New UK Stamp Duty Won’t Dent Appeal of Buy To Let Mortgages For Non UK Residents

As stock market volatility continues, expats might be well advised to stick with UK buy to lets…

Expats invested in major stock markets such as the UK FTSE, the Dow Jones in the USA or in Europe, the Dax will have seen largely static average investment returns over the past 12 months and in some cases a slight fall. Meanwhile UK property continues to power ahead as an investment category with the Halifax recently reporting a 10% rise in UK property values over the past 12 months. That’s good news for UK expat buy to let investors and expat mortgage holders, as interest rates on UK expat mortgages have continued to stay competitive, ranging from 3.53% to 4.24%, according to Offshoreonline.org.

Despite the gloom surrounding the recent changes in new UK Stamp Duty for expat buy to let investors and capital gains tax changes which have impacted upon international property investors, there is much to still be positive about. A roundup of opinions amongst leading property experts including the Royal Institute of Chartered Surveyors (RICS), Rightmove, the UK’s largest property portal, Reuters, BNP Paribas and the Centre for Economic and Business Research (CEBR) all predict another good year for UK expat buy to let investors, with forecast property price growth of between 3.5% and 6%, with most opinions clustering around the 4% mark. “Add to that a typical rental yield of 4%-6% and the market could be on course to deliver total returns of up to 10% again”, said Guy Stephenson, a spokesman for Offshoreonline.org and with new lenders starting to enter the market, the range of buy to let mortgages for non UK residents is improving all the time.

Those moving abroad or already invested in UK property from overseas will now have a new tax check-list, though, thanks to changes in the UK tax system which will impact upon expat buy to let investors and international mortgage holders. Going forward it will be even more important to keep records of amounts spent repairing properties, as this expenditure is still tax deductible against profits. Expat buy to let international mortgage holders will continue to be able to offset 100% of mortgage interest costs against rental income and then only pay income tax at the standard rate, currently starting at 20%. Importantly, UK expat landlords will also still benefit from a personal tax free allowance of £10,800 for the tax year from April 2016.

Other important changes which will affect expat buy to let investors and those with international mortgages include new capital gain tax rules. Going forward, UK property which is not designated as the main family home will now be subject to UK capital gains tax, although UK property investors will still have access to their own tax free capital gains tax allowance, worth £11,100 this tax year. Only gains above this are taxed. As with all matters surrounding tax, the advice is to take advice, as there are often still plenty of ways to mitigate any tax liability and stay within the rules.