How RAW Capital Partners helps expats navigate the hurdles of the UK’s property finance markets
It’s estimated that 5.5 million people from the UK live overseas on a permanent basis.
Known as ‘expats’, many choose to make countries like Australia, Spain and the US their homes, but a vast number of them still seek to own a property – or portfolio of properties – in the UK, either as an investment or for personal use.
However, compared to the typical UK homebuyer, these expats face a unique set of challenges when trying to secure a mortgage. For lenders and brokers, therefore, understanding these challenges is essential.
Fortunately, RAW Capital Partners has this quality in abundance, but more on this later.
Expat investors: a profile
Accurately estimating the number of expat property investors is difficult, but given the strength of the UK real estate market, many likely maintain a connection through property ownership.
These investors tend to fall into the 40-65 age bracket, and often seek buy-to-let (BTL) properties so they can achieve both an ongoing rental income as well as the opportunity for long-term capital growth. To that end, many expats choose major towns and cities where rental demand is highest and property values are more stable.
However, others target smaller urban or rural locations, which can provide a balance between investment potential, cheaper prices, and still having a decent proximity to urban centres.
The challenges of securing a mortgage as an expat
Investing in the UK property market holds a unique appeal, offering a combination of strong capital performance, straightforward transaction processes, and a transparent legal system.
That said, for overseas investors, navigating the BTL mortgage application process can be more challenging. Recently, rising borrowing costs, stricter lending criteria, and new regulations for the private rental sector (PRS) have made it increasingly difficult for expat property buyers to make and manage BTL investments.
Just last year, for example, it was reported that nearly a quarter (23%) of British expats were planning to sell their properties as a result of the cost-of-living crisis in the UK. That said, the issues that expats face go a lot deeper than temporary financial challenges, especially for those seeking a mortgage from a mainstream lender on the high street.
These are the main challenges they face:
- A lack of UK address: Not having a UK address complicates opening a bank account—a key requirement for securing a mortgage with mainstream lenders.
- UK credit history: Since most of their financial activity occurs abroad, expats often lack a UK credit record, which can affect their ability to secure favourable mortgage terms or other financial products.
- Income assessments: Lenders often struggle to evaluate foreign income, whether it comes from pensions, savings, or investments, especially when it involves different currencies or complex financial arrangements.
That is why RAW Capital Partners’ in-depth knowledge of the difficulties that expats face is so important. It means we can best serve their needs with speed and flexibility.
How RAW Capital Partners can help
The key to working with expat investors lies in having the expertise and experience to thoroughly assess their financial situation. At the same time, you need to understand the motivations of the borrower so you can deliver the right mortgage product for the right type of investment.
While high street lenders may reject expats due to irregular income streams, our underwriters here at RAW Capital Partners consider a broader range of factors (such as savings, investments and assets) to gain a full picture of an investor’s financial circumstances. This allows for a more nuanced and flexible approach when evaluating a borrower’s creditworthiness.
We also know that expat borrowers need a lender with expertise in expat-specific regulations, such as stamp duty land tax (SDLT) surcharges and capital gains tax (CGT), which is why we pride ourselves on having a deep understanding of the tax and regulatory challenges that expat investors face. This knowledge helps expats – and the mortgage brokers they typically rely on – to avoid common pitfalls and ensures they are fully aware of the financial and legal implications of a property purchase.
Expat buyers undoubtedly face challenges in today’s property investment landscape. However, with the guidance of RAW Capital Partners and brokers experienced in handling expat clients, expats can overcome these hurdles and take advantage of the opportunities arising as the UK property market recovers.