Proportion of overseas landlords halves, but Hampstead may buck trend
PUBLISHED: 11:09 18 July 2017 | UPDATED: 11:09 18 July 2017
Stamp duty and uncertainty hits overseas investors the buy-to-let market, but in American and Russian interest in Hampstead property has held
The proportion of overseas landlords in London has more than halved, according to data released yesterday by Countrywide.
In 2010 26 per cent of landlords in London were overseas investors, dropping to just 11 per cent in 2017.
In areas of prime central London, such as Marylebone and St John’s Wood, overseas landlords used to make up a third of a rental property owners.
The number dropped by a quarter, from 31 per cent in 2010 to 23 per cent proportionally in 2017.
London still currently has the highest proportion of overseas landlords.
Johnny Morris, Research Director at Countrywide, said:
“The growth of the private rented sector since 2010 has not been driven by overseas investors. 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.”
Recent tax changes have made the buy-to-let industry far less lucrative for investors, both domestic and international, but a overseas investors have been hit harder.
“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,” said Mr Morris.
James Griver, a negotiator for TK International, has noticed a significant drop in the number of buy-to-let transactions across the board.
“We’ve just agreed an offer on a buy-to-let property, but it’s almost an anomaly at the moment because they’re so few and far between,” he said.
“The truth is the three per cent stamp duty surcharge has had a very, very big impact on our market.”
He cited the same toxic combination of stamp duty, surcharges, changes to non dom status and uncertainty surrounding Brexit negotiations and the government.
However in Hampstead the weakening pound following the referendum result has encouraged some overseas investors.
“The only upside is that some of the rental investors that we are seeing are bringing foreign money across because of the slight improvement in the exchange rate,” explained Mr Griver.
“The majority of rental investors are foreign. Not necessarily an increase, but an increase percentage wise.”
Across London in 2017, 33 per cent of overseas landlords are based in Asia, according to the data from Countrywide. 28 per cent are from Europe (down from 39 per cent in 2010), 10 per cent North American, and 9 per cent from the Middle East.
In Hampstead however the current buy-to-let investment appears to reflect the strong dollar against the pound.
“We’ve got a lot of money coming over from America at the moment,” said Mr Griver.
Following today’s ONS inflation release today the pound dropped further to $1.30.
Despite a lull in Russian interest reported in the upper echelons of the prime and super prime market, the rouble seems to be returning – if it ever really left.
“We always see a lot of Russian investment and that certainly seems to still be there.”