Buy-to-let  

How providers are catering to expat landlords

This article is part of
Guide to unusual buy-to-let

How providers are catering to expat landlords

It is not unusual for UK residents to one day move abroad to live and possibly work, or to retire abroad.

But many UK expats will still want to keep ownership of a property in their home country, even if they are living overseas for the foreseeable future.

For example, they may want to keep the property they called their family home and rent it out, or purchase a buy-to-let (BTL) property to keep a foothold in the UK, while at the same time earning some income.

Whatever the reason, what type of mortgage products cater to this specialist market? 

Guy Nyirenda, a partner at Coreco, observes: “There has been a large increase in the availability of expat mortgages in the past few years as lenders look for other ways to meet market demand.” 

As with holiday lets in the UK, it is generally a part of the market catered for by more niche lenders. Often, this area is provided for by building societies or the offshore arms of some UK banks, he notes. 

Mr Nyirenda adds: “Often expats have very good income and very low outgoings which make them a strong borrower in the eyes of the lenders.

“So long as the lenders are happy with where the borrower is resident (there are some countries that are deemed a higher risk than others) and they have a stable income, preferably with a recognised company, then the lenders are happy to lend. 

“As per normal BTLs, the lenders look for the rent to support the mortgage, along with the usual financial strength of an expat borrower adding to this.”

Mike Taylor, head of products and savings at Mansfield Building Society agrees it is a niche market even though there is a small, but increasing, number of lenders offering expat buy-to-let mortgages.

“Expat landlords generally need an individual lending and underwriting approach, rather than one that relies solely on automated decision making,” he points out.

“There are a number of mortgage brokers who specialise in the provision of financial and mortgage advice to UK citizens living abroad and this is where prospective expat landlords should start their research.”

The Mansfield BS launched an expat buy-to-let mortgage in June this year, with up to 70 per cent loan-to-value (LTV) for expats in Financial Action Taskforce (FATF) member countries, Hong Kong, and member states of the Gulf Corporation Council.

“In common with most lenders in this market we require a UK service address and a UK based sterling bank account,” he says.

Despite the differences, he reassures potential expat landlords that a lot of the documentation that is required is not that unusual compared to a typical mortgage application.

Business decision

Karen Bennett, managing director of commercial mortgages at Shawbrook Bank, says: “Often, the motivation for moving abroad will be an attractive salary at a reputable firm, making these affluent customers for any lender.”