UK expats looking to invest in new build homes in the UK are increasingly at risk of losing their deposits, thinks expat mortgage specialist, Offshoreonline.
Typically, buyers of new builds will be expected to put down a deposit of up 10% of the sale price, with strict rules governing if and how this can be reclaimed, in the event the purchase does not progress. Very often, buyers who have to pull out are finding they cannot reclaim their deposit in full.
Guy Stephenson, a director of Offshoreonline.org explains, “If you are living in the UK, it is relatively easy to get a mortgage and the choice of lenders will be wide. Living abroad as an expat, there are far fewer lenders serving the market. Within this group, lenders will pick and choose the countries where expats live that they will lend to. On top of this, many building societies will not lend on any new build for expat buyers. So for the expat living abroad who is thinking that a new build could be an easy way into the UK buy to let market, danger lurks, if they cannot get a mortgage offer, as the deposit may well be lost, either in full or in part.”
Stephenson quotes the case of a client who had paid a 10% deposit on a new build home in the Midlands and was selling his house in France to finance his move back to the UK. The French sale fell through, as the buyer has not been vetted correctly by the estate agent, leaving the client badly exposed. Because of his age and poor income, no UK lender would offer finance on the new build, so he was forced to pull out, losing a large percentage of his deposit.
For expats thinking of a new build investment, the lessons are clear – make sure you can get a mortgage before committing to any deposit, even if you do not need it, as if circumstances change, you may well have to prove you can still raise the funds to buy.