Toby Johncox, head of mortgage sales for Enness Global in Dubai, and Fahd Abu Aisha, MENA Director of Regal London offer tips and advice about financing a property in London from the MENA region.

Historically, Middle Eastern investors have always considered London as a second home and, as such, there has been a huge amount of investment into UK real estate from the MENA region, especially in London. A few years ago, that investment moved towards periphery cities and regional cities but the appetite for London real estate has returned since the coronavirus pandemic started. The major real estate agents expect London property to increase by 20% in the next five years so demand appears to be increasing.

Services for people buying a property internationally

The international mortgage landscape is quite a complicated one, specifically when you consider high net worth and ultra-high net worth buyers, so it is important to source the best mortgage and finance products, but also find a solution to international real estate financing that employs the best tax advisers, lawyers and property consultants.

Mortgage brokers like Enness Global work with local UK banks as well as international banks, but people in the MENA region are not always fully aware of which banks are able to provide a mortgage on UK property or offer products for UK homes.

Middle Eastern clients are used to taking a mortgage in order to invest in UK real estate, but if you look at African buyers, it’s a new prospect. So it’s important that people investigate whether they are eligible for a mortgage on a UK property. Banks in Singapore and other parts of Asia, and institutions in Dubai and the rest of the Middle East, are all willing to lend, although predominantly it is bankers and lenders in the UK and Channel Islands along with banks in Europe where most lending for UK real estate occurs.

Which nationalities can buy in the UK?

It is relatively easy to organise finance for people from the more common Middle Eastern countries and there is usually a solution for every type of buyer.  However, there are some obvious nationalities for whom financing cannot be arranged. As an example, Enness Global alone helped clients of 79 different nationalities last year, based in 20 different jurisdictions.

The demand for mortgages on UK homes from Middle Eastern buyers

Mortgage approvals are as high as they’ve ever been. A number of external factors regarding tax changes have made it more likely that high net worth individuals will borrow to buy a property. COVID has also tightened up people’s liquidity and so those people that may have previously been in a position to buy in cash are now looking to take financing. Also, with complex tax changes over the last few years, it now makes financial sense for clients to take a mortgage or debt against a property when they’re buying it. So the appetite to borrow is significant and lenders’ appetite to lend money is significant. With such fantastic mortgage products available at the moment even people who do have the cash to buy a property could better invest their cash by taking debt on real estate.

Average loan-to-value for buyers from MENA

Rates depend on the client profile, the type of asset they’re buying and whether it’s a buy-to-let or residential property. Also, the value of the asset because, of course, the larger the asset, the more a bank will scale down the loan-to-value i.e. the amount you can borrow against the value of the property. On average, between 65% and 70% loan-to-value is common, which means clients can take a loan from the bank of 65% – 70% of the purchase price of the property. For example, if you were buying a property for a million pounds, you would be able to borrow £650,000 – £700,000. The maximum loan to value for international buyers available at the moment is 75%. How many years this is repaid over varies subject to the lending institution but it can be as long as 25 years up to a retirement age of 75.

UK mortgage process

The sooner a prospective purchaser from the MENA region speaks to an adviser the sooner they can identify how successful they would be in obtaining a mortgage for a UK property. Preferably at the point of making an offer on a property, or have an initial review even earlier to see if they are in a position to buy a property before making an offer. The mortgage process in the UK is roughly eight to 12 weeks. But depending on the required documents and where the client lives that can take longer. Equally, it can be done much quicker if required. f you allow three months to do the mortgage application, and start six months in advance of completion, that gives plenty of time to put the mortgage in place, which means the client will get the best product available.

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