What is a Processing Agent?

If you are not based in the UK, so based overseas and buy a property in the UK with a mortgage or loan from a Bank or Lender, then the Bank or Lender will require you to have a Processing Agent which is a local entity, such as a lawyer, accountant or letting or managing agent, to act as a mailbox/ messenger and more.

A Processing Agent is considered vital for communications between Banks and Borrowers.

Why do I need a Processing Agent?

The vast majority of foreign Banks, UK private Banks and lending institutions require a Processing Agent for their borrowers as they are concerned about sending documents to overseas owners and not being received. So they legally require a buyer to appoint a Processing Agent in the UK who they can service any paperwork or legal notices on.

This is a very important role for whoever acts as Processing Agent for a buyer as the Bank or Lender could serve notice that they are going to repossess the property or change the interest rate and buyers need to be aware of this. Therefore because it is such a responsible role, very few people want to take on this responsibility – many lawyers accountants and agents will not agree to act as Processing Agent.

Imagine if the Bank or Lender serves a legal notice on an overseas client, such as for missed or defaulted payments and/ or possible repossession of the property, at the Processing Agent’s registered address… if the Processing Agent then fails to pass this information on to the Borrower, then the Borrower would have no idea and could face a legal and financial nightmare and in the worst case scenario, lose their property as it gets repossessed.

So for example, if the buyer is a Singapore passport holder with their home or primary residence located in Singapore, who is buying a London property with a loan or mortgage from a Bank or Lender, then the buyer will need to find someone who will act as Processing Agent. This is a requirement by the Bank or Lender and they will not send any funds to the buyer’s solicitor or lawyer until a Processing Agent has been appointed.

A Processing Agent is considered vital for cross-border transactions under the UK’s jurisdiction. These transactions include both bilateral and syndicated loans as well as other credit facilities for corporations and individuals. Should court proceedings become necessary, the Bank or Lender will send all legal notices to the registered Processing Agent in the UK and while they would normally send a copy to the Borrower in Singapore, they equally may not or that notice or letter could get lost in the post. So the role of Processing Agent is vital.

Which Banks & Lenders require a Processing Agent?

The majority of lending institutions and Banks, both foreign and UK based, require a Processing Agent for their borrowers.

A list of some of the Banks that Benham & Reeves act as Processing Agent for clients are

• Arbuthnot Latham
• Bank of China
• Bank of East Asia
• CIMB Bank
• DBS Bank
• Gatehouse Bank
• Julius Baer London
• Maybank
• Nomo by Bank of London and the Middle East plc

As a registered Processing Agent, Benham & Reeves understand the nuances and complexities involved in liaising between the Lender and their Borrowers.

For Banks and Lenders, it is all about ensuring their capital (ie loan amount and interest) is protected by ensuring there is a local person in the UK, on whom they can serve notices and avoid the logistics of finding borrowers overseas.

What does a Processing Agent do?

A Processing Agent for your UK mortgage or loan will in effect act as your local UK representative and will:

• Provide the Bank or Lender with a UK address to accept legal and financial documents
• Keep the Borrower informed of any notices received from the Bank or Lender including default interest payments, changes in the mortgage regulations and threats of repossession.
• Help you comply with updates / changes to UK laws regarding mortgage agreements and property ownership
• Finally facilitate prompt communications between the Borrower and the Bank or Lender.

When do I need to appoint a Processing Agent?

In a nutshell, you will need to appoint a Processing Agent when you have accepted your mortgage offer from the Bank or Lender. Your Lawer or Solicitor will send you a form to complete where you must state who the Processing Agent will be and get the Processing Agent to sign in agreement to the Bank or Lender’s terms.

How do I onboard a processing agent?

There are limited numbers of people who will agree to act as Processing Agent in the UK. To appoint the right Processing Agent, ensure you ask them if they have done it before and for whom and what will happen if the Processing Agent changes address (eg will their mail be forwarded) and then understand the scope and services offered by the Processing Agent.

How much does it cost for a Processing Agent?

The terms and fees for a Processing Agent varies considerably but ranges anywhere from £100 to £3,500 plus VAT per annum.

Do Estate Agents, Sales Agents and Letting Agents act as a Processing Agent?

As your postal representation in the UK, a Processing Agent is agreeing to be served with legal notices by a Bank or Lender on your behalf. This means you need someone who you can trust, who is stably financially as this will be a long-term relationship that stretches throughout the length of you loan or your mortgage.

Most local UK Estate Agents, UK Sales Agents and UK Letting Agents will neither understand nor agree to act as Processing Agent and Borrowers often find they initially agree but then when they discover the responsibilities, excuse themselves form the role and leave the Borrower having to find someone else or be in contravention of their mortgage terms. If a Borrower is in breach of their mortgage terms the Bank or Lender could call in the loan.

So the quick answer is very rarely.

So what do I do if I need a Processing Agent?

In short contact Benham & Reeves.

Benham & Reeves, with 35 global branches (21 in London and 14 overseas), understand the requirements of acting as a Processing Agent and agree to act as Processing Agent for clients. Unlike many other Agents Benham & Reeves offer a full one stop service to overseas investors with UK properties and will act as Processing Agent as part of Benham & Reeves full range of property management services.

If you’re buying a property in London, then Benham & Reeves’ one-stop service, which includes acting as Processing Agent, will take away the stresses of London property ownership so please do contact us today.