Buy-to-let
The debate about the ability to take a summer holiday has left many of us yearning to take off for even a few days to catch some sun and/or journey to a place that isn’t our garden or the local supermarket.
However, for some UK citizens, year-long sun is a reality. Coming up with a precise figure for the true number of Britons in Europe alone is difficult, as it could be one million to 2.25 million. This includes estimates for temporary residents, those currently not registered and dual nationals.
Whatever the figure, a large number of these may want to, or may already have, mortgages in the UK. But since 1 January it has become noticeably harder for those living in the EU to do so.
Why is this?
It starts with the ending of passporting arrangements on 31 December for financial services. Previously these had allowed UK financial institutions to trade freely in EU states.
Warning signs were apparent though much earlier, as some banks warned in 2020 that they would close customers’ UK bank accounts if they resided in certain European countries whilst others said they’d prevent customers from doing product transfers on UK buy-to-let mortgages.
This would lead to them going onto an expensive standard variable rate and so could thus become mortgage prisoners.
Now for each country, lenders may need to apply for a licence and the uncertainty is compounded as there is continued speculation that there could be a deal in the coming months.
This means for now, a growing band of lenders are stopping new lending to expats, which was already a relatively small pool. Thankfully many are still accepting product transfers – where the borrower comes to the end of their deal and remortgages with the same lender – so let’s hope that continues.
Brexit
Likewise, those foreign nationals who have always resided in the UK may also encounter difficulties obtaining a UK mortgage in the wake of the Brexit deal, for the same reasons.
This uncertainty has been reflected in the searches undertaken by mortgage advisers using a tool by Legal & General which finds out which lenders would be willing to accept applications from their borrowers.
It revealed buyers with a visa represented the highest number of searches among advisers in 2020. It also said a rise in visa-related enquiries could be attributed to many factors including the weaker pound, the increased interest from Hong Kong-based buyers as well as the Brexit factor.
The lack of clarity continues though, as The Association of Mortgage Intermediaries (AMI) has expressed that brokers too may face difficulties helping clients based in the EU, as for any customers based in the European Economic Area the services provided becomes a matter for local law and regulation in each jurisdiction.
Keeping calm
As a business, we have a number of customers who are either expats or foreign nationals and so navigating this jelly of a maze has been bewildering at times, for both them and us, but it’s important to keep calm.
During this time, we have used our experience, plus contacts we have built around the world to navigate the current situation and support those customers who need it.
We know this situation will not last for ever and whilst it does, we will be working with our lender and conveyancing partners to support our developer and buying customers in the weeks and months ahead, as although it’s not as simple as it once was, it doesn’t mean it’s impossible.
Visionary Finance can be contacted at 01908 465100 or https://visionaryfinance.co.uk/
Hiten Ganatra is MD of Visionary Finance
