Time is running out before increased Stamp Duty rates are levied against foreign buyers investing in UK property.[1] From April 2021, people buying property in the UK who are not resident in the country will pay an additional 2% in Stamp Duty on both freehold and leasehold property. The rules will also apply to rents on the grant of a new lease. Therefore, if you’re a foreign national looking to buy in the UK, you should act now to save on your purchase.
If you’re looking to buy a UK property as an overseas resident, an expat or a ‘non-UK resident’, you will need a specialist mortgage product, tailored to your specific circumstances. As experts in this area, our team are used to helping expats and foreign nationals based everywhere from the Caribbean and Middle East to Africa and the US. However, this type of lending is not without its challenges.
In recent times, the impact of COVID-19 has been keenly felt on the expat and overseas mortgage market. At the height of the UK’s lockdown, many lenders temporarily pulled their products from the market and, like many other areas of lending, we have generally seen a more cautious approach creeping into standard terms. This has included a reduction in loan to value ratios (LTVs) and restrictions on the countries some lenders will consider applicants from.
However, since the early summer and the announcement of the Stamp Duty Holiday[2], we’ve seen lots of lenders return to the market and plenty of expats taking advantage of the temporary measures to buy a bolt hole ‘back home’ in the UK. Lenders generally see these candidates in a favourable light, but rates will tend to be higher than a standard mortgage because lenders are taking on a bigger risk and need to price their products accordingly.
One area in which we have seen a particular increase is in applications is from British National Overseas Passport Holders based in Hong Kong. The announcement of national security legislation in the territory has prompted a new immigration route for BN(O) citizens[3] and we are helping growing numbers of clients relocating to the UK from Hong Kong. If you’re in this situation, we are the team to help guide you through the process.
What do you need to consider as a non-UK resident looking to buy in the country? Here are our top tips:
- There are only a small number of lenders in the non-UK resident mortgage market and therefore it’s a specialist area of lending, meaning rates will usually be higher.
- Lenders will want to know which country you’re from and where you are living and be aware that they have placed restrictions on lending to individuals from certain countries.
- Lenders tend to want to see a strong link to the UK – for instance family based in the country or a history of study here. If you already own a property in the UK, that will also benefit your application.
- Some of the simple elements of the application process can become more complex when distance is involved. For instance, documents such as proof of address, payslips or other forms of evidencing income such as company accounts can become complex when different languages and systems are involved. Our team has lots of experience in this area, so we can help you consider all the different ways to provide the documentation a lender may need.
- If you’re a high net worth individual looking for a substantial mortgage, private banks are a viable route to lending. In these cases, we often suggest Lombard Loans to clients, which allow them to leverage assets and investments to gain the lending they require.
- If you are an attractive candidate, lenders will be open to hearing about your circumstances. Because we work on a case-by-case basis, we have built up close relationships with decision makers at High Street, specialist and private banks and we regularly approach lenders who can flex their requirements to fit our clients, if they fit the right profile.
If you’re currently considering your options, pick up the phone or request a video call with us to talk through your next steps. Stamp Duty changes mean there is a significant saving to be had, but you must act very soon before the window of opportunity closes. We look forward to hearing from you.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt.
[1] https://www.gov.uk/government/publications/new-rates-of-stamp-duty-land-tax-for-non-uk-residents-from-1-april-2021/new-rates-of-stamp-duty-land-tax-for-non-uk-residents-from-1-april-2021
[2] https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates
[3] https://www.gov.uk/guidance/british-nationals-overseas-in-hong-kong
