Good news – overseas investors are still coming to the UK in droves

7 April 2021 | Investment

Good news – overseas investors are still coming to the UK in droves

Despite the ongoing implications of Brexit and, more recently, the pandemic, the number of overseas landlords owning property in the UK has hit a five-year high, new research from ludlowthompson has revealed.

The lettings agency says the increase shows that Brexit, Covid-19 and recent tax changes have not been a deterrent for those looking to invest in UK property.

Since the EU referendum, it has seen a 19% rise in foreign landlords in the UK, taking the current total to 184,000.

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Favourable exchange rates meant that foreign buyers were able to get more for their money, opening the market up to a wider pool of investors.

ludlowthompson says despite tax changes, including a 2% stamp duty surcharge that will increase costs for overseas investors (implemented on April 1), property in the UK will remain an attractive long-term investment prospect for investors from many overseas jurisdictions.

The UK property market has traditionally been resilient in times of economic uncertainty and a structural shortage of properties has kept rental yields relatively strong.

In recent years, there has also been an increase in the number of Hong Kong buyers of UK property. This is expected to rise following the launch of the new visa for Hong Kong British National Overseas (BNO) passport holders.

The reputation of schools and universities in the UK has also benefitted the property market. The agency says many overseas landlords who have purchased property have done so to provide accommodation for their children studying in the UK. 

Additionally, overseas landlords have been benefitting from the stamp duty holiday, which has enabled buyers to save as much as £15,000 on properties worth up to £500,000. The holiday in its current form is set to run until June 30, after which point stamp duty will be reintroduced on properties worth £250,000 and will apply to properties over the £125,000 threshold from September 30.

Whilst overseas landlords have benefited from the holiday, they are now liable to pay a 2% stamp duty surcharge on property investments.

Stephen Ludlow, chairman at ludlowthompson, comments: “Fears that Brexit might dampen the appeal of UK property amongst overseas investors have been unfounded, with the number of overseas landlords reaching a record high.”

“Many canny investors took advantage of the temporary drop in Sterling’s value to purchase properties in the UK and benefited from both an increase in property prices and a recovery in sterling.”

He concludes: “Investments by overseas landlords into UK buy-to-let properties have ensured that there has been a steady stream of capital into that sector, which has kept the quality of rental stock far higher than would have been the case with these investors.”

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This post has originally been featured in Property Investor Today.