Foreign banks clean up in buy to let market place

Foreign banks are cleaning up at the higher end of the buy-to-let market, according to wealth manager and investment/mortgage planner HFM Columbus.

As traditional UK based players in the £1 million plus end of the BTL world have all but disappeared, the door has been left open for the likes of Sweden’s Handlesbanken, Germany’s Kleinwort Benson, Israel’s Bank Leumi and Switzerland’s EFG Bank.

“Our own lenders have effectively pulled the plug on this market altogether,” said HFM Columbus mortgage specialist Gary Festa.

“But where do buyers go when they want to get their hands on the big money? Current market conditions have given rise to tremendous buying opportunities, and now we have a situation where foreign investment banks are swooping,” he said.

“We are placing major deals on behalf of high net worth clients, but the big fees commission is going to overseas banks which appear to be less nervous than our own.

“A recent example is Handelsbanken, which has just agreed to offer a client up to £2,000,000 at 1.4% above bank base, initially for three years when the rate would be reviewed. The bank is also prepared to offer an offset facility alongside this loan – but no UK lender wanted to touch anything above £1,000,000. It’s their loss,” he said.

“Another client, rejected by UK lenders, has struck gold with Kleinwort Benson on a £1.7m deal at 1.15% over the 1 week Libor rate (currently 5.1%). Monthly repayments on this loan work out at £8,854.

“So the lender is happy, our client is happy – and we are happy, as we are able to broker the deal.”

Interestingly, added Festa, UK banks are currently unable to compete in terms of best buy rates for deals of up to £1m: “the best we could find via traditional UK lenders is 1.6% over Bank of England base rate – and it is just not competitive,” he said.

“Also, nearly all of the traditional lenders’ schemes on BTLs of up to £1m have early redemption tie-ins of between 2 and 3 years, whereas these foreign owned banks have none.”

HFM Columbus Group, the result of a joint venture between Weybridge, Surrey firm Hoyland Financial Management Llp and Tunbridge Wells based company Columbus Financial Advisers Ltd, is designed to deliver outstanding expertise in financial planning.

Aimed at the higher net worth end of the market, the firm offers in-depth solutions ranging from mortgages and investments to employee benefits, retirement and IHT planning, broadly encompassing the entire independent financial advisory spectrum.

For more information, visit hfmcolumbus.com