"A bridging loan can help borrowers secure the funding they need to achieve their goals before more long-term financing becomes available."
The UK property market has always proven to be an attractive investment proposition for foreign investors. Major cities such as London, Manchester and Birmingham have long held significant appeal to buyers living overseas, offering access to an international banking sector, a vibrant and diverse job market and thriving student populations.
Admittedly, the economic challenges of the last few years have taken a toll on both the UK housing market and the wider economy, with sales sluggish and economic growth stagnant. However, as we head into the latter half of 2024, it would appear that the tide is beginning to turn, with a renewed optimism about the future of the UK property market.
This optimism has been driven by falling interest rates, stabilising costs and the clear majority in the recent general election, all of which have instilled renewed confidence and stability in the economy.
Yet despite the challenges of the last few years, investment in the UK has remained strong. Figures from the Centre for Public Data show that foreign ownership of the UK residential property market has more than doubled over the past decade, rising by 180% in the last ten years.
This demand shows no signs of slowing any time soon as, despite recent economic and political instability, the UK remains a safe bet for overseas investors who continue to be drawn to the country’s solid legal and financial systems alongside its close proximity to Europe.
For brokers working in the mortgage market, this offers a significant opportunity to tap into the foreign national bridging loan market and help these buyers achieve their goals.
Investors purchasing a property from overseas can often experience significant delays due to time differences, language barriers, currency movements and enhanced due diligence requirements. This can cause problems securing funding, leading to the buyer missing out on the chance to secure an investment opportunity.
In this circumstance, the speed and flexibility of a foreign national bridging loan can help. Foreign national bridging loans work just like standard bridging loans in offering a short-term funding solution to foreign investors looking to expand into the UK property market.
Foreign national bridging loans are available for a number of purposes, such as buying a residential property, refurbishing or renovating an existing one or buying a property at auction. For each purpose, a bridging loan can help borrowers secure the funding they need to achieve their goals before more long-term financing becomes available.
These bridging loans can also prove particularly useful if the borrower does not have a UK credit profile, as it will allow them to establish a credit record in the UK, making it easier to apply for a mortgage to refinance the loan once the property is acquired.
Given the complexities and nuances of dealing with overseas investors, it is vital that brokers working in this area of the market speak to a specialist lender familiar with helping foreign investors secure funding in the UK.
As a specialist bridging finance lender, KSEYE is well-placed to assist brokers seeking bridging finance for their overseas clients. For example, having an in-house legal team means any upfront legal queries can be assessed promptly which reduces delays when the case goes to offer.
Our in-house legal team is also familiar with the complexities of international purchases and moving money from overseas, which can give investors the confidence that all regulatory obligations are being met.
To give an example of how our in-house legal team helps with bridging loans where the borrower is an overseas client, we recently completed a residential bridging loan for an auction purchase with a Chinese foreign national with assets in another country. Our in-house legal team worked quickly with our underwriters to conduct enhanced due diligence on the client and their assets, including proof of sale and receipt of funds relating to some of these assets, established proof of income, and conducted the relevant AML checks, all in time to provide funding before the client’s deadline.
With the outlook for the UK economy looking brighter, it is widely expected that 2025 will see continued demand from overseas investors looking to purchase property in the UK. For brokers with clients looking to secure funding, speaking to a bridging finance specialist can help them to secure the funding to make the most of every opportunity.
