If you don’t live in the UK but are thinking about buying a property here, you may have heard about the need to use someone called a “process agent”.
A common reason why non-resident property buyers use a process agent is because they need a buy-to-let mortgage with a UK-based lender.
If they plan to continue living overseas, their mortgage lender will often insist on the involvement of a process agent, for reasons I will explain shortly.
But it can be hard to find the information you need about process agents – who are they, what services do they offer and why do many UK companies insist on one?
Adding to the confusion, they are also sometimes known as “processing agents”… or even the more convoluted term, an “agent for service of process”!
Let me try to clear up the confusion for you with my comprehensive guide. In this article I’ll explain what a process agent is, when an overseas buyer may need their support and the right time to appoint one in the property purchase process.
Contents:
What is a process agent?
Process agents have wide-ranging clients who use them for many different purposes. They do not only serve overseas property buyers.
It will help to explain why overseas buyers sometimes need to use a process agent if I start by detailing their broader remit first.
Broadly speaking, process agents tends to represent parties or clients that do not have an address in the UK. They serve these clients in business dealings with a UK supplier, often a bank.
In essence, a process agent is a UK representative for an overseas client liaising with a provider based in England and Wales, under Civil Procedure Rules.
That could be an overseas property buyer – but their clients are often businesses, from the smallest family office to the largest multinational corporation. Of course, it’s possible to buy property through a limited company too.
Process agents are essential for certain specific cross-border contracts. For one client it could be a property or mortgage-related contact but for others it will be different types of transactions requiring a contract.
Examples include loan agreements, commercial leases, share purchase agreements, derivatives contracts, licensing agreements, joint venture contracts and so on. So, what does a process do?
- In short their name, UK address and contact details go into the contract on behalf of their overseas client
- Should another party need to serve legal notices on the client, they send them to the process agent instead
- The process agent acts as the UK-based point of contact, taking responsibility for passing on information or forwarding documents if necessary to non-resident clients.
And who are process agents exactly? In the UK there are dedicated process agent companies but also, law firms and notaries can provide these services too.
Why would overseas buyers need a UK process agent?
The most common reason why a property buyer who is a non-resident may need to use a process agent is to take out a mortgage with a UK-based lender, because:
- The property will be a buy-to-let or a holiday home, with the buyer based overseas most of all of the time
- Mortgage regulations, overseen by the Financial Conduct Authority, stipulate that certain specific legal documents related to property matters must be served in the UK
- This also protects the lender from risks including communication delays in urgent matters – i.e. struggling to get the information to someone based overseas
As confirmed by brokers Mortgage Lane, many banks or lenders will not agree to loan money to someone who does not reside in the UK without a processing agent.
They want the reassurance that in the event they, or another party, serves an urgent document to a non-resident mortgage customer, there are no delays or barriers to getting it.
The logistics of sending these documents overseas are deemed too risky because:
The most urgent documents would include:
- Repossession notices
- Missed mortgage payment notices
- Defaulted mortgage payment notices
- Interest rate changes
Since these notices relate to the mortgage itself, lenders will stipulate that the borrower continues to use a process agent throughout the duration of the mortgage contract term.
The traditional length of a mortgage in the UK is 25 years but for first time buyers, the average is now 32 years, according to data from TSB.
When should overseas buyers contact a process agent?
It’s no secret that there are many steps and moving parts in a typical property purchase process. For a run-through of the different steps involved, read my first time buyer checklist.
Finding a process agent is one extra step for overseas property buyers to go through but the good news is, they are not hard to find. A quick Google search online will produce many results.
And in terms of the overall outlay for buying a property, the costs for using a process agent are relatively low. Mortgage Lane estimates an annual fee of £100-500 or alternatively, approximately £10-50 per document.
So if you’re an overseas property buyer needing to take out a mortgage, when is the right time to choose one?
- Wait for your chosen mortgage provider to confirm whether they require you to have a process agent – it’s possible that your lender won’t
- Some lenders may have the means in place to directly serve non-residents, particularly if they specialise in mortgages for foreign property buyers
- Your lender may show some flexibility if you have a long-standing relationship with them or strong finances
- If the lender confirms that you do need a process agent, appoint one after making an offer on a property and before the seller accepts it, to meet the mortgage provider’s conditions
Of course, you may wish to have a process agent ready to receive important documents on your behalf, regardless of whether or not the mortgage lender requires it. In which case, choose one as early as you like in the property purchase process.
Final thoughts: What is a process agent (UK)?
Hopefully this guide has answered all your questions around what a process agent is and does, as well as when you might need one.
If you are buying a property to let and planning to stay living overseas, read my guide on the non-resident landlord scheme (NRLS) covering paying tax on your rental income.
Take a look at my recently published landlord checklist too, complete with the responsibilities for renting out property in the UK. Also, find out what tenants in common means when buying real estate from another landlord.
Here at Fine Living, we make things as straightforward as possible for non-resident property buyers.
We have many years of experience finding the perfect properties for overseas buyers and helping them through the purchase process and that includes non-resident landlords.
Take a look at the full Fine Living portfolio and for any queries, please don’t hesitate to get in touch.
