British expats benefit from the stamp duty holiday | WIS Mortgages
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British expats benefit from the stamp duty holiday

It may be a good time for British expats to invest in UK property for a variety of reasons. 

The stamp duty holiday is one of the main reasons. British expats mainly buy properties in the UK as a buy-to-let investment. Alternatively, they may buy them for their loved ones to live in, or for themselves in the future. 

The UK government has made a move to strengthen the economy by rebuilding the property market. One of the steps taken to boost the property market is the introduction of a stamp duty holiday. 

What is the stamp duty holiday? 

The chancellor, Rishi Sunak, has announced a Stamp Duty Land Tax (SDLT) holiday for all property purchases to the value of £500,000 until 31 March 2021. 

The stamp duty holiday will include properties purchased by expats and foreign nationals. This government initiative to help homebuyers is seen as a great decision by many. It could save expats up to £15,000 in stamp duty fees, depending on the price of the property they invest in. Please check out our stamp duty calculator.  

If you are an expat planning to purchase, the transaction needs to complete by 31 March 2021. It will take time to identify the right property to buy. In the UK, the mortgage and legal processes can take a good three months, on average, depending on the complexity of the transaction. Therefore, British expats planning to purchase in the UK may need to act quickly. 

How can British expats benefit from the stamp duty holiday?

– Reduction in overall tax liability 

Stamp duty can be a significant barrier stopping a UK expat from entering the UK property market. The stamp duty holiday provides home buyers with an excellent opportunity to reduce their overall tax liability. 

– Increase the deposit for residential property purchases to 15% or 20%, as there is more money in hand

Planning the deposit is one of the biggest concerns for foreign applicants. With the coronavirus pandemic, the banks in the UK have increased the minimum deposit amount if you opt for a mortgage. The stamp duty savings can be used as a deposit instead. This may help British expats overcome the barrier. 

As expats earn in a different currency to GBP, deposit funds need to be converted to pounds sterling. Foreign exchange rates can be challenging due to high uncertainty around exchange rate fluctuations. The good news for overseas investors is that the pound has weakened, and that makes international transactions cheaper for expats, provided the currency of their country of residence is stable compared to the pound.

It indicates that both savings from the stamp duty holiday and benefits from the exchange rate can be used to increase the deposit amount. 

– Apply for cheaper interest rate deals 

Homebuyers may now put down a bigger deposit by using the savings resulting from the stamp duty holiday. A bigger deposit will help the expat secure a more favourable mortgage deal as the loan to value (LTV) ratio may fall. It helps mortgage borrowers to maintain lower monthly payments and better budget for their commitments. 

Good news for foreign nationals wanting a mortgage  

The reduction in stamp duty will help foreign nationals wanting to invest in the UK, too. Mortgage providers are now much more flexible when it comes to lending to foreign nationals. 

Interest rates can be slightly on the higher side for expats and foreign nationals than it is for UK residents, given the additional risk to the bank. 

Buying a property in the UK can be daunting for many. An experienced mortgage broker can help people calculate maximum borrowing amounts and other requirements of the application process. 

Expat mortgages may require bespoke underwriting, and a mortgage adviser can help you identify the most suitable lender and a suitable mortgage based on your circumstances. WIS specialises in expat mortgages and mortgages for foreign nationals. Call us on +44203 0111986 or chat to us on live chat. We are happy to arrange a call at a time that suits you. 

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the mortgage repayments.

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