The number of foreigners who own buy-to-let properties in the UK has more than halved over the past seven years, it has been revealed.
But despite this dramatic drop, they still earn £5.4 billion a year in rent half of which comes from London properties.
Countrywide, which conducted the research, says this decline in the number of overseas landlords is down to both a steady increase in tax on property investors, and stalling capital growth particularly in London.
“The growth of the private rented sector since 2010 has not been driven by overseas investors,” says Johnny Morris, Research Director at Countrywide (pictured, left).
“As well as having to contend with increased stamp duty and the annual tax on enveloped dwellings (ATED), overseas investors also saw the removal of capital gains tax exemptions in 2015.”
Countrywide also says the proportion of UK property owned by overseas landlords has dropped from 12% to 5%, a record low.
And in Greater London the reduction has been more dramatic from 26% to 11%, the research says, while in prime Central London the proportion has dropped from nearly a third in 2010 to less than a quarter now.
Asians largest group
Countrywide says the reduction is in part due to Europeans withdrawing from the London buy-to-let market, and that Asians now make up the largest proportion of foreign landlords in the capital at a third, followed by Europeans (28%) and Middle Easterns (9%).
But outside London Europeans are the largest group of foreign landlords at 37%, although overall foreign buy-to-let investors have been withdrawing from the UK’s regional property markets since 2010, Countrywide says.
Although 11% of buy-to-let property in London is owned by foreigners, outside the capital it is less than 5% in most regions including the South East. In Scotland, Wales and the Midlands only 3% of buy-to-let properties are foreign-owned.
Countrywide also says that while the average rent in the UK rose by 1.1% in June, they dropped by 0.8% in London.
“The fall in the capital was driven by lower rents in the outer areas of London as the ripple effect from falling rents in Central London continues,” says Johnny Morris.
But outside the capital demand for rented property is pushing up rents, dramatically in some regions. For example, in the South West rents rose by 4.6% during June.
- Where London’s overseas landlords come from
Europe – 28%
North America – 10%
Middle East – 9%
Oz/Malaysia – 8%
Africa – 7%
South America – 5%