For expats, UK property has always been a good investment, either as a way of putting their hard-earned cash to work, or as a way to acquire property that’s ready and waiting for them when they do eventually decide to return to good old ‘blighty’.
Chancellor George Osborne, as expected, confirmed in his Autumn Statement foreign investors who don’t reside in the UK will have to pay capital gains tax (CGT) on UK residential property from April 2015.
Although he’s clearly targeting Russian oligarchs and Middle East oil billionaires, expats will also have to pay CGT.
But for most it’s a bit of a red herring, because capital gains tax is already payable by anyone who sells a property which isn’t their main residence. The change also brings the UK in line with other investor markets such as New York and Paris.
Expats wanting to either expand their UK property portfolio are also encountering an additional problem, which is that the number of UK lenders willing to lend to expats is falling. When the Halifax decided to pull out of this market it left a major void, but a number of lenders continue to offer buy-to-let mortgage deals for expats.
So what are some of the key issues expats need to consider when applying for a mortgage?
Lenders will usually want to see the applicant still has a financial foothold in the UK. So, for example, they must have a UK bank account from which their monthly direct debits can be paid and they must have a recent credit record, such as having a mortgage in the last 3 years, so the lender can see a satisfactory credit history. The applicant must have a UK solicitor so, in the event of default, there is someone in the UK to whom notice can be served.
The expat market represents a real opportunity for any mortgage broker that is able to tap into it and with house prices strengthening once again, it looks likely more expats will be looking to buy UK property.
Peter Izard is head of mortgages at Saffron for Intermediaries