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Overseas landlords shun UK housing market after tax hikes

The number of overseas investors with buy-to-let properties has dropped sharply after a tax and regulatory clampdown, reducing the number of homes coming onto the private rented market, fresh research shows.

Overall, just 5% of British homes now have overseas owners, down more than half from the 12% seen seven years ago, the study by agency group Countrywide found.

The sharpest decline in foreign activity has been witnessed in London, where 11% of properly acquisitions are by foreign buy-to-let investors down from just over a quarter in 2010.

The investor demographic in the capital has also shifted since the start of the decade. Asians now constitute the largest investor segment in the capital, while the number of European owners has dropped from 39% to 28% over the past seven years.

North Americans own 10% and Middle Eastern landlords 9%.

Despite falling ownership rates, the average overseas based landlord earned 35% more in rent last year than one living in the UK, Countrywide says.

Collectively this totalled around £5.4bn in rent over the past 12 months – 11% of the £50.6bn paid by private tenants in the UK.

Johnny Morris, research director at Countrywide, said: “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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