Ukrainian crisis hits expat property buyers based in Russia
Expats and local nationals living in Russia will now find it much harder to find an international mortgage from mainstream lenders to buy UK property, thinks specialist international mortgage broker Offshoreonline.org. The news comes after one of the largest lenders in the market announced that it was no longer accepting any Russian based mortgage applications, both for buy to lets and main residential homes.
Russians have been big spenders in the UK over the past five years, particularly on London property. According to estate agent Knight Frank, Russians bought 8.5% of all London properties worth more than £2m between March 2012 and March 2013. However, there is other evidence which suggests that the flow of Russian business in the £2milion plus bracket is already beginning to slow, particularly in the light of corporate buyers now having to pay Stamp Duty and, since 2012, capital gains tax.
High end buyers often have no need for mortgages, so the news that a leading high street home loans provider for expatriates has withdrawn from the market will hit ordinary expatriates and Russians alike looking to make even modest property investments in the UK.
Tim Harvey, managing director of Offshoreonline.org feel that it is the 6000 plus UK expatriates living and working in Russia who will be most affected by the changes. “UK nationals living and working in Russia will unfortunately be caught by these new rules which are not particularly targeted. There will still be some routes in to UK property for the expatriate community, but brokers such as ourselves will now need to try to place business on a case by case basis and it will certainly be harder, with interest rates likely to be around the 5% mark.”
Expatriate buyers should budget on a deposit of 20% for their main house purchase or 25% for buy to let deals. Banks are often reluctant to lend on properties valued at less than £125,000 to £150,000, but at such levels, it is certainly possible to add a good quality property to your international pension and retirement planning options.