What’s behind the surge in overseas investors in UK property?

 

The UK property market has always been a prime target for overseas investors, but over the past year the number of homes let by non-UK based owners has soared.

Property investors from Asia, the US, Europe and more have viewed the UK property market as a solid investment location for many years, with strong capital appreciation, growing rental markets and the support of continued private and public investment across the country.

Now new data revealed by Hamptons International shows that the number of investors based abroad who let out property in the UK has spiked over the past 10 months, up to 11% of the total market share from 7%.

Rises were seen particularly in the east of England and London, both with an 8% increase, while the south-east and north-west both saw impressive 7% rises. In London, 18% of landlords are now based overseas according to Hamptons’ data.

What’s behind the UK’s growing popularity?

One major factor influencing overseas investors right now is the depreciation of the sterling since the EU referendum in 2016. Favourable exchange rates for foreign investors mean they get much more for their money now than they once did, opening up a wider section of the market.

The country’s housing market is also extremely resilient in times of political unease, which is another attraction for international investors looking for a relatively secure place to put their money. Despite a slowdown in the number of property transactions recently, partly as a result of ongoing Brexit uncertainty, house prices remain relatively stable with many experts predicting a return to growth shortly.

The UK’s rental market also continues to grow, presenting excellent yields for property investors. According to the Hamptons report, the average rent in the UK for newly let properties was £999 in October this year, which is up 2.2% year-on-year. As people continue to buy homes later and later in life, the private rented sector is performing strongly, while standards and expectations across the sector are also improving, leading to the recent build-to-rent boom.

Discounts for foreign buyers

Aneisha Beveridge, head of research at Hamptons International, said: “The proportion of homes let by overseas based landlords rose for the first time in more than nine years. The east and London recorded the biggest increases.

“Sterling’s depreciation has made investment property in Great Britain more attractive to international investors. The average home cost 23% or £53,065 less than in 2014 for a US dollar buyer, solely due to the currency changes.”

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