Landlord and BTL Blog: BTL investing for expat workers

Wednesday, October 12, 2016

BTL investing for expat workers

Jane Simpson, at Property Hawk Mortgages says:

The buy-to-let mortgage market is without doubt a fast-paced and ever changing environment in which to operate as an intermediary and it can sometimes be a challenge to keep up to speed. This is one of the reasons why Property Hawk Mortgages specialises only in buy-to-let mortgages and is able to provide added value to landlords with our expertise and in-depth knowledge of lenders and their criteria.

To illustrate the dynamic nature of the buy-to-let mortgage market, in the last month Property Hawk Mortgages has removed 370 buy-to-let products from its sourcing system and added a further 361 new rates.

There are many reasons why lenders withdraw existing product ranges and release new ones, but any activity affecting the financial markets and monetary policy will immediately have an impact on the pricing of buy-to-let finance. It was not unexpected that The Bank of England’s Monetary Policy Committee (MPC) announced a further cut to interest rates of 0.25 per cent and it is therefore not surprising that the buy-to-let mortgage market is experiencing considerable change at the moment.

For landlord clients, the cut in interest rates presents a great opportunity. So far, most lenders are passing on the rate reduction through their Standard Variable Rates (SVR) and Bank Base Rate (BBR) tracker products. We have also seen a number of lenders releasing reduced fixed rate products following the MPC’s decision.

For example, Axis Bank has launched a selection of reduced 2, 3 and 5 year fixed rates for both its standard and specialist ranges.

At Property Hawk Mortgages, we have been getting a steady flow of enquiries from landlords about expat buy-to-let mortgages. This has always been considered a niche segment of the buy-to-let lending sector, but in reality there is a wide choice of lenders and products available for UK citizens who are living and working abroad.

Property Hawk Mortgages currently offers expat products from nine different lenders including: Kent Reliance, Shawbrook Bank, National Counties Building Society, Market Harborough Building Society, Bank of China, Axis Bank, Landbay, Saffron Building Society and Skipton International.

As you would expect, lending criteria for expat applicants is a bit different compared with standard buy-to-let mortgages for landlords who live and work in the UK. All of the lenders mentioned above require that the applicant owns an existing property in the UK, with the exception of Skipton International and Market Harborough Building Society which do not. Applicants must also have a UK passport and bank account.

Quite often we get calls about clients who have sold their home to move abroad and therefore are not current UK property owners. In this case Skipton International and Market Harborough are the only port of call.

Expat lenders also have a higher minimum income requirement than for standard buy-to-let mortgages. For example, Kent Reliance has a minimum income of £25,000, Axis Bank a minimum of £40,000 and Market Harborough Building Society a minimum of £45,000.

Following on from the higher minimum income requirements, lenders are also strict about the type of work the applicant does e.g. Kent Reliance requires they must be a professional or employed in a senior position within a UK, EU or US agency or recognisable and traceable company.

Many lenders accept self-employed applicants such as an equity partner in a law firm or a business owner with an internationally recognised accountant, but may require a higher level of income. For

example, Skipton International requires £40,000 for employed but £60,000 for self-employed applicants.

Most lenders also have a higher minimum loan size for expat cases, usually of between £100,000 and £150,000, with the exception of Saffron Building Society, which has a minimum loan size of just £30,000.

One of the most important questions to ask expat landlord clients is which country they are living and working in as most lenders have either a list of banned countries or a list of acceptable countries that they will consider.

Although there are particular aspects to consider when handling a buy-to-let expat case, there are plenty of products available for these clients. For some lenders, their core range of buy-to-let products is open to expats and for others such as Kent Reliance, Landbay and Skipton International a specialist expat range is offered separately.

Here is an example of expat buy-to-let mortgages currently available: