A closer look into the increasing foreign ownership of property in London post-Brexit
A few stats…
– In London’s borough of Westminster 1 in 10 properties are owned by offshore companies1
– Within the high-end ‘Prime London’ residential market, Savills estimate that 32% of buyers are international2
– The UK’s tallest residential skyscraper is over 60% foreign-owned and is under-occupied2
Who is investing?
Data from Knight Frank indicates that the Chinese are the biggest buyers of new-build residential property internationally and Singaporeans follow in second. According to The Independent Newspaper, “Estate agents in the UK have been swamped with calls from Chinese, Middle Eastern, Italian and Spanish buyers looking for a bargain after the pound tumbled to more than 30-year lows”. This suggests that foreign investment in London property is coming from an increasingly wider pool of countries given the post-Brexit conditions – based on the average price of property in London; European investors received a £42,000 discount following the referendum result3.
Are there any regulations?
So long as tax is paid to the UK government in relation to the property, there are no restrictions on foreign ownership of residential property in the UK. With the increase of Stamp Duty Land Tax there are now significant costs when buying UK property (applying to all accept the cheapest properties); however this does not seem to be putting overseas investors off with such favourable exchange rates.
Key issues surrounding foreign ownership of property
Concerns centre on the affordability and availability of property for domestic buyers. Is overseas property investment causing housing prices to rise?
Another concern is that many foreign investors are simply buying the properties to let, sometimes leaving them vacant for many months at a time, which is essentially wasting valuable properties.
Some have argued that foreign property investment is positive and stimulates further house building and investment. For example, aside from London, Chinese enquiries into property in Manchester have jumped by over 50pc which will help with the growth of the Northern Powerhouse4.
However, the availability of affordable housing still remains a significant problem, especially in the capital where multiple affordable housing planning applications have recently been rejected.
1: BBC news – Just who owns what in central London?
2: Parliament UK – Foreign investment in UK residential property
3: The Independent – London property snapped up by overseas investors as domestic buyers pull out after Brexit
4: The Telegraph – Chinese investment into Manchester property powers up