High-end UK rentals helped by foreign money
Landlords of high-end buy-to-let properties in the United Kingdom are continuing to do very well, primarily because significant amounts of foreign money are helping boost this sector of the housing market. A new study published by HFM Columbus, a mortgage firm, suggests that continental European banks have entered the UK buy-to-let market, in the form of lenders. In fact, this trend appears to be well under way, as a bank from Sweden is already present in the UK market, as are lenders from Germany, Switzerland and even from as far away as Israel.
It appears that while British lenders have started to pull out of the high-end rental market, foreign banks and financial institutions are filling the void, when it comes to buy-to-let mortgages. An additional problem for British banks is that they make it much more difficult to receive large mortgages, at least when compared to the approach taken by foreign lenders. For example, while few UK-based banks are willing to hand out buy-to-let loans of more than one million pounds, many foreign financial institutions, like Sweden’s Handelsbanken, are much more likely to provide well over this amount to high-end investors. According to a report in the Financial Times, Gary Festa of HFM Columbus argued that UK banks are simply not as attractive as foreign lenders, as they tend to be less flexible in terms of the conditions attached to buy-to-let loans and their rates are also less favourable to investors. Most observers point out that the problem for Britain is that UK banks are losing out on the opportunity to be major players in the high-end residential property market.