UK buy to let mortgages

[eyeswideshut]

With the low Pound, I think this is a great time to buy a place in the UK. An acquaintance recently bought a buy to let place in London but he said he had a devil of a time getting a mortgage being a non-resident. He ultimately got one with a regional credit union thanks to diligent searching by his mortgage broker. So it is not impossible - just very difficult. I would explain your situation to your real-estate agent and maybe they can introduce you to a broker who specializes in overseas clients.

One other point. There are significant tax advantages to buying overseas rental properties thanks to the ability to depreciate the building value against your Japanese income. Not sure if this has entered into your calculations or not but it is something to consider.

[RetireJapan]

Is this a political discussion board now? This whole post seems to be 100% politics and 0% practical investment discussion.

Sorry I don't have any experience with property, but I am worried about the direction of some of the threads recently.

I kind of feel we're having some drift recently. I don't want to set rigid rules for the site, but I would prefer if people would try to keep things focused on personal finance. Work in progress I guess

[ricardo]

It’s sometimes difficult to untangle finance and politics. I thought the point about Labour Party policy was a fair one to make, given the strong chance of them becoming the government soon.

Also Brexit is directly related to the current low value of the GBP.

The growth of the American economy is partly due to the current Trump administration’s monetary and tax politics. (Partly..)

Same with next month’s consumption tax rise here in Japan - very important to personal finance, especially if you're planning a big purchase (e.g. a car) in the next few weeks.

So making impartial observations about politics is, I would suggest, highly relevant for this site.

I’d support a ban on giving political opinions, however.

[RetireJapan]

So making impartial observations about politics is, I would suggest, highly relevant for this site.

I’d support a ban on giving political opinions, however.

That's why I am hesitant to make rules. It's a tricky call. So I would be grateful if everyone could exercise restraint and keep things light and as factual as possible. よろしく everyone

[adamu]

I think I've been a bit on edge recently, which showed up in some snarky comments here. I'll (try to) keep those posts to myself from now on.

Um.. buy to let?

[Wales4rugbyWC23]

Doing a buy to let in the UK has become a lot more financially challenging in the last few years. I am in the process of buying my second buy to let flat in the UK. The first one I bought about eight years ago seems like a walk in the park to the process that I have to go through now.... However, I wouldn't be doing it, if my first one hadn't of been such a success and Brexit which means I have been able to pay a significant amount of the mortgage off already. In my first purchase I bought a flat in Oxford I put down a 25% deposit (at that time the industry norm for buy to let mortgages) and went through a specialised expat mortgage broker who got me a mortgage with the Ipswich building society. You needed a minimum salary of 25,000 pounds, and at that time your salary level was not important for the application, but the level of rent was. In addition I paid about 2000 pounds in stamp duty. We did a small renovation after our first tenant left and then Brexit came a long, sterling fell off the cliff and I have paid off about 40% of the capital. It is a real nice earner now of passive income and we have a real good tenant in and good letting agents.
Second time round, my family and I went back for the summer holidays this August and we were looking for flats in Oxford but pretty much priced out of the market specifically North Oxford where our first flat was so we looked further afield more specially Bicester where there is a lot of new house construction and over the next thirty years there is going to be a lot of construction on the Oxford to Cambridge belt. Anyway, we found a flat about the same price as we paid eight years ago, but it being a buyers' market we were able to get a significant discount on the price. However, the mortgage process has changed dramatically. I am still going with the Ipswich building society (I looked at the big banks and even smaller building societies and they all wanted expat salaries in excess of 80,000 pounds and for self-employed 100,000 pounds. The Ipswich have raised their minimum salary to 40,000 pounds and they didn't want self employed borrowers) In addition the yield and the loan to value ratio had changed, so I have to put up a 40% deposit. To add insult to injury because this my second house in the UK I have to pay almost 9000 pounds in stamp duty.

That's where I am now, if you have any questions then please don't hesitate to ask, I am really happy this issue came up as a blog post on Retire Japan. Brexit, even though I am opposed to it, (I have a Polish wife) offers a real opportunity for British expats in Japan to get on the property ladder in the UK even though there more hoops to jump through for the mortgage application procedure, it is worth it.

[Cheeseman]

Wales4RugbyWC19

Some good advice there.
I see on the Ipswich BS site that one of the requirements for a BTL is UK resident. How did you get around that? Or is that new?
Thanks

[Wales4rugbyWC23]

Wales4RugbyWC19

Some good advice there.
I see on the Ipswich BS site that one of the requirements for a BTL is UK resident. How did you get around that? Or is that new?
Thanks

I go through a mortgage broker who specialises is expat mortgages. His company is called international mortgages. He is based in Weybridge in Surrey.

[concerned]

Mortgage relief on buy to let is also being phased out I think, though as a non resident this may not have applied anyway. It does seem the government is keen to discourage buy to let so other disadvantageous measures may come in too. .

Previously one was able to affset 100% of mortgage interest against the UK rent so reducing your UK tax liability. As of this year this has dropped to 50% of the interest you can offset, and they plan to reduce this to 0 in the next 2 years. This is a very big deal, and it making it more difficult to make a profit. Someone mentioned return of 5%, I presently have a buy to let mortgage charging 5%, so this is another head wind....

[Wales4rugbyWC23]

Mortgage relief on buy to let is also being phased out I think, though as a non resident this may not have applied anyway. It does seem the government is keen to discourage buy to let so other disadvantageous measures may come in too. .

Previously one was able to affset 100% of mortgage interest against the UK rent so reducing your UK tax liability. As of this year this has dropped to 50% of the interest you can offset, and they plan to reduce this to 0 in the next 2 years. This is a very big deal, and it making it more difficult to make a profit. Someone mentioned return of 5%, I presently have a buy to let mortgage charging 5%, so this is another head wind....

You will get a 20% tax credit for the mortgage interest from next year. These tax changes only really affect UK higher rate tax payers, but on the whole buy to let landlords are higher rate tax payers so the changes have had a very significant impact on the housing market. Many cities have been saturated by landlords selling their buy to lets. House prices for flats and rents have gone done.
As an expat, I am definitely not a higher rate tax payer and just come under the tax threshold after maintenance, ground rent, agent fees and mortgage interest relief is deducted.