British expats living in Europe who want to buy property on home shores have been shunned by lenders.

Banks and building societies in the UK are unwilling to lend to British expats who live in the EU because of the uncertainty surrounding Brexit relations, mortgage brokers have warned.

It means UK nationals living in the EU hoping to buy a property back home have seen a “significant drop” in mortgage options, and in some cases must seek out foreign lenders.

Meanwhile, those expats living outside the EU do not face the same barriers when buying in the UK.

Guy Stephenson, of mortgage broker Offshoreonline, said: “With no comprehensive financial settlement being part of the UK Brexit deal, many of the biggest British building societies have decided to stop lending to EU residents [who live in the EU] until the position is clarified. This has limited the supply of lenders.”

The trade deal announced between the British Government and the EU in 2020 did not include terms on financial services, making cross-border lending harder. This has left British expats purchasing a buy-to-let in the UK, or buying to keep a foot in the British market, left out in the cold.

Mark Harris, of SPF Private Clients, another broker, said: “Options are limited for buyers, as high street banks and building societies have stopped serving this market.

“This is partly to do with the increased difficulties in checking income, expenditure and general affordability, as well as the lack of a finance bill, which has still to be agreed.”

Expats turned down by British banks are being forced to turn to foreign lenders to get a mortgage for a property in their home country. 

One borrower, a UK national living and working as a teacher in Germany, was turned down by a British building society, despite meeting its deposit and rental income criteria. Mr Stephenson said: “We got him lending with an international bank based outside mainland UK.”

The vast majority of the lenders that offer buy-to-let mortgages to expats are smaller building societies. This contributed to the exodus from the market post-Brexit, said Chris Sykes, of broker Private Finance. 

He added: “The EU was always considered a safe bet for lending, but with so much uncertainty surrounding banking relations, the smaller, niche lenders who dominated the expat market have pulled back.”

Expat buyers investing in property in the UK will need to pay a premium, too. Mr Sykes added: “Expat buy-to-let deals will typically be in the 3pc range and above, compared to normal buy-to-let mortgages [for buyers living in Britain], which start from around 1.8pc.”

Despite the challenges of finding a lender and two successive interest rate rises by the Bank of England in just six weeks, British buyers living abroad have been undeterred. The number of expat buy-to-let inquiries are continuing at the high levels seen late last year, Mr Stephenson said.