Research carried out by Hamptons has found that the number of overseas landlords owning and operating buy to let properties in the UK has halved since 2010. Eight years ago, 14.4% of landlords in the private rental sector were living overseas. Now, overseas landlords only account for 5.8% of the PRS.
Data gathered by the Countrywide Group shows that the drop off in overseas landlords has been particularly sharp in London, where it was once common for overseas investors to snap up rental properties. Back in 2010, just over a quarter of private landlords were based overseas. Now that figure has fallen to 10%.
In other areas of the UK, there are different proportions of overseas investors.
In Scotland, overseas investors account for 6.1% of the market. In Yorkshire and Humber, the figure is 6.7%. In Wales, however, overseas landlords are in short supply, with only 3.3% of landlords based outside the UK.
Why Have Overseas Landlords Dropped Out of the Market?
As you might expect, the situation is rather complex. Whilst it is currently cheap for overseas investors to buy up large swathes of the UK property market, thanks to a weak pound, there are other additional costs to bear in mind.
When an overseas landlord buys a UK property. Any money they make must be converted back to their own currency. Naturally, there are many costs involved, so income derived from letting out properties can be greatly diminished after the banks have taken their share.
The UK government is also trying hard to make the climate unfavourable for overseas investors. Following an announcement in October that foreign buyers would be subject to additional taxes, the UK’s biggest housebuilders saw their share prices take a tumble. The move was designed to level the playing field for UK buyers, as many experts believe that foreign investors have pushed property prices up, especially in cities like London.
Theresa May said it was only fair that overseas property investors and landlords should pay additional taxes.
“It cannot be right that it is as easy for individuals who don’t live in the UK, as well as foreign-based companies, to buy homes as hard-working British residents,” she said.
Monies raised by the government’s new levy on overseas investors would be used to help tackle homelessness.
“For too many people the dream of home ownership has become all too distant and the indignity of rough sleeping remains all too real,” said Mrs May.