A UK buy-to-let is underwritten on the rent. A mortgage on a property abroad is not — most European banks will not count your projected rental income towards what you can borrow at all. That single difference undoes the arithmetic British investors arrive with, and it is the thing to understand before anything else.
This guide covers what a buy-to-let looks like when the property is in Spain, Portugal, France or the UAE: who lends, what the deposit is, how the letting is taxed on both sides, and where the model still works.
The quick answers
- Can I get a buy-to-let mortgage on a property abroad? Yes, from a bank in that country. What you cannot usually do is borrow against the rent.
- Is “expat buy-to-let” the same thing? No, and this is the most expensive confusion in the space. That product is a UK property for a Briton living abroad.
- How much deposit? Generally 30 to 40%, and investment properties are often held at the stricter end of the range.
- Can I let it short-term? Sometimes, and it changes both the lending and the licensing. Several banks apply stricter criteria to holiday lets.
- Who taxes the rent? Both countries, with a credit rather than a double charge. It is declared where the property is and again in the UK.
- Does it still work? On cash yield, often yes. On leverage, much less than a UK buy-to-let.
Will the rental income count towards the loan?
Usually not, and this is where the UK model breaks.
A UK buy-to-let is sized on an interest coverage ratio: the lender takes the expected rent, applies a stress rate, and lends what the rent supports. Your salary is almost incidental. That is why a UK investor can hold several properties on a modest income.
Spanish, Portuguese and French banks generally do the opposite. They size the loan on your personal income and your existing debt payments, and treat the rent as an unproven bonus rather than as servicing capacity. A few will consider a portion of a signed long-term lease; most will not consider a projection at all.
The consequence is arithmetic. If your income already supports a mortgage on your own home, the additional overseas loan competes with it — the rent does not create new headroom. Across Upscore’s applications, among applicants whose existing housing costs already took more than 35% of their income, none went on to complete a purchase (n=333). An intended rental does not move that ratio.
Two things follow, and they are the practical core of the piece:
- Your borrowing capacity is capped by your day job, not by the property. Work out what you can service before you look at yields.
- A smaller loan is disproportionately easier to get. Reducing the request from 70% to 60% of the price is the single most reliable improvement to a non-resident file.
Expat buy-to-let is a different product
The term “expat buy-to-let” almost always means something else, and applying to the wrong lender wastes weeks.
| Expat buy-to-let | Overseas buy-to-let | |
|---|---|---|
| Where you live | Abroad | UK |
| Where the property is | UK | Abroad |
| Who lends | Skipton International, Suffolk Building Society, Family Building Society, NatWest International, Barclays International Banking | A bank in the destination country. No UK lender covers Spain or Portugal |
| Underwriting | Rent-based, as a normal UK BTL | Income-based |
| The hard part | Proving foreign income to a UK lender | Cash, and the rent not counting |
Most of the lenders that rank for “expat buy-to-let” sit in the left column. If your property is in Alicante, they are not options — their product is UK security. Which lenders actually lend on property abroad separates the two lists properly.
How much deposit do you need?
Plan on cash rather than a percentage, because the percentage hides the taxes.
Non-resident lending in Spain generally runs at 60 to 70% of the lower of price or valuation (against 80% for residents), and in Portugal the same range with a few lenders stretching to 75% for strong profiles. Investment and second properties are frequently held at the lower end, and some banks price them separately again.
Then add the purchase costs, none of which can be borrowed:
| Spain | Portugal | |
|---|---|---|
| Transfer tax or VAT | 6-10% by region | IMT, banded — and a second-home band is not the main-home band |
| Stamp duty | Included above | 0.8% plus a charge on the mortgage |
| Notary, registry, gestoría | 1-2% | ~1% |
| On top of the deposit | 10-13% | 8-10% |
The Portuguese point deserves emphasis for an investor: IMT bands treat a main home differently from a second home or an investment, so the same property costs more to buy when it is not going to be your residence. The bands are published by the Portuguese tax authority. Spain’s regional rates are published by the Spanish tax agency.
One more mechanic that catches investors: the loan is calculated on the lower of the agreed price and the bank’s own valuation. A valuation below the price does not reduce what you pay — it increases the cash you bring.
What if you want to let it short-term?
Short-term letting is where the lending question and the licensing question collide, and both have moved in the last few years.
On the lending side, several banks apply stricter criteria to properties intended purely for holiday letting, and a minority will not lend on them at all. It is worth asking the question in those words — “is this property intended for short-term tourist letting?” — before the valuation, not after, because a change of stated purpose late in the process can reopen the credit decision.
On the licensing side, the direction of travel across Spain and Portugal is restrictive. Tourist-letting licences are controlled at municipal or regional level, several major cities have capped or suspended new ones, and a building’s own community of owners can prohibit tourist letting regardless of what the city allows. Check three things before you buy: the municipal register, the regional regime, and the building’s statutes. A yield model built on nightly rates is worthless if the licence cannot be obtained or transferred.
This is the single most common way an overseas buy-to-let case falls apart, and it is not a financing problem.
How is the rental income taxed?
In both countries, with a credit rather than a double charge — but you file twice.
Where the property is, you are taxed as a non-resident landlord on the rent, usually with a restricted set of deductible expenses compared with a resident. In Spain, non-resident landlords file periodically rather than annually, which surprises people expecting one return a year.
In the UK, rental income from an overseas property is taxable for a UK tax resident even when the tax has already been paid locally. It goes on your Self Assessment, and you claim Foreign Tax Credit Relief for the foreign tax paid. The credit means you pay roughly the higher of the two liabilities rather than the sum — but the claim is not automatic, and it needs evidence of the foreign tax.
HMRC’s guidance on foreign income sets out the mechanics. Two details that matter for an investor:
Mortgage interest. UK buy-to-let interest relief was restricted to a basic-rate tax credit; the treatment of interest on a foreign property follows the UK rules for overseas property income, which is not the same calculation as the local one. Model the after-tax return on both sides, not just the local one.
Losses. Overseas property losses are pooled separately from UK property losses. They can be carried forward against future overseas property profits, but they do not offset your UK portfolio.
And the exit is its own event: see selling property abroad for the capital gains and repatriation side, and our guide to calculating UK capital gains tax on overseas property for the arithmetic.
Who actually lends, and what do they need?
A bank in the country where the property is, in almost every case. The document list is longer than a UK application and the translations are what stretch the calendar.
| What | Detail |
|---|---|
| Local tax number | NIE in Spain, NIF in Portugal. Needed for the purchase, not only the loan |
| Proof of income | Three to six months of payslips, or two to three years of accounts |
| Bank statements | Six months, every account |
| Every existing debt payment | Including your UK mortgage and any other buy-to-let |
| Tax returns | SA302 or P60, usually two years |
| A credit report from where you live | Standard on a non-resident file. Read for undeclared debt and defaults, not for the score |
| Statement of purpose | Whether the property is a second home, a long let or a holiday let |
| Sworn translations | Of income and tax documents |
| Local life insurance | Portugal in particular: banks generally require a local policy assigned to the loan |
The credit-report line surprises British investors who have read that Spain and Portugal have no credit scores. Both are true: there is no score, and the bank still asks for the report. See how credit scores work in Spain for what it is read for.
Your existing UK buy-to-let portfolio is relevant here in a way investors underestimate. Every monthly payment on it counts against your capacity, and the rent it generates usually does not count in your favour — the asymmetry works against a leveraged UK landlord specifically.
Personal name or a company, and what about the currency?
Two structural questions that a UK investor asks early and that answer differently abroad.
Ownership structure. Holding UK buy-to-let through a limited company became common after the interest-relief restriction. Abroad, the calculation is not the same: a company purchase can change the transfer-tax treatment, the annual property taxes and the non-resident filing obligations, and in some regimes it is actively worse. It also narrows the lending options, because several banks will only lend to individuals on a residential-type product. Decide this with a local tax adviser before you make an offer, because changing it afterwards means a second set of purchase costs.
Currency. The rent arrives in euros and your life is priced in sterling, which means the yield moves without the property doing anything. If you also finance in euros, the mortgage and the rent are in the same currency and the exposure is limited to what you take home. If you finance in sterling — by remortgaging in the UK — you hold a sterling debt against a euro income stream, and a move in the rate changes the real cost of the loan without changing the payment. Neither is wrong; the mismatched version just needs to be a decision rather than an accident.
Does the model still work?
It depends which model, and the honest answer separates two things people merge.
On cash yield — buying with a large deposit and letting long-term — the case is often solid, particularly where purchase costs are lower and long-let demand is steady. The return is closer to a bond than to a UK buy-to-let: less leverage, less volatility, and much less dependence on capital growth.
On leverage — the UK model of a small deposit amplified by rent-based borrowing — it largely does not translate. The rent does not size the loan, the deposit is 30 to 40%, and the purchase costs are 8 to 13% of the price in cash. The multiplier that makes UK buy-to-let work is simply not available.
What our own data says about who gets there: British buyers who have identified a specific property complete at 3.68%, against 0.29% for those still weighing options before they start looking (n=163 and n=346) — nearly thirteen times. For an investor comparing markets in a spreadsheet, that is the relevant warning: the modelling stage is not progress, and the file only becomes real against an actual property.
“I bought an apartment about 4 years ago and had to do some shopping to find the best deal. The options were rather limited because non-residents won’t have a paycheck they can get a hold on or any other assets they can go after if something goes wrong.”
— r/ExpatFIRE, Non resident mortgage in Spain?
Frequently asked questions
Can I get a buy-to-let mortgage on a property abroad?
Yes, generally from a bank in that country. The difference from a UK buy-to-let is that the loan is sized on your personal income rather than on the expected rent.
Will the bank count my rental income?
Most will not count a projection. A minority will consider part of a signed long-term lease. Assume it does not count when you model your borrowing capacity.
What deposit do I need for an overseas investment property?
Generally 30 to 40% of the price, with investment properties often at the stricter end, plus 8 to 13% in purchase taxes and fees that cannot be added to the loan.
Do I pay tax on the rent twice?
Both countries tax it, but a double taxation agreement means you claim Foreign Tax Credit Relief in the UK for the local tax paid. The total is roughly the higher of the two, not the sum — and the claim has to be made.
Can I use a UK expat lender for a property in Spain?
No. Those products lend against UK property, and so does every other UK lender that ranks for the term — checked in August 2026. HSBC Expat refers rather than lends, and only where HSBC has personal banking, which excludes Spain and Portugal.
Do I need a licence to let short-term?
Usually yes, and increasingly it is restricted. Check the municipal register, the regional regime and the building’s own statutes before you commit — a community of owners can prohibit tourist letting even where the city permits it.
Can I remortgage my UK home and buy the overseas property in cash?
Yes, and it sidesteps the whole problem of the rent not counting. It also converts a mortgage on a foreign property into a mortgage on the house you live in, which is a different risk rather than a smaller one.
Is Portugal or Spain better for an overseas buy-to-let?
Purchase costs run lower in Portugal, but the IMT band for a non-main home narrows the gap, and the licensing regime matters more than either. Model both after tax and after licensing, not on headline yield.
The bottom line
An overseas buy-to-let is a viable purchase and a poor imitation of a UK one. The rent does not size the loan, so your borrowing capacity comes from your income — and the deposit plus purchase costs mean the cash requirement is closer to 45% of the price than to 25%.
Do three things before you model a yield: confirm your capacity against your existing monthly commitments, confirm the letting licence is obtainable and transferable for that specific property, and model the return after both tax authorities.
Once you have a specific property in mind, Upscore’s Finance Passport shows which banks in Spain, Portugal or the UAE will approve your profile. It is free and takes under fifteen minutes. For the wider picture, see can you get a mortgage on a property abroad.
