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Comment: Smaller lenders are stretching their horizons

A few weeks ago, I found myself presenting to a room full of property investors at the top of a skyscraper in Hong Kong. The event was organised by a major Hong Kong wealth management firm in conjunction with the British Chamber of Commerce. Many in the room paid to be there and hear me talk about the challenges of financing UK property as an overseas resident. A great opportunity and quite a thrill to have the Altura presenting in such a setting, with our logo prominently displayed, just a few months after our launch.

After a couple of introductory slides, I revealed an image of Mad O’Rourke’s world famous pie factory. Despite their globally renowned status, no one in the room was able to identify it, or that it is located in the town of Tipton, home of course to the Tipton & Crossley building society, a increasingly competitive expat lender.

Post credit crunch, the lending environment became far more challenging for anyone based outside the UK. A few years ago, major players such as Lloyds International, Barclays, Bank of Scotland and RBS International provided competitive and convenient finance to expats and other non-UK residents in places like Hong Kong.

The financial crisis saw major lenders retreat to UK clients. Regulatory changes such as the Mortgage Market Review, the Mortgage Credit Directive and the PRA guidelines on buy-to-let also saw major lenders pull away from overseas clients. The foreign currency rules alone, for example, make lending to anyone outside of UK that little bit more complex. Technology has had an impact too, with mainstream lenders more frequently relying on algorithms to make decisions, much of which is reliant on a ‘credit footprint’ via Experian or Equifax. If, however, you have been in Hong Kong, Dubai or New York for the last 10 years you are not going to show much on an Experian report.

As a result, it is no longer the major banks who specialise in UK mortgages for overseas residents. Instead, a range of smaller, niche lenders have shown the appetite to lend. Regional building societies like our friends in Tipton, Skipton International and Saffron Building Society have been joined by challenger banks such as Hampshire Trust Bank, Castle Trust, Kent Reliance and Gatehouse Bank. A number of private banks such as Arbuthnot Latham, Butterfield and Coutts are targeting overseas clients investing in UK property.

While Tipton’s pies might be world famous, these smaller regional building societies and challenger banks have very limited overseas presence. To access these lenders, clients need the services of a UK broker with the right contacts. Altura now has access to over 20 lenders happy to consider expat and overseas clients. Such a wide range of lenders means a large variety of clients, property types and ownership structures can be catered for.

The presentation went very well with several good contacts established and direct enquiries received. No news yet on whether Mad O’Rourke have had an influx of visitors from Asia…

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