As the uncertainty of Brexit rumbles on, the insistence of the government that the UK is prepared to leave the EU without a deal1 has put further downwards pressure on an already-weak pound.
While this may not be ideal for those who are heading abroad for summer holidays, it is welcome news for UK residents living abroad who want to purchase a property back in the UK, either for investment or as a place to return to in the future. The combination of a pretty stagnant property market, which has seen relatively flat price inflation for a number of months, and the weak pound, is making UK property far more attractive for those who are paid in foreign currencies.
So, what difference does the exchange rate actually make to potential buyers? Here are two examples showing the impact of the last three years on the strength of foreign currency to buy property in the UK.
On 1 June 2016 just ahead of the EU referendum, £1 was worth US$1.442. So, a property worth £500,000 would have cost an equivalent of US$720,000.
On 30 July this year, £1 was worth US$1.223, which means that a property worth £500,000 would cost an equivalent of US$610,000. That’s a saving of US$110,000 based purely on the currency exchange.
On 1 June 2016, £1 was worth €1.294, so a property worth £500,000 would have cost an equivalent of €645,000.
On 30 July this year, £1 was worth €1.095, which means that a property worth £500,000 would cost an equivalent of €545,000 – a saving of €100,000.
It’s may be a good time for expats to buy property back in the UK on the basis of the exchange rate. Additionally, the current competitive mortgage market makes it even more attractive.
Traditionally, getting a mortgage as an expat could be tricky. It is harder for lenders to assess a borrower’s financial stability when they have been living abroad for period of time as there may not be sufficient or up-to-date data from the credit reference agencies. In addition, being paid in a foreign currency can add further complications.
There are, however, a growing number of lenders that are able to lend to UK nationals living abroad who want to buy an investment property in the UK, or a home to which they can return and there are some very competitive products available.
The key for expats who want to make the most of this opportunity is working with a broker that understands this sector and has strong relationships with the lenders and private banks that can help expats create strong opportunities from a weak pound. If you are interested in finding out more information, get in touch with one of our specialist advisers today on 0207 519 4947 or email firstname.lastname@example.org.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
Changes in the exchange rate may increase the sterling equivalent of your debt.
The Financial Conduct Authority does not regulate some aspects of buy to let, overseas mortgages and tax advice.