A Guide to UK Commercial Mortgages for Expats and Foreign Nationals

We’re seeing an increase in Expats and Foreign Nationals investing in UK property; what’s attracting them and what are the benefits? This guide from Mortgages for Business’ Commercial Consultant, Asad Khan, aims to answer a lot of the frequently asked questions, particularly when it comes to commercial investments, and explain the processes involved when investing from outside of the UK.

Why is the UK an attractive place to invest?
In the current political and economic climate, the pound is weaker against a lot of currencies than it used to be a few years ago, making it less expensive for foreign investors. Coupled with the low interest rates currently on offer, buying property in the UK is financially more appealing than ever.

Just as UK landlords are experiencing high rental demand and increasing rent prices, these same benefits are felt by landlords living outside of the UK, which, paired with low monthly mortgage payments, makes for excellent yields.

It’s not just residential buy to let that’s getting all the interest from overseas. Investors are also purchasing commercial and semi-commercial properties as, just like UK investors, these types of purchases do not incur the 3% stamp duty surcharge.

Who can invest in UK Commercial Property?
There are surprisingly few restrictions around who can take a commercial mortgage.  Anyone with a UK passport can do so, and for those who do not hold a British passport the majority of available lenders will consider the individual, as long as their country of residence is on the Financial Action Task Force (FATF) list. FATF is an inter-governmental body which sets standards and promotes the effective implementation of legal, regulatory and operational measures to combat things like money laundering. You can see a list of the approved countries here.

As a whole of market broker, we do have access to specialist lenders who will consider investors from countries not on the FAFT list, although, due to the complexity of these purchases, applications are considered on a case by case basis.

What types of property investment can Expats and Foreign Nationals make?
As you might expect, lenders do have experience-based criteria for applicants and some types of asset class require more experience from the landlord for a lender to consider them for finance. For commercial properties, most will require at least two previous commercial investments, and around two years of landlord experience before they will consider your application.

Experienced landlords will be able to invest in HMOs, Multi Units and Holiday Lets as well as properties such as factories, industrial units and shops, plus semi-commercial property such as residential flats with a retail unit below.

If you’re considering a buy to let investment, get in touch and we can talk about the options that might be available to you.

Where can Expats and Foreign Nationals make property investments?
You will most likely be able to purchase property in England, Scotland and Wales.

How can Expats and Foreign Nationals purchase property for investment?
Individuals & Limited Companies
You can purchase property through either your personal name, or through a Limited Company. If you are setting up a new SPV for the purpose of purchasing property, keep-in-mind that you will require a UK bank account to set it up.

As you might expect, lenders will execute enhanced due diligence on identification and proof of residency checks in order to manage their risk. You should also expect to provide them with your previous UK credit history, as well as your overseas/country of residence credit history.

The Application
All the paperwork can be signed in your country of residence and witnessed by a qualified lawyer or attorney, registered with the relevant national professional body. You will, however, be required to post the original “Wet Ink” signature for most of the paperwork to us or the lender, as this is part of the increased due diligence procedures that come with investing from overseas. You will also be required to instruct a UK based solicitor, so this is something to consider in terms of extra costs and time scales when deciding on your investment budgets.

For the lender to be able to receive direct debit repayments, you must have a UK bank account. A number of banks have international bank accounts available, so it’s worth shopping around to see which will be best for you.

The Finance
The range of products available to Expats and Foreign Nationals is more restrictive than for those who live in the UK, so it is likely you will need to use a more specialist, off the high street lender to get the finance you need.

For commercial property, available lenders’ rates will start from around 5% above the Bank of England Base Rate. You can expect committed terms of up to 25 years, as well as shorter terms, on either capital and interest or an interest only basis and generally, lenders will require a maximum 65% loan to value, though there are some lenders that we have access to who may consider 75%.

What else should you consider?
Self-employed? We have access to lenders who will finance your investments based on your business’ accounts. For some lenders, you may need an internationally recognised accountant, usually a member of The Association of International Accountants, but this is something we, as a broker, can assess and talk through with you based on your individual case.

Are there age restrictions? We have access to lenders who will consider applicants up to the age of 85. Please get in touch with me if you want to discuss your options in later life lending.

Who will manage your property? When you’re living overseas, you’ll need to consider who will manage your property here in the UK. It depends on the lender and the type of property, but a lot of lenders will require you to employ a property manager, usually through an agent, to look after things on your behalf.

What’s next?
If you’re looking to invest in UK commercial property, either as an Expat or as a Foreign National, and want to know more about the process and the products available to you, do not hesitate to give me a call on 01732 471652 or email , and I will be happy to assist.


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NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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