UK home buyers face snag in loans

HOME buyers considering a British property with a non-British lender could face a 25 per cent increase in payments, tax experts warn.

Peter Goodman, a partner with London-based Wilkins Kennedy, said an increasing number of overseas mortgages would fall into the withholding tax net.

'This is a time-bomb for the ill-advised,' he said.

Last year's Finance Act opened the doors for foreign banks to lend on properties in Britain.

Since April 6 last year, non-resident landlords with overseas loans have been allowed to claim interest relief against the rents received on commercially let property.

This has always been the case for domestic loans.