UK Buy To Let

by Matthew Wright

For expats who have UK buy-to-let property, now could be a good time to look at the rate you are paying on any UK mortgage that you have. The buy-to-let market has developed enormously over the last few years and the rates available for buy-to-let property in some cases beat UK standard residential mortgage terms.

As an expat, you will have come to realise how difficult it is to arrange anything to do with banks and building societies in the UK whilst abroad. The lenders themselves also have a hard time understanding the expat market. They do not realise the quality of expat mortgage business and either fail to offer any terms for buy-to-let loans for expats, or offer only substandard terms at best. Happily the more forward-thinking lenders have realised this now. None of International Mortgage Plans (IMP's) lenders differentiate between expat and UK domestic borrowers, even though the expat will normally be letting commercially with full tax efficiency on their interest payments.

Many expats have seen the value of their UK properties soar. Remortgaging can take advantage of this by releasing equity to fund overseas property purchases, retirement or education planning, care for sick or aged family or consumer products of any type.

Buy-to-let investors still smiling

Despite the mixed forecast for property values in 2005, buy-to-let landlords have remained confident. Paragon Mortgages, a leader in the field, confirm that the average property investor, who owned ten properties in 2000, now owns thirteen and is still looking to increase their portfolio. As home ownership has become more of a stretch for many prospective first-time buyers, many of them have stayed in rented accommodation longer. Very few of the buy-to-let landlords surveyed said they would be selling their properties in 2005 if prices should fall. Likewise, the Association of Residential Letting Agents (ARLA) have carried out surveys confirming similar results, showing that sensible buy-to-let investors are not short-termist in outlook and do not trade on emotive market signals. Some 89% of the 800 investors surveyed by ARLA said they would not sell even if house prices fell, but would be prepared to stand their ground and rely on a return to more favourable market conditions.

There are also changes to UK pension rules that come into effect next April which should give a further boost to the buy-to-let market. For the first time UK pension plans will be able to hold residential property within the pension. Leading industry experts expect between £7-£11 billion to be invested in residential buy-to-let property. The prospect of being able to tax shelter their buy-to-let investments in pension arrangements has buy-to-let investors positively salivating! Quite why Gordon Brown should choose to initiate the biggest tax give away for high earners ever seen is beyond comprehension. The proposals are astonishing coming from a Labour government. Returns on buy-to-let investments could be almost doubled if the new planning is used correctly and to its full tax efficiency. This we expect will give new impetus to the buy-to-let market.

Details of the current best buy-to-let terms available to expats are as follows:

SCHEME 1

Two-year fixed interest rate of 3.99%
Redemption penalties apply in first six years: 5/5/5/4/3/2%
Lender's arrangement fee of 0.5% of the loan (can be added to loan)

SCHEME 2

Three-year fixed interest rate of 4.69%
Early repayment penalty in first five years: 5/5/5/2/2%
No lender's arrangement fee

SCHEME 3

Three-year fixed rate of 4.69%
Redemption penalty 5% during fixed rate period - no extended "tie-in"
Lender's arrangement fee 1.5% (can be added to loan)

SCHEME 4

Five-year fixed rate of 4.99%
5% early redemption penalty in first 5 years
Lender's arrangement fee 1% (can be added to loan)

SCHEME 5

Two-year discount of 1.45% year current rate payable 5.29%
5% early redemption penalty during discounted period only
Lender's arrangement fee 0.5% (can be added to loan)

SCHEME 6

Three-year fixed rate of 5.49%
5% early redemption penalty during fixed rate period only
No lender's arrangement fee

For all schemes you can repay 10% of the capital per year without penalty.

Expats wishing to compare their own loan packages with what is currently available to them should click on IMP's website at www.international-mortgage-plans.com which gives an overview of the current market place, lenders comparable terms and incorporate a cost and commitment free 24 hour acceptance in principle guarantee. For further information please contact matt@international-mortgage-plans.com

Home Truths of the Web

Another disadvantage an expat faced when purchasing a property was having to rely on what the estate agents were telling them about a particular area and the property prices. At long last that, too, is a thing of the past. An expat can now find out what properties have sold for in a particular area. It's all recorded on the Web - the site www.nethouseprices.com allows an expat to establish exactly what price property in a particular road/area has achieved since April 2000. The expat UK property buyer is newly empowered.

Matthew Wright Dip PFS
International Mortgage Plans

International Mortgage Plans are regulated by the Financial Services Authority; their registration number is 302775. IMP holds consumer credit licence number 504524. Most of their clients' buy-to-let mortgages are not subject to the new regulatory regime.