Foreign landlords shun United Kingdom property market after tax hikes

Elias Hubbard
July 17, 2017

London has seen the largest fall with 11% owned by an overseas landlord, down from 26% in 2010. Outside London and the South East, less than 5 per cent of homes are let by an overseas landlord.

In "prime" London - the central areas most popular among a global elite who tend to own property in a number of major cities - the decline has been from 31pc to 23pc.

The average overseas based landlord earnt 35% more in rent past year than one living in the United Kingdom and over half of the income earnt by overseas landlords came from rental homes in London.

However, the capital has seen a particular drop-off in the proportion of overseas landlords.

The percentage of European-based investors has been slowly falling over time. The average overseas based landlord earnt a significantly higher sum than their United Kingdom counterparts, taking 35 per cent more in rent past year than one living in the UK. In 2010 they made up largest group of foreign investors in London with 39 per cent compared to just 28 per cent this year.

However, rents in London fell by 0.8% year-on-year, while in the south west they grew by 4.5%, the strongest rental growth across the country.

However, past year also saw a stamp duty hike for people buying second homes, including buy-to-let investors, among other tax changes for landlords which could potentially eat into their profits.

A separate tax on companies buying property in the United Kingdom, known as the Annual Tax on Enveloped Dwellings, pushed up costs further by between £3,500 and £7,000.

The letting agency group claims the proportion of overseas-based landlords operating in Britain is now five per cent, down from 12 per cent in 2010. Rental growth remained at 1.1 per cent in June. "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, ' he pointed out.

Tax changes introduced in recent years include capital gains tax payable in Britain, higher rates of stamp duty on the purchase of property, and ongoing annual taxes levied on properties owned via overseas companies.

Other reports by Click Lancashire

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