The Intermediary – April 2025 - Flipbook - Page 29
BUY-TO-LET
Opinion
Broker opportunities
in expat BTL
W
ith more than
5.5 million
Britishborn expats
estimated to
be scaered
across the globe, according to the
Institute for Public Policy Research
(IPPR), it’s no wonder some choose to
stay connected to the UK by owning a
buy-to-let (BTL) property back home.
The expat BTL market has shown
impressive resilience over the past
few years, managing to withstand the
turbulence of Brexit, the disruptions
caused by Covid-19, and ongoing costof-living pressures. This resilience
can, in part, be aributed to the
steady rise in the number of British
expats, which have risen from around
4.7 million in 2011 to more than 5.5
million today, according to Home
Office statistics.
Each expat has their own
motivations for investing. While the
goal of a passive income and long-term
capital growth still holds weight,
sentiment can also play a part. For
some expats, investing in UK property
is their way of staying connected
to home – whether it’s securing a
property to return to one day or
providing a home for family members
back in the UK.
While some brokers may be put
off advising on expat BTL due to the
perceived complexities of overseas
incomes, the fundamentals of
advising don’t really change compared
with advising BTL investors based
here in the UK.
In recent years, many building
societies have become actively
involved with the expat BTL market.
Dudley Building Society, for example,
has long been an established lender
in this space, and can help brokers
find flexible lending solutions that are
tailored to meet the unique needs of
expat borrowers.
Expat BTL investors come from
all walks of life, each with their
own unique financial situation. For
example, they could be a high-networth (HNW) individual who has
travelled overseas for work and views
UK property as a solid, dependable
investment. They might work in a
high-earning sector such as finance,
IT, energy, or law, perhaps based
in the UAE, the wider Middle East,
Australasia, or the US.
On the flip side, a BTL investor
might be an older borrower who has
moved abroad in search of a quieter
pace of life, to a country such as
Spain. The recent news that Spain
is considering a property purchase
tax of up to 100% for non-EU citizens
highlights some of the challenges of
buying property abroad – this could
be a reason why some expats prefer to
rent overseas and keep a property back
in the UK.
Regardless of their reason for
investing, expat BTL investors need
clear, accessible advice from brokers
and lenders who truly understand the
ins and outs of the market.
Lending challenges
Building societies are a natural fit for
the expat market, primarily because
of the personalised approach many
take when assessing cases.
This tailored approach is
particularly important for borrowers
with complex income structures –
such as those with multiple income
streams, some in different currencies
or from self-employment. In these
cases, a one-size-fits-all solution
doesn’t always work.
Not all lenders are able to provide
this level of personalisation, and some
even put up extra barriers for expats.
A common example is applying a
‘haircut’ to an expat’s income – which
can mean a cut of up to 20% to account
for currency fluctuations. At Dudley
Building Society we take a different
approach, and can consider 100% of
an applicant’s income paid in a foreign
currency, using the lowest exchange
ROB OLIVER
is director of distribution at
Dudley Building Society
rate from the past three years, subject
to lending criteria and underwriting.
Another challenge expats can face is
jurisdiction restrictions. Some lenders
rule out applicants based in certain
countries, like the US or Australia,
or other regions that they consider
higher risk.
Tap into expat BTL
If expat mortgages haven’t yet come
across your radar, now is the time
to take notice. With the number
of British expats on the rise, we
are seeing interest from directly
authorised (DA) and appointed
representative (AR) brokers, who
are recognising the opportunities in
this market.
While the BTL market for both UK
and overseas-based investors continues
to face legislative challenges,
economists remain optimistic
about the potential for some more
reductions in the base rate this year.
As we move further into 2025, if the
Bank of England base rate continues
to decrease, we could see renewed
confidence in the market, along
with increased interest in discounted
mortgage products for expat BTL
investors – both for remortgages and
new purchases.
Building societies have become
key players in the expat BTL space,
particularly for borrowers who
don’t meet the rigid criteria of some
mainstream lenders.
At Dudley Building Society, we
remain commied to working closely
with brokers, providing practical,
tailored solutions that reflect the
unique needs of expat borrowers. ●
April 2025 | The Intermediary
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