International Purchases

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PLEASE NOTE – Rose Capital Partners are in the process of merging with Heron Financial, therefore it will be best for Heron to pick up your enquiry from here. Please do use the link here to book in with the team but if you have any concerns, please call us on 020 7935 7866 or contact info@rosecp.co.uk 

International Purchases

International Purchase Mortgages Frequently Asked Questions

Richard Campo from Rose Capital joins us to talk to us about international purchases.

Why does the UK appeal to overseas investors?

The classic appeal of the UK is that we have a good rule of law. Governance is really important and we have a very strong regulatory system. 

Plus, in terms of trading hours, the UK has always had the longest trading day in the world. Here, you might start dealing with clients in Singapore, Hong Kong and China early in the morning and then talking to people in America in the afternoon and evening. So we’re beautifully positioned for the markets. 

Our school system is also very tempting for people who are looking at investing here, where their children might come and use a property at a later date. We see a lot of that.

An interesting example of our governance is the recent mini-budget announcement in the UK (podcast recorded in October 2022). A budget needs scrutiny, so the government thought they’d be clever and call it a ‘fiscal event’ to be able to move faster. The markets went mad as a result, and there was such a backlash that the government had to rescind some of their schemes.

It shows how robust the system is. Our elected leaders are very much held to account, even by their own party, as well as the opposition and the public. The fact we can openly criticise them shows why this is still one of the most stable and reputable countries in the world. 

Can a non-UK resident invest in the UK?

Mortgages in the UK are based on an assessment of the borrower. For international investors, including expats that have been outside the UK for a while, lenders can’t rely on credit scoring systems.

Because of that there’s a very old-school underwriting process based on the three Cs – collateral, commitment and capacity. The collateral is the property itself, the commitment is your deposit and the capacity is your income or your ability to pay. 

Internationally, it may not always be clear what your income is. So the underwriting process will involve the lender looking at bank statements and accounts. We might need to get things translated and notarised in your home country. Because it’s an old school approach, it’s very personal, which I like.

The skill is in matching your situation to the right bank. There are around 170 private banks from all over the world with an office in London. So wherever you’re from, there may well be a private bank from that country with a London office. 

A lot of the big banks also have international wings, so there tend to be lots of options and ways to find the right lending to suit you.

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Can a foreign company buy property in the UK?

Yes, you can absolutely do that. What I see 99% of the time is that an international company will set up a UK limited company to do this. It could be a wholly owned subsidiary of your company. 

I’m not an accountant so I don’t know the tax rules around that. But that’s the approach I see most commonly. It all boils down to a technical thing where getting lending is a lot easier if you have something called a SIC code. It’s set up with Companies House, and sets out certain permissions for companies. There are about five or six in the property field – typically developing, buying, selling, letting and maintaining property. So if you set up a limited company with the correct codes it’s straightforward. 

If you don’t want to do that, we might need to go a bit further afield and find a bank that’s comfortable with your set-up. You may have to pay a higher interest rate because it might be deemed more risky. That’s the tradeoff – if you’re willing to set up a UK subsidiary you can get a regular mortgage. But if not we might have to go a bit further to find a bank that’s comfortable.

How do I apply or qualify for a UK mortgage as an overseas investor?

Because the process is a bit old school, it can take more time. People could be in different jurisdictions, speak different languages and be in different time zones which can complicate things. 

We urge you to speak to us as soon as possible. We’ll start with a ‘fact find’ exploring your details and situation, assets, liabilities etc… it’s not particularly intrusive. It takes about five to ten minutes and gives us a good indication of where we can go for lending. 

The jurisdiction is the key point because certain banks do and don’t like people from specific countries – it’s all about their capacity. They can’t deal with the whole world. They might have particular expertise in-house or an office in certain countries. 

We’ll then ask you for some documentation, typically bank statements, payslips or accounts depending on your situation. We can use that to draw up a shortlist of lenders and have a conversation with you around products and borrowing. 

Then we go back to the bank and get a formal agreement in principle. This is your rubber stamp to go and buy property. We only disclose information to a bank at that stage –  everything prior to that is done on a no-name basis. We are governed by the data protection acts and GDPR so information is held very securely with us and does not go anywhere without your express consent. 

Once you have identified a property, we formally apply with the bank. It can take time, so engage with a broker as early as possible. Often it’s the account opening stage that takes time – three to six months is not out of the ordinary.

What other advice do you have when it comes to international purchases?

Whenever I talk to clients who aren’t from the UK, they are staggered by how disjointed and backward our system is. For example, a mortgage is broken down into three processes: the legals, the survey and the mortgage itself. 

You’ve also got the agent selling the property. So there are four invested parties in one transaction. A broker pulls the whole thing together, so you only have to deal with us. 

If you’re not from the UK or you’re not in the same time zone, that’s very important. 

One thing to stress is that brokers work on behalf of clients – not on behalf of the bank. We want to get the right outcome for you. We don’t even get paid until the whole thing goes through. So we have a vested interest to make sure you get the right result. 

Your time is far better spent focusing on your day job, so let us do the donkey work and get the right outcome. People typically go to their bank for help, but there are 170 private banks and more than 100 high street banks. Many of them will do some form of international lending. So let us do the work for you and get you a better outcome, and you’ll have someone in your corner who’s working for you. That’s absolutely essential in the UK purchase market.

Your property may be repossessed if you do not keep up with your mortgage repayments. 

There may be a fee for mortgage advice, however the precise amount will depend on your circumstances. If a fee is charged, a typical amount is £495.