Despite economic uncertainty, overseas investors continue to flock to UK property for investment. In recent years, the property market has performed particularly strongly.
The number of overseas landlords owning property in the UK has reached a five-year high. There are currently 184,000 overseas landlords. This is a 19% rise over the past five years, according to data from estate agent ludlowthompson.
Despite tax changes in the buy-to-let sector, the COVID-19 pandemic and Brexit, UK property has remained an appealing long-term investment for many overseas investors. And this is expected to continue to be the case in the coming years.
A rise in demand from Hong Kong investors
There has been a particular increase in the number of property investors from Hong Kong. This is expected to increase further with the launch of the new visa for BNO passport holders, which opened for application on 31st January.
London has long been the traditional location for Hong Kong investors. There has continued to be strong demand in the capital. And there has also been a rise in Hong Kong investors and buyers looking to the north-west of England, especially Liverpool and Manchester. Cheaper house prices and strong demand are big draws for this region of the UK.
Favourable exchange rates
The value of the pound dropped since the EU referendum. Some overseas investors took the opportunity to add to their property investment portfolio. The Brexit uncertainty, which was followed by the COVID-19 pandemic, has kept the value of the sterling low.
With recent favourable exchange rates, foreign buyers could get more for their money. This opened up the sector to a wider pool of investors. At the beginning of the year, overseas investors even ranked the UK as the best residential property investment hotspot for 2021.
Stephen Ludlow, chairman at ludlowthompson, says: “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.”
Stamp duty changes
Overseas investors have also been benefiting from the stamp duty holiday. The tax holiday has allowed buyers to save up to £15,000 on properties worth up to £500,000. The holiday is in place until 30th June. After that, the nil-rate band will be in place for properties worth up to £250,000 until 30th September.
Second homes and property investment still incur a 3% stamp duty rate. And an additional 2% stamp duty surcharge came into place for overseas buyers and investors on 1st April 2021. While many overseas landlords looked to complete on property investment purchases prior to this date, the additional surcharge is unlikely to be a deterrent as there are numerous factors making UK property investment appealing.
