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Hello from Switzerland - Expat Benefits and Challenges in UK Property


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Hi All,

 

I’m new to the excellent forum here, but have been investing in property for 15 years so have a fair bit of knowledge, partly learnt from my own experiences both good and bad (Spain, Bulgaria!) and from the experiences and ideas of others. I left the UK 10 years ago and now live and work in a ‘normal’ job near Zürich in Switzerland. The property market here is very illiquid, laws very tenant orientated and properties very expensive (a 2 bed apartment in the town I live is minimum £700k) with a 20% deposit required. Due to these factors I am focusing my attention again on the UK.

 

Other than rental income from my 2 current btl properties in the UK I have no (UK) income, so as I see it I am as a UK expat less affected by the tax changes than I would be as a salaried UK resident. I am in the process of buying a 3rd property in Manchester which I will have in my name rather than in a ltd company. I was wondering though, even for an expat, where the threshold is for this and at what point it makes sense to put property into a ltd company. Does anyone know of a simple tool / spreadsheet to assess this? As I now have a fair bit of cash saved from working abroad, this is something I’ll consider before buying another few properties in the near future. I suspect however even with around 7 properties and income around £40k it would not be worth it.

 

One disadvantage of being an expat investor in the UK is of course mortgages. There seems to be very few expat deals on the market and as such the rates are uncompetitive. Nevertheless it still seems worth it to get a mortgage even though I could do some cash deals. According to my maths whenever the interest rate is less than the net yield of the property (also factoring one off mortgage costs) a mortgage makes more sense. Whenever this is the case it seems from my spreadsheet that the bottom line ROI is better. Anyone with good leads for expat mortgages on £100k ish property please get in touch :-).

 

Another disadvantage being abroad is of course the ability to source properties. I will have a call with Matt from RMP to discuss this next week. For me looking on the portals for property is now no longer an option. I see for someone in my position (or who is otherwise very busy) lots of value in paying someone to source property deals and as has been discussed elsewhere by Rob and Rob, the cost of this can ultimate save and make you thousands. Ultimately with the power of the internet, I can do very good due diligence remotely even when offered a property in an area which I do not know. I can get a good estimation of the value and then only need to send round an independent person to validate detailed aspects such as the condition of the property.

 

So any good property sourcers out there, feel free to get in touch…!

 

Looking forward to more good discussions on the forum.

 

Regards

 

Iain

TPH-Iain-Mathews.jpg

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On 04/01/2017 at 5:41 PM, iainmat said:

Hi All,

 

I’m new to the excellent forum here, but have been investing in property for 15 years so have a fair bit of knowledge, partly learnt from my own experiences both good and bad (Spain, Bulgaria!) and from the experiences and ideas of others. I left the UK 10 years ago and now live and work in a ‘normal’ job near Zürich in Switzerland. The property market here is very illiquid, laws very tenant orientated and properties very expensive (a 2 bed apartment in the town I live is minimum £700k) with a 20% deposit required. Due to these factors I am focusing my attention again on the UK.

 

Other than rental income from my 2 current btl properties in the UK I have no (UK) income, so as I see it I am as a UK expat less affected by the tax changes than I would be as a salaried UK resident. I am in the process of buying a 3rd property in Manchester which I will have in my name rather than in a ltd company. I was wondering though, even for an expat, where the threshold is for this and at what point it makes sense to put property into a ltd company. Does anyone know of a simple tool / spreadsheet to assess this? As I now have a fair bit of cash saved from working abroad, this is something I’ll consider before buying another few properties in the near future. I suspect however even with around 7 properties and income around £40k it would not be worth it.

 

One disadvantage of being an expat investor in the UK is of course mortgages. There seems to be very few expat deals on the market and as such the rates are uncompetitive. Nevertheless it still seems worth it to get a mortgage even though I could do some cash deals. According to my maths whenever the interest rate is less than the net yield of the property (also factoring one off mortgage costs) a mortgage makes more sense. Whenever this is the case it seems from my spreadsheet that the bottom line ROI is better. Anyone with good leads for expat mortgages on £100k ish property please get in touch :-).

 

Another disadvantage being abroad is of course the ability to source properties. I will have a call with Matt from RMP to discuss this next week. For me looking on the portals for property is now no longer an option. I see for someone in my position (or who is otherwise very busy) lots of value in paying someone to source property deals and as has been discussed elsewhere by Rob and Rob, the cost of this can ultimate save and make you thousands. Ultimately with the power of the internet, I can do very good due diligence remotely even when offered a property in an area which I do not know. I can get a good estimation of the value and then only need to send round an independent person to validate detailed aspects such as the condition of the property.

 

So any good property sourcers out there, feel free to get in touch…!

 

Looking forward to more good discussions on the forum.

 

Regards

 

Iain

Hi Iain

 

Welcome to The Hub, my inlaws are Swiss so we spend a lot of time over in your neck of the woods - a beautiful place (expensive though!) 

vicky2.jpg

 

I am the Community Manager at The Property Hub, and PA to Rob & Rob, drop me a line if you'd like to say hello. :)

 

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  • 8 months later...

Hi Markus

I am in Zug, so Zürich would be great. I should definitely be able to make that. I can also imagine there are several more investors or potential investors here who would be interested if it gets up and running.

Regards

Iain

TPH-Iain-Mathews.jpg

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Hi Iain

 

I just came across your initial post. I'm also an expat (living in Bergen in Norway). I've got 4 flats in west London which I self-manage.

 

I met a couple of mortgage brokers at the Property Investor Show at the Excel in April who I've got some initial advice from on expat mortgages. Both were very helpful and certainly seemed to know their stuff. I should say that I've not made any applications with them though as I'm not at the stage of needing to remortgage or purchase further properties just at the moment.

 

Please let me know if you would like their details and I can let you have them.

 

Purchasing new properties within a limited company is certainly a hot topic at the moment! I must admit to being quite sceptical about doing so unless you have pretty specific circumstances which make it advantageous.

 

With kind regards,

Richard

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Hello everyone,

 

I am interested in this thread too as an expat with one BTL in London and looking to expand... these are interesting times for us! We definitely have some advantages: for me personally, given that my only UK income is from property, I have quite a lot of headroom before becoming a higher rate taxpayer. The weak pound is also an advantage at the moment.

 

However our mortgage options are fewer and definitely less competitive than for those in UK. I had a mortgage in principle for around 3.44% from Vida lined up in June which is no longer available to expats living outside the UK.

 

One thing I am struggling to find is a tax advisor with specialist knowledge of BTL as an expat, so if anyone has any leads, please let us know!

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Hi all and thanks Iain for the initial post.

 

I'm an expat in Italy and just about to start my UK BTL investment strategy. I've looked at mortgages and the one thing that comes out is that if looking for your first property, the options are very limited, whereas if you have a UK footprint things get better.

 

In terms of rates through brokers, I don't see fixed term rates below 2.99%. However, HSBC, who have an expat arm in Guernsey, have a 2.74% rate  if the LTV is 60% or less.  Check out the instant quote at https://www.landlordcentre.co.uk which includes an expat field (Advanced option).

 

Most surprising for me is the minimum lend. The lowest HSBC will lend on a single property is 100K, so I am 'forced' to buy something for no less than 167K! Other expat lends will go down to 80K, but their rates are higher.

 

Hope this has helped.

 

Are there ANY advantages to being an expat landlord? I can't find one but if any of you have some tips, I'd appreciate it. The Italian government slaps a wealth tax of 0.8% on all property owned worldwide which is right pain and upsets the cash flow quite a bit.   

 

Tim

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I am in a similar scenario.

 

Throw in for some the issue of expat in 0 tax countries adding another twist.

 

Perhaps worthy of a podcast or even one of Rob D's Property Geek podcasts with an expert ( a mortgage broker of accountant with knowledge in expat domains).  

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On 6 October, 2017 at 2:48 PM, tim adams said:

 

Are there ANY advantages to being an expat landlord? I can't find one but if any of you have some tips, I'd appreciate it. The Italian government slaps a wealth tax of 0.8% on all property owned worldwide which is right pain and upsets the cash flow quite a bit.   

 

Tim

 

Actually I think we have one massive advantage as expat landlords in that we can have a lot of income from property before becoming high rate tax payers.

 

Secondly, we are currently benefitting from a weak pound.

 

The Italian wealth tax doesn't sound too good however....

 

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Hi hufhouse,

 

Surely the amount of tax paid is dependent on the tax regime of the country where we are tax resident?  I am tax resident in Italy, where 45% tax kicks even lower than the UK. So this becomes an expat disadvantage, at least for me. Maybe I should relocate to Monaco or a tax-free island!

 

Tim

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Hi All,

Nice that we have a good expat based discussion started. @Markus & Alex lets try and meet up in Zurich in November. I can coordinate if you mail me (iainmat1@yahoo(dot)co.uk)

 

Regarding the tax situation, at least here in Switzerland you pay tax based on your worldwide wealth. If this is the same in other countries and you are living somewhere with a high wealth tax then this will be pretty tough!

TPH-Iain-Mathews.jpg

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Iain, yes it's good to be able to talk to other expats.... and you are right to point out the difficulty with mortgages.... if anyone needs a mortgage broker, it's us expats.... even so, it really depends where you live.... I was told recently that my "agreed in principle" mortgage is no longer valid because the lender changed their policy... they will no longer lend less than 100k to expats if they are out of the Euro Zone.....  this reduces the number of properties to invest in... most of RMP's offers are not expensive enough for me to take out a 75% LTV mortgage...

 

Tim, sorry to hear about the situation in Italy....  though I think your cost of living in Italy would be a lot less than in Monaco!

 

France also has a wealth tax....

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