Proportion of overseas landlords halves
A common idea that the growth of the rental sector since 2010 has been driven by overseas investors is not true. In fact, the proportion of overseas based landlords in Great Britain (GB) hit a record low in 2017. Overseas landlords owned just 5% of all homes let in GB in 2017, down from 12% in 2010.
A steady increase in foreign investors’ tax bills combined with more recent falling expectations of price growth, particularly in London, has led to a decline in foreign investment in buy-to-let. 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.
As a result, London saw the largest fall with one in ten (11%) homes let this year owned by an overseas landlord, down from one in four (26%) in 2010. Prime Central London continues to have the largest proportion of overseas based landlords – they owned nearly a third of all homes (31%) let in 2010, a figure which fell to 23% in 2017.
The number of European based landlords has been gradually falling over time, more so than any other group. In 2010 they made up 39% of all lets by overseas landlords in London, but now account for 28%. They were the biggest group of overseas investors in London until 2014. Asia based landlords have taken over as the biggest group of overseas based landlords in the capital (33%), followed by Europeans (28%), North Americans (10%) and Middle Eastern (9%). Outside of London, Europeans (37%) remain the biggest group of overseas landlords.
The proportion of overseas based landlords has fallen in every region across Great Britain since 2010. London has always had the highest proportion (currently 11%) of landlords based overseas, followed by the South East (5%). But outside London and the South East, less than 5% of homes are let by an overseas landlord.