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What are the Problems Facing Expats Landlords?

Written by Sam Jones on 22 April 2014.

Since the credit crunch banks have cracked down on many areas of specialist lending.

High street lenders consolidated their lending operations and cut back on anything they did not see as essential to their core business.

This included their international arms to help Britons buy abroad and expats buy in Britain. Most lenders require a UK postcode when offering mortgages so it can be extremely tough for expats to get a deal.

With more and more people moving abroad we believe this is a crucial part of the market.

In particular we believe there are more expats looking to tap into the UK rental market and buy-to-let.

Just because someone has left Britain temporarily or permanently does not mean they want no investments here.

This is why we have a specialist expat buy-to-let team at hand to provide expert advice.

We believe advice is necessary for such a complex deal. An expat looking for British buy-to-lets is not simply going to pick up the phone and get a deal.

It has to be specifically tailored to suit the needs of both bank and borrower.

Intermediaries can act as an excellent bridge to facilitate finance of such complexity.

Problems

A key hurdle for expats borrowers is currency. Borrowers could be using anything from euros to Australian dollars or Yen.

Choosing the right moment to convert your cash is crucial but so is dealing with a lender who appreciates the sensitivity.

Changing £100 into US dollars for a holiday is one thing but the timing of converting £500,000 for a house is massive.

Buyers could end up making thousands of pounds depending on the exact time and day of the transfer.

Advisers need to be adept at appreciating this and deal with banks who can trade with different currencies.

It is not just the initial deposit but, more importantly, the monthly payments. Will they be paid in pounds or foreign currency? What impact will it have on monthly payments?

If one currency nosedives, will your mortgage payments rocket sky high?

It is not just currency though because working abroad adds an extra layer of complexity.

The bank may not be familiar with your employer, tax structure or working patterns?

It could cause havoc on the staid income verification and affordability checks of high street banks.

There are also issues in how you will collect the rent whether it will be done privately or through letting agents.

Lenders will want to know how you are actually going to get rent into your bank account from abroad.

Even if you find a lender to do a deal and then overcome the hurdles, borrowers rightly want to get the best rates. Advisers can offer you the a menu of options from the cheapest to the most flexible to the most secure.

The UK rental market is growing stronger with house prices rising and rents increasing.

It is little wonder that expats want to tap into this booming area as long as the complex nature of deals is well-known before you start out.

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