Is London property still a top option for overseas investors?

 

The level of foreign investment in UK housing has faltered in recent years, but London property could be seeing a revival of interest now the dust has settled.

A combination of the UK’s 2016 vote to leave the EU, a new stamp duty levy and finally travel as well as financial issues caused by Covid have all had an impact on foreign investment.

The London property market, which was once one of the main attractions for overseas buyers, appeared to have fallen slightly out of favour. While the UK property market has remained robust over a tumultuous few years, some of the issues above dampened appetite in some areas.

According to new research from debt advisory specialist Henry Dannell, though, the tide could now be turning. After a steady decline in transaction numbers since 2017, foreign buyer appetite seems to be returning.

Highs and lows

The company noted that 2017 was a stellar year for overseas investment in London property, when there was “phenomenal interest” from this buyer group. The quantity of transactions – 31,693 – was the highest the country had seen in the past decade, marking a 21% annual increase from 2016.

The value was also the highest seen over the previous 10 years, at £15.2bn, and was a 24.3% increase compared with 2016. But the peak was followed by a trough, notes the company, with foreign buyer numbers dropping by -0.7% in 2018 and by -26% in 2019.

This was the year that the effects of Brexit were about to become apparent, as the UK officially left the European Union on 31st January 2020. This was, unbeknown to anyone, just a couple of months before the effects of Covid-19 began to take hold, too.

The year of 2020 then saw another decline in foreign investment into London property of -3.6%. This equated to approximately 22,444 transactions, at a value of around £10.9bn; still relatively high due to the ongoing capital appreciation of UK property.

Geoff Garrett, director of Henry Dannell, said: “Having peaked in 2017, a myriad of factors have led to a decline in international buyer interest within the London property market. As a result, both the proportion of transactions and the total market value of homes purchased by foreign buyers have been on the slide.”

A turnaround for London property

As the country slowly began to see some level of recovery from the Covid pandemic in 2021, Henry Dannell noted that international interest began to return. There was a 0.6% increase in property purchases, while market value rose by 4.8% to almost £11.4bn.

During the course of the pandemic, as well as Brexit, the UK property market has shown its resilience, and buyer appetite has not gone away. This ongoing confidence in bricks and mortar in the country may have instilled optimism in overseas buyers, even despite the 2% stamp duty surcharge.

Garrett said: “This tide certainly seems to be turning and the initial green shoots of a recovery across this segment of the market appear to have sprung in 2021. This has undoubtedly been driven by the easing of pandemic travel restrictions and the fact that the political dust has now settled following Brexit.”

He added that they expect recovery to continue over the coming year.

“With many foreign buyers already securing financial support within their native countries, often at much higher rates of interest compared to the UK, we don’t foresee increasing interest rates to act as a deterrent to the same degree as it will across the domestic market.”

BuyAssociation has many years of experience in helping overseas investors find their next UK property investment. Get in touch to speak to one of our consultants, and browse a selection of some of our current and past opportunities here.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

overseas investment London property

Is London property still a top option for overseas investors?

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.