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UK mortgage enquiries from expats soar

A mortgage company that specialises in offering UK mortgages for expats has revealed that UK buy to let mortgages from foreign nationals has significantly increased.

According to Skipton International’s latest 2020 figures, they received a 51% upsurge in mortgage enquiries from expats compared to figures from 2018.

In particular, there has been a significant increase in mortgage enquiries from the United Arab Emirates, which saw a 50% rise in comparison to 2018. Further buy to let enquiries have also come from Singapore, Hong Kong, USA and Switzerland.

Skipton reported that the upsurge in enquiries from UK expats and foreign nationals was kickstarted by UK Chancellor Rishi Sunak’s stamp duty holiday announcement, seeing a 61% rise in the use of their online buy to let mortgage calculator.

UK Property Market

Growth in UK rental market

Brexit uncertainty appears not to have affected the demand for buy to let mortgages amongst expats. The reason for the upsurge in international enquiries can mainly be attributed to the recovery within the UK rental market. Skipton International reported that annual rental growth increased by 2% towards the end of October 2019. This is the most rapid rate of growth witnessed within the last three years.

With the easing of coronavirus lockdown restrictions, Q2 of 2020 also saw rapid growth within the UK rental market, with average rents increasing by 2.2% and demand 33% higher than pre-lockdown.

A report from ARLA Propertymark has outlined the growth in tenant demand in 2020. In July, letting agents saw 97 newly registered tenants on average, compared to 79 in June. Landlords also saw an average void period of just 3 weeks during July, compared to 4 weeks the previous month.

Tenants are also reportedly remaining within their rental homes for longer, which leaves a consistent rental income for owners. The report showed that the average tenancy period in July was 21 months, the highest average on record. With such a high demand for rental properties, now could be the ideal time for expats to invest within the UK property market.

“Despite changes for buy-to-let landlords – such as the phasing out of interest rate relief – buy-to-let investments have continued to prove popular with a growing number of British expats looking at ways to secure long-term investments in the UK,” explained Nigel Pascoe, director of lending at Skipton International.

“Online enquiries make up a significant part of our business, with a growing number of expats choosing to find out about what they can borrow through our online mortgage calculator.

“Being able to get an agreement in principle straight away online makes it easier for potential investors to plan their purchase from anywhere in the world.”

Stamp Duty Holiday

A further reason for the upsurge in property enquiries is down to the stamp duty holiday which took effect from July 2020. Chancellor Rishi Sunak’s announcement that stamp duty would be waived on homes up to the value of £500,000 was a bid to boost the UK housing market and activity certainly seems to be heading in the right direction. Just one week after the announcement, Skipton international saw a huge surge in the use of its online calculator for buy to let mortgage estimates.

Jim Coupe, managing director of Skipton International believes that now is an excellent time for foreign nationals to invest within the UK housing market, particularly as the chancellor has since extended the stamp duty holiday from March 2021 to the end of June 2021.

Roger Hughes, Business Development Manager of Skipton International has also stated that going forward, Skipton will aim to make their mortgages even more enticing to overseas residents by allowing them to access the UK property market for long term investment purposes.

A reason that EU countries may not feature too highly on this list is due to the discrepancy between British property prices and those within the EU.

A recent report carried out by Retirement Advantage Equity Release shows that since 2010, the combination of sustained price rises in the UK housing market and falls in many popular EU destinations could leave expats facing a substantial shortfall if they choose to come back to the UK.

“While UK property prices have risen, relative values in the EU have not kept pace,” said Alice Watson, head of marketing at Retirement Advantage Equity Release. “Many people simply wouldn’t be able to afford to move back to their old homes.”

As the UK enjoys the upsurge in expat buy to let enquiries, only time will tell if the demand continues further down the line after the Brexit transition period and the end of the stamp duty holiday. With so many political and economic issues to contend with, it will be interesting to see if the UK housing market can sustain this current level of growth.