Fewer overseas nationals investing in UK’s buy-to-let market

There has been a notable decline in the proportion of overseas based landlords in the UK as a growing number of buy-to-let investors are deterred by a recent myriad of tax changes effecting landlords and overseas investors.

Fresh research from Countrywide shows that overseas landlords now account for 5% of all British homes let in 2017, which is down sharply from 12% in 2010.

London, which has the highest proportion of overseas based landlords, has seen the steepest decline, with 11% of all homes in the capital let this year owned by a landlord based abroad, down from 26% in 2010, according to Countrywide’s monthly letting index.

In prime central London, overseas based landlords own 23% of homes let so far this year, down from 31% of properties let in 2010.

The study also shows that European based landlords, which made up 39% of all overseas based landlords in London in 2010, but now accounts for 28%, are no longer the largest group of overseas investors in the capital.

The Europeans have been replaced by Asia based landlords as the largest group of all overseas based landlords in the capital, representing 33% of all overseas based landlords, while North Americans and Middle Eastern represent 10% and 9% respectively.

Outside of London, Europeans remain the biggest group of overseas landlords, at 37%, but the proportion of all overseas based landlords continues to fall across all regions of Great Britain. 

Outside London and the South East, less than 5% of homes are let by an overseas landlord, while Scotland, Wales and the Midlands have the lowest proportion at around 3%. 

Countrywide also report that the average price of a new let in Great Britain increased by 1.1% year-on-year in June 2017 to stand at £950 per month, with London being the only region to see rents fall year-on-year, down 0.8%.

The South West recorded the strongest rental growth of 4.6%, the biggest year-on-year rise since November 2015.  

Johnny Morris, research director at Countrywide, said: “The growth of the private rented sector since 2010 has not been driven by overseas investors.

“A steady increase in foreign investors’ tax bills combined with more recent falling expectations of price growth in London has led to a decline in foreign investment in buy-to-let.

“As well as having to contend with increased stamp duty and the annual tax on enveloped dwellings, overseas investors also saw the removal of capital gains tax exemptions in 2015.” 

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