The UK has a vast number of expats – individuals who live outside their home country – dotted around the globe. In fact, there is an estimated 5.5mn people from the UK who live abroad on a permanent basis, according to the Institute for Public Policy Research.
Many of these Britons opt to live in Australia, Spain and the US, but not all of them cut ties with the UK completely. There are a healthy number of expats who, despite living overseas, own or are seeking to acquire property in the UK.
Some do so from an investment perspective, others for practical reasons, namely a desire to have a property for them or friends and family to stay in when they do visit (given many will maintain social or professional ties with the country).
However, this is not always a simple task. Specifically, expats can face unique challenges when seeking mortgages for a property purchase, with their experience differing significantly from those encountered by the average UK homebuyer.
Therefore, for lenders and brokers, understanding these hurdles is crucial. It allows them to provide tailored financial solutions that address the specific needs and financial situations of expat investors, helping them navigate this complex landscape with confidence.
Expat investors: a profile
Putting an accurate figure on the number expat investors that have a property investment is a challenge. However, given the strength and resilience of the UK’s real estate market, it would not be surprising to find that a very significant number of expats maintain a connection to the UK through their ownership of a property, whether it is for personal use or investment reasons.
These investors typically range from middle-aged professionals to retirees, and so often fall into the 40 to 65-years-old bracket. For the most part, investors will desire these property holdings for buy-to-let purposes, as a means of securing rental income or ensuring long-term capital growth.
In terms of investment locations, BTL purchases tend to be in the UK’s major towns and cities where demand for rentals tend to be higher, and where property values typically experience more stable, predictable growth.
That said, some investors will target smaller urban or rural locations, which can provide a balance between investment potential, and cheaper prices, but still having a decent proximity to urban centres.
What challenges do expats face?
One of the key attractions of investing in the UK property market is the relative ease with which property transactions can be completed. This is supported by a transparent and well-established legal system.
However, for investors whose permanent address is overseas, the mortgage application process can be a lot more difficult to navigate.
In recent years, these issues have come into sharp focus. Indeed, rising costs, stricter lending criteria, and the introduction of new regulations have significantly affected how expat property owners manage their investments.
Just last year, for example, it was reported that nearly a quarter (23 per cent) of British expats were planning to sell their properties as a result of the cost of living crisis in the UK.
