Mortgages 

Buying UK property as a US expat

This article is part of
Guide to advising US expat clients

Buying UK property as a US expat

Property is a popular asset class separate and distinct from fixed income and equities, and therefore, can be used to diversify a client’s portfolio.

US expats face several obstacles when taking out a mortgage in the UK; if they are eligible, they are faced with different rules than in the US, and so there are several financial considerations clients must be aware of before buying property.

But that is not to say it is either difficult or straightforward to obtain a mortgage for these individuals, it simply depends on their circumstances, says Tim Scorer, partner and mortgage and protection consultant at Austin Friars.

One of the first considerations is establishing a client’s eligibility, or their right to reside in the UK.

Eligibility

But the approach taken by UK lenders towards US expats varies significantly, says Mr Scorer.

Some lenders will decline US clients altogether, some may be able to lend subject to certain criteria being met, while others will require that the client has resided in the UK for a certain period of time – say up to three years – but their doors will remain open, he explains.

“US expats with indefinite leave are generally able to obtain a mortgage with high street lenders quite easily, in the same way as an EU passport holder resident in the UK," he says.

“If, on the other hand, the client does not have indefinite leave and they reside in the UK on a visa of some kind, the pool of lenders reduces significantly.”

But, the pool of lenders reduces even further if the client is paid in a foreign currency, making it even more challenging to find a willing mortgage lender.

And clients in this scenario will generally need to seek the assistance of a private bank, which typically have more appetite for such business, notes Mr Scorer.

If US expats do not have indefinite leave to remain in the UK, although the pool of lenders significantly reduces, they can potentially still obtain a mortgage but their eligibility is subject to specific lending criteria being met, and again these criteria will vary from lender to lender.

Such variation in lending practice highlights the importance of good advice, he adds.

But another important consideration is whether the US expat already owns property outside of the UK.

Mr Scorer explains that, depending on the nature of the property they own, the costs of this property may be factored into the affordability calculation by the UK lender.

He says: “Culturally US expats have a good level of knowledge and understanding and are very receptive to advice.

“Austin Friars would strongly recommend US expats always seek advice regarding their obligations, both in the UK and particularly in the US, to avoid incurring unnecessary financial penalties.”