a South Korean expat mortgage customer would have seen an effective 6.8% fall in London housing prices in their own currency. The price of an expat buy-to-let mortgage in Chinese yuan fell by 6.2% over 2020. Likewise, the price in Japanese yen fell by 5.6%

There have also been quite a few enquiries about UK Expat Mortgages from property buyers in Canada and the United States. Contrary to what many experts had predicted following Brexit, many expat buy to let mortgage customers in North America seem to feel that the UK is a more attractive place for property investment than the EU.

 A large amount of Expat Mortgage interest comes for UK nationals living overseas.

Another growing source of expat mortgage customers are UK citizens currently living abroad and paid in foreign currencies, but prefer to invest in UK properties. Many UK expats live in places like Germany, Paris, the UAE or the USA, and wish to invest in UK property on a Expat Buy to Let basis or wish to buy a home for family members who do live in the UK. There is an especially high amount of interest at price points around £500,000. Many expat mortgage professionals also report a growing interest in buying flats, which had begun to fall out of favour early in the pandemic.

Because these customers are not paid in sterling, though, they have discovered that they need to seek out specialist expat mortgage brokers like Expat Mortgages UK.

Who are these Expats and where are they coming to the UK from?

There are more people who were born overseas living in the UK now than ever before. Even after Brexit, there has been a steady increase. In 2004, some 5.3 million UK residents were expats. That number had nearly doubled to 9.5 million in 2019. The growth of the UK’s foreign-born has slowed since around 2016 when many began emigrating, but the overall figures still indicate substantial growth.

Brexit has been responsible for a demographic shift, of course. The last decade had seen EU-based immigration rising more rapidly than immigration form other countries. However, the majority of UK immigrants came from non-EU countries, and Brexit has done little to slow it. In 2019, for example, around 38% of UK immigrants came from the EU.

Compared to the native-born UK population, immigrants tend to be in the 26-64 age range. As of 2019, 70% of immigrants fell into this ‘working’ age category, whereas only 48% of UK born residents did.

Around 19% of UK natives were age 65 or older, whereas only 11% of migrants were. However, this varies substantially with country-of-origin. 17% of EU-14 immigrants were age 65+, but only 1% of those from Bulgaria and Romania were 65 or older.

At the other end of the spectrum, the demographics are more similar. UK natives aged 16-25 make up 12% of the population, and 11% of the immigrant population. Again, this varies by place of origin. Some 15% of EU-8 and EU-2 immigrants were younger, whereas only 5% of immigrants from India were aged 16-25.

Where do Immigrant Expats come from?

As of 2019, the last date we have good figures for, most of the expats coming to live in the UK came from either India, Poland or Pakistan. India contributed around 9% of the total immigrant numbers, as did Poland. Pakistan was slightly behind, at 6% of the total. Poland had been solidly in first place until around 2018. Roughly 100,000 Poles left the UK in 2018 and 2019.

What brings Expats to the UK?

The most common reason given for non-EU immigration was ‘family reasons’, at roughly 49%. Another 21% of non-EU immigrants said they came to work. Many of these people entered on family visas, and therefore are more likely to settle permanently in the UK compared to those on student visas or work visas.

Among EU-based immigrants, 48% said they came to work. Those numbers are even higher for immigrants from new EU member states – 62% of EU-2 immigrants came to work, and 59% of those from EU-8 countries.

Where do Immigrant Expats tend to live?

Unsurprisingly, London has a higher immigrant population than any other region in the UK. In 2019 35% of all immigrants to the UK lived in London and a further 13% lived elsewhere in the South East – accounting for just under half of all immigrants, more than 4.5 million. By comparison, only 10% of the UK’s native-born population lives in London.

On the other end of the spectrum, Northern Ireland, the North East and Wales each received only 1-2% of 2019’s immigrants to the UK.

Summary

Expats make up around 14% of the UK’s resident population. Expat mortgage brokers – those who specialise in serving clients who either currently work or have worked primarily in non-GBP currencies, or who hold primarily offshore assets – are seeing growing interest in Expat Buy to Let Mortgages and UK Expat Residential Mortgages generally.

This may be because at the moment the pound is weak relative to many major world currencies, but confidence in the UK’s COVID vaccination program and economic recovery are high, so that trend is expected to reverse. In short, money spent on UK properties now will be worth more in the Expat’s home country soon. Expat mortgage clients typically need specialist advice and guidance, as it can be tricky to find specialist lenders who are happy to accept payments in overseas currencies and with different work and immigration statuses etc.

If you would like to speak with one of our Specialist Expat Mortgage Advisors today, simply get in touch via the Short Form below, or call us on Expat Mortgage Broker services.