UAE-based British expats snap up buy-to-let properties in the UK

Offshore bank Skipton International says 15 per cent of its expat buy to let mortgage applications have originated from the UAE since it launched its products last summer.

An array of To Let and For Sale signs protrude from houses in the Selly Oak area of Birmingham. Christopher Furlong / Getty Images

British expats living in the UAE are taking advantage of rising rents in the UK to purchase buy-to-let investment properties.

According to offshore bank, Skipton International, while many have joined the surge for London property, others are vying for rental increases elsewhere in the country.

The bank, based in Guernsey, launched its expat buy-to-let mortgage products last summer and says it has received a surge of interest from UAE expats.

Managing director of Skipton International, Jim Coupe, said: “We’ve had interest from all over the world, but particularly the UAE. With many now viewing the London property market as overheated, demand is set to increase for properties in other areas of the UK where rental yields are looking far more attractive for buy-to-let investors.”

Such is the demand, the bank has also opened up its products to retired expats. Retired applicants must have a minimum pension income of £40,000 (Dh233,200) and a maximum age of 70.

New research from Homelet, a British property management agency, shows that UK rental prices for the three months to April, rose by 10 per cent, but it’s the regions which are outstripping London with their growth. The west midlands, East Anglia and South-west all saw greater rent increases than London in the three months to April.

Here, Mr Coupe, reveals more about the increased interest from UAE-based British expats:

Have you noticed an increase in enquiries from UAE-based British expats looking for buy-to-let mortgages?

We only started lending last summer so don’t have this information available yet. However, more than 15 per cent of our Expat Buy to Let mortgage applications have originated from the UAE, more than any other country, and a significant proportion as we offer these mortgages worldwide (with specific country exceptions).

Why did you decide to enter the expat mortgage market?

Skipton International has been serving the expat community for more than 20 years through our range of savings products. We are also major mortgage lenders in the Channel Islands. We launched the expat buy-to-let mortgages in response to feedback we received that it was very difficult for expats to obtain a suitable loan, with very few products on the market.

How is the buy-to-let market faring in the UK right now?

The market varies across the country. Some London yields are now approaching 2-3 per cent, the South-east is nearer 4-5 per cent and we have seen 6 per cent plus in the North of England.

Which are the most popular areas for expats from the UAE?

The majority of properties purchased so far have been flats and apartments located in Greater London/South East England. Often however applicants will purchase property in a geographical area known to them and where they may have family members who can assist with the management of the property.

What interest rates do you offer?

At present there are three UK Expat Mortgage products:

• A 5-year Fixed Rate at 5.24% /5.4% APR

• A 5-year Discount at 4.49% / 5.1% APR

• A 3-year Fixed Rate at 4.74% / 5.3%

The first rate quoted is the rate of interest charged on the outstanding mortgage balance. The second figure, suffixed by APR (Annual Percentage rate) is the true annual cost of the mortgage and takes into account any compounding of interest applied during a 12 month period ie interest charged on interest. It will also take into account any product fees where applicable. The APR figure is quoted by lenders to enable a customer to compare the true cost of a specific mortgage with other facilities available within the market. In the UK it is a regulatory requirement for lenders to provide APR’s for all credit contracts.

How do they compare to mortgage rates offered by financial institutions to residents?

Skipton International stands out from other lenders because we use our own team of experienced underwriters in Guernsey. It means we are able to provide an agreement in principle within two working days of receiving applications.

What does an British investor need to secure an expat buy-to-let mortgage?

• Applicants must be British, or the spouse/partner of a British citizen where a joint application is being made.

• We offer a maximum loan to value of 75 per cent

• The property must be in England or Wales and for buy-to-let purposes only, ie not for you or a family member to live in.

• We lend from £100,000 to £1.5 million.

• Applicant needs to be working for an established employer and be able to provide six months of payslips/six months of bank statements and earning over £40,000, (or £50,0000 if paid in a local currency).

• There are also other terms and conditions, including completion of the usual credit searches.

We offer an online calculator which can help people see how much they can borrow against expected rental yield.

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