Expats Returning to UK in Need of a Mortgage – What is the Process?

In 2009, at the height of banker-bashing, the Labour government brought in a one-off ‘supertax’ on bonuses. A significant proportion of those affected headed straight to Heathrow and bought a one-way ticket to the land of Toblerone, punctual trains and cuckoo clocks: Switzerland. Six years on, however, the financial landscape has altered dramatically. Many of these expats to Switzerland are looking to move back to the UK, and are in need of mortgage advice and support.

After the credit crunch, bankers and hedge fund managers found themselves cast as Public Enemy No 1 in Britain, the irresponsible and greedy architects of the financial crisis. The government came down on them like a ton of bricks; a 50% income tax rate for top earners was introduced; and, in December 2009 alone, no fewer than eight British-based hedge funds relocated to Swiss cities, mainly Geneva and Zurich.

Attractively low taxes and a perceived ‘business-friendly’ environment persuaded firms to abandon England’s green and pleasant land for Alpine pastures and snowy peaks.

Fast forward six years and the tables have turned. This summer Brevan Howard, one of Britain’s largest hedge funds with £17.5bn under management, announced that it was moving its staff back to London. Many other firms are hot on its heels.

The return of the natives has been on the cards ever since the Conservatives won the election, and lately the financial motivation to remain in Switzerland has all but disappeared. Geneva and Zurich are among the world’s most expensive cities in which to live and this, coupled with a low-yield environment, means that Swiss exile no longer makes sense. In the first six months of 2015, hedge funds’ income fell by more than in the previous seven years combined. The slump in the Chinese stock market added insult to injury; and on top of all that, new rules and regulations have driven up the cost of doing business.

The business-friendly Tories are a big draw, but it seems many financiers were simply finding Switzerland too claustrophobic to stay there in the long term. London, compared to Geneva and Zurich, is metropolitan and exciting; you are unlikely to be trapped in one place by heavy snowfall on mountain passes, and your chances of bumping into all of your colleagues on an evening out are far lower. In London flats, we are even allowed to flush loos after 10pm.

Family considerations are also playing a huge part in the decision to return home. Spouses followed their hedge fund manager husbands and wives halfway across Europe on the basis that their income would make all the cuckoo clocks in the world worth it; but over the last couple of years, they simply haven’t been making the money they hoped they would. And, as always, there are the children to think about, with most parents setting their sights on British schools.

Back on British soil, many of these returning expats are in need of a mortgage; and although the market is bursting with choice, it is not any easier to navigate. Those who sold up in 2009 or 2010 are finding that lending rules have altered, particularly with regards to the amount of bonus income banks will take into account.

At Enness, we have a huge amount of experience with this type of loan. One of our recent clients had spent the past few years in Geneva, working at an investment bank. The bank was bringing him back to London, and he wanted a mortgage to purchase a primary residence back in London – but using his bonus income. We managed to secure him the £1.4m loan he needed at a highly competitive rate.

As ever, please don’t hesitate to get in touch – we are always happy to talk through your options with you. For more information, have a glance over our Expats guide.