Mortgage brokers operating across the UK property market have faced a series of significant challenges in recent years.
The pandemic was followed by a cost-of-living crisis, which led to a sharp rise in interest rates – factors that have profoundly impacted homebuyers and property investors alike. Additionally, the past 12 months have brought substantial regulatory and tax reforms, including changes to Stamp Duty Land Tax (SDLT) rates and revisions to non-dom tax rules.
These shifts have added more complexity and red tape for international buyers looking to build a portfolio of UK properties. Yet, despite the obstacles, overseas demand remains strong – in fact, an estimated 200,000 properties in the UK are now owned by foreign buyers, reflecting continued international interest.
All of this poses some important questions:
- How many UK brokers work with international clients?
- Which regions is the demand coming from?
- What challenges do brokers face when seeking mortgage products for non-UK residents?
To get the answers, RAW Capital Partners commissioned an independent survey of 300 UK mortgage brokers. In this blog, we’ll share key insights from our research, revealing how our bespoke lending solutions can help brokers navigate the obstacles they face when growing their business internationally.
Brokers see international clients as an area for growth
First and foremost, our survey showed that international clients represent a major growth opportunity for UK mortgage brokers.
Indeed, many brokers are already seizing this opportunity – 83% of respondents say they “occasionally” or “frequently” find mortgages for non-UK residents. Moreover, 62% report that their brokerage is actively investing in marketing, advertising and sales activities to attract international clients.
Why? Primarily, they have seen demand climbing, with 60% noticing an increase in international buyers using their services over the past five years, and 63% expecting this demand to remain strong in the five years to come.
There are significant challenges
However, securing finance for non-UK residents remains a challenge.
A key issue is the limited availability of lenders – 61% of brokers feel there are too few willing to work with international clients. Additionally, 36% admitted that they do not have enough knowledge or experience to identify suitable lenders for non-UK borrowers.
Added to this, since the Labour government took power, 66% of brokers have also found that international clients are requiring greater support in navigating policies relating to the property market.
Clearly, the demand for UK property from overseas investors remains high, and brokers are responding to this by actively seeking out ways to grow their client base internationally.
Yet the inability or reluctance of mainstream mortgage providers to lend to non-UK residents, typically because of the extra due diligence required or perceived extra risk, has left brokers and international buyers in a difficult position.
How can RAW Capital Partners help?
Fortunately, the RAW Capital Partners team is here to help. In fact, our very existence is thanks to the challenges that overseas investors face in finding finance for their property investments.
In 2015, our founder Richard Avery-Wright approached a major high street bank to secure a mortgage to buy a house in Guernsey. However, even though he didn’t have any debt and owned various assets, his non-conventional financial situation didn’t match with the bank’s criteria, and he was rejected as a result.
Borne out of this reticence among mainstream lenders to stray from strict tick-box applications, RAW Capital Partners was created to provide access to financial products for people with unconventional financial profiles, and particularly for expats and non-UK resident buyers. To date, we have provided loans to clients based in over 50 countries, including a strong track record in Asia and Africa.
This is because we do not take a rigid approach to lending. For example, we recently provided a buy-to-let (BTL) mortgage to a Chinese couple who had a single income source and no prior experience of investing in property. The couple’s broker had faced difficulties securing finance for the client as many mainstream lenders will turn away applications from first-time landlords or foreign nationals, and therefore the combination of both was a major challenge.
However, because we treat individual applications on a case-by-case basis, we were able to carry out extra due diligence and Know Your Client (KYC) checks to take the couple’s entire financial situation into account. It meant we were able to issue the £300,000 mortgage at an LTV of 50%. The case is a perfect demonstration of how we use our expertise and experience to take on cases that other lenders might shy away from.
As the market heats up and demand from overseas continues to build, our expert team is here to offer timely, bespoke guidance that will help brokers stay ahead of any challenges that may arise when working with non-UK resident clients.
To discuss how we can support your next case, get in touch with us today: https://rawcapitalpartners.com/