Yahoo Finance Tough buy-to-let rules mean more overseas buyers rejected for mortgages
Many overseas buyers and British expats are finding it increasingly difficult to buy a property in the UK, reveals independent financial advisory DeVere Mortgages.
The observation follows the introduction of new tougher requirements for buy-to-let borrowers year by UK lenders.
New buy to let rules introduced
Earlier this year new rules on the buy to let lending were introduced by the UK’s Prudential Regulation Authority (PRA) they involve a limit to buy to let property investors and landlords can borrow.
DeVere Mortgages highlights the difficulty is also due to expats being considered as ‘higher risk’ by UK lenders even if they have substantial assets and a high salary.
British property considered a safe haven asset
“Foreign nationals from the Middle East, Asia, Europe and the U.S. as well as British expats residing in those destinations are a hugely important demographic for the UK’s property market,” says Darren Mead, head of mortgages at DeVere Group.
He says: “Quite sensibly, they view British property as a safe haven asset and, due to the relative weakness of the pound, it has become more attractive in recent times.”
Mead explains due to the changing criteria, buyers are finding it more difficult, unless they work with mortgage advisors who specialise in expat home loans for those who live outside the UK.
“This is because more common lenders now require borrowers to receive a minimum of 145% of their mortgage costs in rental income. Previously it was 125 per cent,” explains Mead.
DeVere Mortgages adds the change in lender affordability could also have potentially significant affects on the UK’s property market for expat buyers if they are not made aware prior to making a mortgage application.
Mead concludes: “It is therefore highly recommended that expats and overseas buyers looking to buy property in the UK seek advice from cross-border specialists who have well-established relationships with UK lenders.”
