Dozens of UK lenders have started offering mortgages to international buyers, opening up the property market to new investors other than British citizens working overseas, analysis shared with The National has found.
Three in five top-tier lenders now have a route for overseas borrowers, as a growing market develops in which Gulf-based families maintain or acquire UK property using British mortgage finance while keeping their principal residence, businesses and liquidity in the Middle East.
Transaction data includes a private-bank mortgage of about £8.5 million ($11.4 million) on prime London residential property, where income denominated in Qatari riyals was accepted, as well as recent mortgage terms for UAE-resident borrowers earning in dirhams. In another case, a Gulf-resident first time-buyer couple secured an agreement in principle for an 80 per cent loan-to-value UK mortgage.
The analysis by Enness Global suggests the perception that Gulf buyers of London property are predominantly cash purchasers may be wide of the mark.
It shows a widening group of banks, building societies and specialist lenders will now finance UK property for borrowers whose home, employment, company or principal assets are in the Middle East.
Of 122 Tier-A lenders in its database of 1,000 UK and international lenders, 73 lend to people who are not resident in the UK.
Of those, 47 explicitly lend to non-resident foreign citizens. Enness Global identified 21 leading UK lenders with specific lending criteria or transaction evidence relating to borrowers based in the UAE, Saudi Arabia, Qatar, Kuwait, Oman or Bahrain.
Private banks, meanwhile, were offering larger loans and assessing net worth, overseas earnings and investments rather than sticking to conventional UK salary-based affordability criteria.
Islay Robinson, chief executive of the Mayfair-based broker, said: “London and Dubai are often described as competing wealth centres. Increasingly they are complementary. Dubai may be where somebody lives, runs their business and holds much of their liquidity, while London remains somewhere they want a home, an investment property, children at school or simply a second financial base.
“Ten years ago, there was an assumption that if a wealthy Middle Eastern buyer wanted a London property, they would simply pay cash. That assumption is increasingly wrong.”
Who is the 'Dubai buyer?'
He said the typical ‘Dubai buyer’ was no longer limited to Emiratis, as wealthy entrepreneurs and investors who have swapped Britain for the UAE after the non-dom tax status was scrapped may not have severed financial links with London entirely.
The diversity of lenders competing for these borrowers was also significant, he said.
“At one end of the market, specialist building societies and international mortgage lenders will finance relatively conventional London homes and investment properties for employed expatriates. At the other, private banks can combine UK mortgages with securities-backed lending, multi-currency facilities and offshore wealth structures for ultra-high-net-worth families.”
UK house prices rose in August, according to one of the country’s top mortgage lenders, suggesting demand is holding up despite the economic effects of ongoing conflict between the US and Iran.
Price rises
Nationwide Building Society said the average price of a home rose 0.2 per cent to £275,465 in August, reversing a downwardly revised 0.1 per cent drop the previous month. The latest month’s reading was slightly stronger than the 0.1 per cent increase expected by economists.
The reading implies Britain’s housing market may be weathering the Middle East conflict. Healthy savings buffers and a boost to sentiment from Prime Minister Andy Burnham’s cost-of-living measures are helping sustain demand, although energy costs remain high and prices have fallen in two of the last four months.
“Underlying affordability is improving, as house price growth remains well below earnings growth,” said Robert Gardner, Nationwide’s chief economist. Higher mortgage rates, however, are offsetting some of those gains, he added.
The Iran energy shock has dashed hopes of interest-rate cuts, with traders now expecting a quarter-point increase by the end of the year.
The average five-year fixed-rate mortgage remains around 0.8 percentage points higher than before the war at 5.63 per cent, according to Moneyfacts.
Official figures, which are based on completed transactions, showed house prices falling for the first time this year in June. Property website Rightmove also said asking prices fell 2 per cent in August, posting their biggest monthly drop since 2022, with particularly weak figures in London.
New Chancellor of the Exchequer John Healey will deliver his first budget next month hoping to avoid any harm to the economy from speculation about tax rises – a risk that could further discourage prospective buyers.
