A majority of expats looking to invest in buy-to-let property are increasingly looking towards London and the South East.
According to Skipton International, up to 40% of expat mortgage customers are investing in buy-to-let property in Greater London, with another 25% in the South East of England.
Just 10% of British expats purchasing property to rent out are investing in either the South West or the North West of the country.
Many expats living oversea looking to invest in buy-to-let property or buy a home to live in when they return have found themselves shut out by the big banks in recent years.
According to comparison website Moneyfacts, there were 19 lenders offering expat mortgages in 2004. Since the credit crunch the number of lenders has plummeted to just a handful as expats are seen as a riskier proposition, while others have tightened their criteria.
The largest provider, Lloyds Bank, pulled out of the market in 2012, while last year RBS and NatWest decided to stop offering mortgages to British expats.
The major problem expats face when taking out a mortgage is that they lack a recent credit history and therefore don’t score well on checks required by lenders.
However, a number of smaller banks and building societies have decided to buck this trend by offering buy-to-let mortgages with more personalised underwriting to expats that takes into account their circumstances.
Skipton International launched a range of buy-to-let mortgages in 2014 as a response to the difficulties British expat customers faced obtaining a mortgage on UK investment properties. Since then, Skipton has lent over £130 million to British expats around the world and completed over 700 mortgages.
Nigel Pascoe, director of lending at Skipton International, said: “Property prices in London have increased significantly in the past few years, meaning that capital gains have been very attractive for investors. British expats have many reasons for investing in buy-to-let property in the UK, and long term investment is usually the most important.
“We see lower average LTVs in the South East and particularly London as the rental yields are lower in those regions. Further north in England where rental yields are greater, higher LTVs are supported.”
Skipton International offers buy-to-let mortgages for British expats purchasing property in England and Wales, but not in Scotland or Northern Ireland. Earlier this year, Skipton opened up their mortgages to self-employed applicants and also expanded their eligible country list, enabling even more British expats to access the mortgages.
In a survey by Skipton International earlier this year, 35% of people surveyed cited long term investment as their main reason for investing in buy-to-let property in the UK.
This was followed by pension planning (19%), a desire to remain invested in the UK property market (12%), rental income (10%), inability or unwillingness to buy property in the country of residence (9%).
Capital growth was ranked by just 6% of expats surveyed as the most important reasons for investing in UK buy-to-let, while just 6% indicated that a poor return from alternative investments and 3% ranked security of investment as the most important factors.
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