Buy-to-Let Watch Episode 11 | The Rise of Expat and Foreign Investor Buy-to-let Mortgages In The UK
According to HMRC data, overseas buyers accounted for 1.4% of UK property transactions in the year ending March 2023. Although this figure appears small, it marks a significant 20% increase compared to the previous year. This upward trend highlights the growing interest of international investors in the UK property market.
The UK faces an ongoing housing shortage, which drives high rental demand and competitive rental yields. Moreover, the established legal system and transparent property market make the UK attractive to overseas Buy-to-Let investors. These investors often seek stability that is unavailable in more volatile global markets. A weaker pound can also make UK property more affordable for buyers whose home currency holds greater strength.
Increasing Lender Participation in the Expat and Non-Resident Market
It is no surprise that lenders such as Molo and UTB are expanding into this market by offering products tailored to expatriates. A UK expat is a UK citizen or recognised British National who resides or works outside the United Kingdom. In contrast, Non-Resident applicants are foreign nationals who do not hold UK citizenship but are citizens of other countries.
Buy-to-let applications for these groups are frequently considered “complex” due to additional regulatory and legal considerations. Lenders may restrict the availability of such products to advisers with specialised knowledge. For example, advisers must fully understand the sanctions regime. Advising individuals or companies subject to sanctions could lead to severe legal consequences for the adviser.
Money laundering regulations also present added challenges when dealing with overseas clients. Transactions involving individuals not physically located in the UK often require enhanced due diligence, making compliance more intricate.
Offshore Company Structures for Overseas Investors
Purchasing Buy-to-Let properties through a Limited Company is common for UK-based property investors. However, overseas buyers—mainly foreign nationals—often prefer offshore company structures. These structures might involve an offshore entity owning a UK-based company that holds the property. Such arrangements can provide tax benefits and legal protections but require careful planning to ensure compliance with UK regulations.
This evolving landscape demonstrates how international interest in UK property shapes market trends, lender offerings, and adviser expertise.
Start Simple
For advisers looking to venture into this buy-to-let, I would suggest getting to grips with Expats first, as there are fewer complications around language and identification. Some additional points to be aware of are:
- Understand any advice restrictions or regulations for the company your client resides in. Just because buy-to-let is not regulated in the UK does not mean the country the client resides in has no regulations regarding the advice given.
- Ensure the firm or Network you belong to does not restrict you from offering this type of mortgage.
- Use additional identity verification tools and hold virtual meetings rather than phone meetings.
- When discussing ongoing affordability, examine income sources and stability and consider exchange rate fluctuations and potential tax implications.
- If possible, evaluate credit history in the UK and the client’s home country.
- Put together your panel of providers, remembering you may not be able to access all of them directly until you have built up some experience.
I suggest getting to grips with expats first
In addition, invest some time to understand the differences in criteria. The offerings may differ from the lender’s standard Buy to Let offering. The deposit requirements may be higher, there may be restrictions around income or credit, and the rates may differ.
Expats may also have requirements such as an existing Buy-to-Let in the UK, time since they left the UK or UK bank account requirements. Many lenders also have stricter requirements around the solicitor that can be used for the transaction.
Skipton International is a popular Expat lender with loans up to 75% LTV and competitive 5-year fixed interest rates. Molos’ new rates are slightly higher but offer a range of rate offerings, including shorter-term fixed rates and trackers. They also have a lower minimum loan compared to Skipton. UTB’s new offering is very competitive in terms of rate, suiting clients earning over £50000 and with a UK property already.
More specialist lenders like Shawbrook and HTB have Expat offerings for complex property types such as mixed-use. 
This type of advice can undoubtedly be lucrative for advisers who take the time to understand the complexities. Alternatively, consider partnering with advisers or packagers you can refer clients to so you can still benefit from helping these clients.
Thank you for reading our publication “Buy-to-Let Watch Episode 11 | Expert Mortgage Brokers.” Stay “Connect“-ed for more updates soon!
To join our network, click here!
