Expats are cashing in on buy to let in Britain by laying down big deposits to make properties more affordable.
The main driver is the falling Pound, which means buying homes in the UK is becoming more cost effective for expats dealing in other currencies.
A recent online poll of mortgage brokers revealed that more than two thirds are experiencing more inquiries from expats.
Almost every expat wants to fund a buy to let investment with a mortgage.
By offering large deposits, they can meet new mortgage affordability rules and are less bothered by HM Revenue and Customs non-resident landlord scheme and other tax issues.
Landlords in transition
In recent years, the government has cracked down on landlords by imposing a 3% stamp duty surcharge on purchase, started to phase out mortgage interest relief for higher rate taxpayers and making capital gains tax rules on disposals stricter.
However, since Brexit, the pound has dropped in value against the US dollar, which means expat investors living in countries with a currency pegged to the dollar are also finding buying property cheaper.
Scott Hendry at lender Auction Finance said: “What we are seeing is investors, including expats, are still buying-to-let in Britain, but perhaps focusing on lower loan-to-values and using larger deposits to take the various changes into account, as well as adapting their portfolios and business models to maintain their profitability; for example by looking at up-and-coming areas across the UK instead of the more traditional rental hotspots like London.”
Long term investment
He explained that expats seem to view buy to let as a long term investment and are not too worried about immediate tax issues.
“Given the strong rental market in the UK and interest rates at an historic low, it appears that expats are still keen to keep a foothold on their home property ladder, and whilst the buy-to-let market has faced a number of challenges recently, those taking a long-term view seem undeterred,” said Hendry.
Few UK lenders offer buy to let loans for expats.