A place in the rain

Lower taxes, more money or even a better climate are all good reasons for Brits to want to live and work abroad. But keeping a toe in the waters of the UK property market can make equally good sense.

Over the past few years, the UK housing market has proved to be one of the most buoyant in the world. An average property in April 1996 would have cost £51,367 according to the Nationwide House Price Index. Ten years later and the same property would is worth £160,391.

"Although further equity rises of this kind are not expected, buyers who have left the country in recent years don't want to take the risk," says Paul Fincham, spokesperson for Halifax. "They want a stake in the UK market even if they don't live here."

Buying-to-let
If you are buying a property purely for investment purposes you will need to take a buy-to-let mortgage - regardless of what country you call home.

These mortgages are available from range of lenders. To get advice on the best deal you could use a specialist buy-to-let brokers such as Mortgages for Business or Landlord Mortgages.

Typically, buy-to-let interest rates will be around 1% higher than those on residential mortgages. This is because the owner does not live in - and therefore safeguard - the property. If the property owner is also not in the country, criteria will be tighter still.

Nick Gardner, director of Chase de Vere Mortgage Management, says buy-to-let lenders might limit the loan to value (LTV) - the proportion of the property price they will lend you - to less than the 85% normally offered to landlords who live in the UK. This means you may need a deposit of more than 15% to purchase a property.

If you are buying one with the intention of living in it in the near future, you can often get a cheaper residential mortgage and acquire a "consent to lease" from the lender.

These deals are usually called expatriot mortgages and permit you to rent out the property for a limited period until you come home to occupy it. The consent to lease, which would otherwise cost in the region of £70, comes as part of the package.

Expatriot mortgages
All expat mortgages require that the borrower lives in the property within a certain timeframe, typically three or four years.

They will also come with other restrictions. Halifax for example, confines its overseas borrowers to either a three-year fixed rate or a three-year tracker. Priced at 5.59% and 5.49% respectively, rates are not competitive compared with the bank's mainstream deals. And loans are restricted to 75% LTV. "It's a kind of quasi buy-to-let product," said Fincham.

Leeds building society will usually lend up to 95% of the purchase price on expat mortgages. However, the caveat is that borrowers must be paying tax in the UK - something Halifax does not insist on.

Portman building society will lend expats up to 80% LTV, but on the condition that they are operating a UK bank account.

Finding the right lender
Not all lenders offer expat mortgages. "Many will insist that you are living in the UK and have been for the past three years," Garner says. "Otherwise you will probably not be on the electoral role and therefore be perceived as higher risk."

He cites Bristol & West, GMAC and the Mortgage Business as three lenders that "would not touch you with a bargepole".

To save on legwork, many Brits buying from overseas opt to use a broker. Mortgageforce, which has branches across the UK, gets a steady stream of enquiries from British mortgage applicants living overseas, especially from Australia.

"Thanks to the internet, the whole process can be carried out without the customer having to come back home - something we call 'remote fulfilment'," says Rob Clifford, the managing director. "However, 90% of clients conduct the process by the telephone."

As a rule, brokers do not charge extra to arrange UK mortgages from overseas. Chase de Vere charges a standard maximum of 1.5% of the loan. "But we refund any commissions paid by the lender, so the typical net fee is about 0.8%," says Gardner.

Savills Private Finance charges up to 1% of the loan, but its typical fee is 0.4%. Mortgageforce makes no charge.

Deposits and repayments
Expats will also have to budget for transferring funds back to the UK to pay the deposit or make mortgage repayments.

"Spanish banks, for example, make a charge which is usually a percentage of the amount being sent," says Mark Bodega, marketing director at currency broker HIFX. "Typically, this is around 0.5% in addition to a minimum fee."

On a deposit for a property, this can be a considerable sum. And when several transfers are made - for solicitor's fees and so on - each one will incur separate costs.

To save money you could use a currency broker such as HIFX or Currencies Direct from anywhere in the world. They tend to offer better exchange rates than the banks and do not charge fees.

It may also be the case that you no longer have a UK bank account. And unless you can produce a utility bill with a UK address on it, you will be unable to open one. If this is the case, currency brokers can hold funds on your behalf, and may even pay a small amount of interest on them.

You can keep up with house price movements in the UK with our special report.

Part one: An untaxing time abroad
Part two: Keeping the sun shining on your pension