Stateless: The status of the returning UK expatriate

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UK nationals approaching the end of a placement abroad who are planning on a quick and easy house purchase after landing back home would do well to think again, suggests UK regulated expatriate mortgage brokers Offshoreonline.org.  It is well know that many expatriates leave the UK to build up capital more quickly and to be able to move up the property ladder faster than they would have, if they had stayed put.  Apart from retiring earlier, increasing property holdings is one of the most common reasons given by expatriates for deciding to move abroad to live and work.

Poorly served as it is by mortgage lenders, the expatriate market does at least feature on some lenders’ radars as a source of business, albeit one where deposits of 30% and more are demanded for what is often better quality lending business than exists on the mainland.  Rather than stump up such large deposits, many expatriates decide to delay their house buying until they return to the UK, on the misguided assumption that they will automatically qualify for the lower deposit options that exist for most domestic buyers.

But the position of the returning expatriate is likely to be bleak and choice even more limited than for an expatriate buyer, especially if they have been abroad long enough to have dropped off the Electoral Roll, which will be the case for almost everybody who has lived and worked abroad for any significant length of time.  The reason?  Most banks use the UK voting registry as a core component in their credit scoring.  Without a high credit score, no bank will agree to lend to a client, irrespective of their general wealth levels, and it is virtually impossible to achieve a high credit score if you are not a current voter in the UK.

Bizarrely, that can also apply to clients of banks who have held accounts with their offshore subsidiaries whilst living and working abroad.  If you’ve had an account with one of the big clearing banks abroad, don’t automatically expect their UK operations to grant you a mortgage is the message.

Tim Harvey, managing director of Offshoreonline.org comments, “We frequently meet clients who may have worked in the Far East or Middle East where they might have held significant sterling or currency savings accounts with one of the clearing banks’ offshore subsidiaries in Jersey, for example.  Their level of savings can be quite large, so it is not uncommon for a returning expat to only want to borrow 50% or less of a property’s value, but time and again they are rejected due to a poor credit score.”

UK Property search consultants Expatfindaproperty.com agrees, Erica Evans recently found a home in Scotland for a returning client, only to nearly lose the business as the bank would not lend, despite him having a 90% deposit.  “In the end”, said Evans, “the client bought for cash, as he did not want to lose his dream home, but we were amazed by how unprepared the banks were even for their own returning clients.”

According to Offshoreonline.org, there are two main ways around the problem; either the client has to buy for cash and remortgage six months later once they have a credit record in the UK, or they bite the bullet and buy as an expatriate with a 30% deposit, then remortgage to release funds to rebuild savings once a credit record has been built up in the UK.  Neither would seem to suggest a warm welcome for a willing property buyer who may have a far larger deposit and more stable income than many of his UK counterparts.  (PR-Log)