Expats play a growing role in our private rental market

For many, there is a stereotypical view of expat landlords. Invariably, people picture tycoons who own property in the UK but live a luxurious life outside the country. While that image of people basking in the sun as the rent money rolls in might seem like a life on easy street, the reality can be quite complex.

Understanding that complexity matters – especially now, with so many reports of a growing market. 

Intermediaries are seeing a rise in enquiries particularly from Brits relocating to the United Arab Emirates (UAE). The demand from expats moving to cities like Dubai is now higher than the once popular European destinations of France and Spain.

This is supported by data from HM Revenue and Customs that shows that 1.4% of UK property transactions in the year ending March 2023 came from overseas buyers, which is a 20% increase on the previous year.

Brits move from the UK to the UAE not only for the tax-free income and warmer climates, but Dubai is among the cities with one of the lowest crime rates in the world and also boasts a world class healthcare system. However, as the figures show it seems that many people still want to keep one foot in the UK, and that comes in the shape of property ownership.

While living abroad and owning property in the UK may seem like an attractive proposition there is a lot more diligence and specialist advice that is required to ensure a positive property outcome.

Expat landlords need support from intermediaries who understand everything from the regulations and restrictions of the country their client is living in, to the impact of exchange rates on the affordability of the product they are offering.

In terms of options for would-be landlords, the good news is that expat mortgage holders now have more product choice and the option of whether to choose a fix or other type of variable rate mortgage.

Choosing a mortgage that removes uncertainty is crucial for any expat landlord and opting for a fixed rate can protect against any adverse currency movements. Fluctuations in exchange rates can significantly impact monthly payments.

This was the case after the Brexit referendum in June 2016, when the British pound went from a high of 1.43 at the end of November 2015 and then remained below 1.2 from July 2016. By February 2024, there were 1.17 euros to the pound, and today the euro stands at 1.19.

A weaker pound might be good news for overseas investors, but less so for UK expats, which is why it is important to find an intermediary who understands their client’s circumstances as well as being able to guide their clients on the timing of the transaction.

Due to the nature of these propositions, more often than not an intermediary will need to talk to a lender that manually underwrites complex and nuanced business to ensure that a personalised solution and appropriate product is found.

Specialist Understanding

At the Cambridge Building Society, we have seen a marked increase in demand for expat buy-to-let finance. We understand the support that expat landlords and their intermediaries need and have the specialist knowledge to be able to offer a complete financial solution.

We offer a maximum loan size of £750,000 and where a 5-year fixed rate is taken we use payrate together with an interest cover ratio of 140% to ensure the monthly payment is met by the gross rental received. 

If a 2-year fixed or discounted rate is more suitable, then we use a stress rate of 2% above the payrate and again an interest cover ratio of 140%. Our buy-to-let mortgages are available to expats from any country with the exception of those under financial sanctions, and all currencies can be considered.

In this specialist market, we believe that we recognise the importance of expat landlords within the UK rental market and the extra support that they need from our intermediaries in order to make the right decisions.

Kathy Bowes
Intermediary Manager

Want to know more? Get in touch with our award winning team on 0345 601 2744, use our online live chat, or send us an email at intermediary@cambridgebs.co.uk for more information. You can also have a listen to Nicole, our Telephone Business Development Manager, who summarises our criteria here.