Expat taxation change

EExpats who own property in the UK have been warned to take note of a tax charge which comes into force next month on sales of both residential and commercial property and land.

The Association of Taxation Technicians says that non-UK residents who sell any UK land or property from April 6 onwards must file a non-resident Capital Gains Tax return and pay any tax due within 30 days of the sale.

Non-UK residents selling a residential property have been liable to UK tax and required to file a tax return with HMRC within 30 days of sale since 6 April 2015.

But from 6 April 2019, these rules will apply to all sales of UK land and property both residential and commercial as well as disposals of substantial interests in companies which are “UK property-rich” – otherwise known as “indirect disposals”.

Any non-UK resident who owns an interest in UK land or property needs to be aware of these significant changes. In particular, those looking to sell need to be aware that they will have to file a non-resident Capital Gains Tax return with HMRC and pay any tax due, in a very short time frame.

For disposals of commercial property and indirect disposals, only an increase in value after 6 April 2019 will be subject to tax.

This means that, in the short term at least, any tax due on such disposals is likely to be minimal. Even if there is no tax due, or a property is sold at a loss, there is still a requirement to file a non-resident Capital Gains Tax return within 30 days or face penalties.

Good advice for expats who hold UK commercial land or property should consider getting their property valued as at 6 April 2019 whether or not they anticipate a future sale. In the event of such a sale, the value at that date would be used to calculate the taxable gain.

Non-UK resident individuals disposing of residential property will be subject to capital gains tax at 18 or 28% depending on whether they are basic rate or higher rate taxpayers

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For direct disposals of non-residential property and all indirect disposals (irrespective of whether the company holds residential or commercial property) the capital gains rates will be 10 per cent or 20% again depending on whether the taxpayer is a basic rate or higher rate taxpayer.

Expats, five years fixed are very popular

Mortgages with five-year fixed rates have undergone a surge in popularity within the expat community, nearly half of the completed deals recently have been for 5 years or more.

Data revealed 49% of expats are now choosing an initial fixed rate period of five years compared to only 25% back in 2013.

Meanwhile, mortgages with rates fixed for two years have experienced a plunge in popularity with 37% of customers choosing the shorter-term fixes compared to more than half in 2013.

Mortgage brokers think the fact the Bank of England base rate is currently low, coupled with fears over future rate rises, is main driver behind the soaring popularity of five-year deals, which allow customers to lock into a specified rate for a longer term.

Potential pitfalls of five-year deals

While they provide a certain amount of security, five-year fixes aren’t necessarily for everyone. Indeed, several of those questioned in the survey of 200 mortgage intermediaries raised concerns.

They stressed that products with a longer term initial fixed period might only suitable for customers who expected to stay in their current home for an extended period. This was because anyone considering a house move might have to pay early redemption penalties which could outweigh the benefits of a longer-term deal.

Low interest rates, economic uncertainty around Brexit, a reduction in home-mover transactions and more re-mortgaging means that five year products have become a viable option for a much larger proportion of customers.

Outlook

Going forward, the brokers questioned, did not see any reason for five-year fixed rates to fall out of favour.

However, many said a stable economic climate post Brexit, which could lead to an interest rate rise, was the most likely cause of any reduction in the attractiveness of the five-year fix.

In need of some guidance?

Can we be of assistance with your new mortgage/re-mortgage we have fully qualified independent advisers waiting to help you.

Pleasing news for expats

PThe average asking price for UK homes jumped by almost £3,500 in April – making it the biggest month-on-month uplift in over a year, new data has revealed.

Across Britain, the average price of new-to-the-market properties increased by an average of £3,447 in April – equivalent to 1.1% – making it the biggest month-on-month increase since March 2018, according to the House Price Index. 

The average asking price of a property is now £305,449 – still 0.1% lower than a year ago, despite the spring bounce in April.  

Home buyers and sellers are ‘bored of Brexit’ and cannot keep putting their lives on hold whilst negotiations continue.

It is not uncommon to see prices increases at this time of year, but it is still the biggest increase seen for the month of April since 2016.

However, Brexit uncertainty continues to hold back the market as new seller asking prices, the number of properties coming to the market and the number of sales agreed all below this time last year.

The value of properties are holding their value better with an average 0.7% year-on-year price increase. This is compared to a national fall of 0.1% for all properties.  

The best way to describe the sentiment in the market at the moment is “bored of Brexit” – fed up with sitting on their hands, sellers are now looking to get on with their lives and move to a new house and buyers are looking to secure somewhere new.

Can we assist you?

If you are looking for a new or re-mortgage do get in contact and one of our qualified advisers will be happy to help.

Expat with a UK mortgage? – time to review your deal

Mortgage rates are unlikely to improve in the near future so now is the ideal time for borrowers to secure a fixed-rate deal on their mortgage. Borrowers who are on a standard variable rate (SVR) or coming to the end of their term have the potential to save themselves thousands of pounds on their mortgage

The savings can be substantial and could easily pay for home improvements or that much longed-for family holiday.

The near all-time low rates will not last forever, the wise expat should look to secure a deal and speak to an independent broker straight away.

Independent brokers

Not only can brokers offer a far wider range of products and options for consumers which they may otherwise not have access to, or the time to find, but their invaluable expertise will be able to help you secure a great deal on your mortgage.

What does a mortgage broker do for expats?

Essentially, they are there to help expats find the best mortgage deals in the UK. They aim to make that as simple and stress-free as possible, looking at each person’s situation and finding the best product to match their needs.

The mortgage product minefield

There are many expat residential and buy-to-let mortgage products currently available in the UK. This number is increasing every year, highlighting the sheer number of options out there. That is a big minefield to navigate if someone wants to investigate all of those without help. Combine all those options with infinitely-varied personal and income circumstances, plus the variety of property types and how they can impact a buyer’s options… the value of obtaining correct advice has never been higher.

Need assistance

If you are an expat looking to secure a mortgage in the UK, please do make contact and one of our qualified independent advisers will be pleased to help.

Expat buy-to-let’s keep increasing

EA recent report has shown a large increase in expat buy-to-let business, figures show expats are increasing their portfolios as quickly as they can. This year has seen a surge of first time buy-to-let applications in January and February compared to the same period last year.

A new survey shows more than 50% of existing expat landlords are looking to increase their portfolios as they see very good profits in the long term. One of our expat landlords recently expanded his portfolio “I live in Belgium and have seen my property value here fall considerably over the last 5 years.”  “This is not the case in the UK with values and rents increasing year on year” “With such poor returns on my savings accounts I will be increasing my portfolio again when the right opportunity arises.”

At this present time all is in the favour of the landlord with low mortgage interest rates and stable rental incomes.  It has become much easier in the last 12 months for expats to be able to secure a mortgage if the required deposit levels are available.

Lenders are without doubt seeing this market place as a growth area and more and more deals are becoming available on a daily basis. If you are thinking of going into this area of investment call us and we will be pleased to talk over your options.

Buy to let mortgages

UK and expat landlords are reaping rewards from lower mortgage charges and longer fixed rate deals. The various products that are now available are vast and you should be very careful before deciding which deal meets your needs. We always recommend talking to a professional independent adviser as some deals are not quite what they seem.

Competition in the market place is forcing lenders to reduce charges and fees as well as offering longer fixed rate deals.

Need some assistance?

If we can help with your new mortgage please call one of our fully experienced independent advisers, we are here to help!

Expats are searching

EOverseas buyers and expats are sizing up the UK property market for potential bargains, taking advantage of the weak pound and the political uncertainty over Brexit, according to the latest figures released

The property portal found that searches for UK property by overseas buyers have grown steadily since before the EU referendum. They now account for 6.2% of all activity on the portal in the first three months of this year, compared to just 3.6% three years ago, an increase of 72%.

It said some investors are keen to capitalise on softening prices and a weak pound and are looking for discounts. This could fuel demand for UK property, alongside expats planning a return to the UK amid uncertainty over their rights, pensions and healthcare.

Where are they looking?

London is in strong demand as the third most sought-after location, but the UK’s regional cities could benefit the most from interest from overseas buyers, with Glasgow and Birmingham the most popular search locations, followed by Manchester and Leicester.

Below are the top 5 most popular UK locations with overseas buyers:

1. Glasgow
2. Birmingham
3. London
4. Manchester
5. Leicester

Who is looking?

US house hunters are watching the market most closely, accounting for nearly 50,000 searches in the first quarter of this year, as shown by the list below of the top 3 countries where buyers are searching from:

1. USA
2. Spain
3. Ireland

Owning property in the UK is a goal of many overseas property investors including expats, it’s clear a rise in the proportion of searches for UK property which are taking place overseas since June 2016. Foreign buyers view the impact of Brexit chaos on house prices and the value of sterling as a rare opportunity to buy into the market at favourable prices, with a long-term view.

Uncertainty over the rights of British expats living in Europe as well as access to healthcare and pensions, is also likely to be prompting many expats to consider a return to the UK, driving demand for property.

Can we assist you?

If you are looking for a new or re-mortgage do get in contact and one of our qualified advisers will be happy to help.