What’s bringing overseas investors to the UK housing market in 2022?

 

Overseas investors continue to look to the UK housing market, with London, Liverpool, Salford and Manchester all in the top 20 list for foreign investment.

Last week it was revealed that overseas investors now own around £90.7bn of property in England and Wales. Around half of this (£45.3bn) is concentrated in London, which has historically attracted the most attention from foreign buyers.

This was according to research from Benham and Reeves, which also named the south east and the north west as the top two property investment destinations for those living abroad, after the capital. Overseas owners have around £15.6bn tied up in the south east, and £7.6bn in the north west.

The report hones in on some other key cities for investment, some of which have been attracting growing numbers of investments due to their attractively low house prices and promising outlooks in terms of capital appreciation and rental demand.

Overseas investors spreading the wealth

In total, according to Benham and Reeves, 247,016 properties across England and Wales are owned by overseas investors. As well as the highest value of properties, the highest number of these can be found in London, with 85,451 foreign-owned.

Elsewhere, the report marks out Liverpool as another frontrunner for foreign investment, with £1.4bn worth of homes owned by overseas buyers. In Salford, this figure is slightly lower at £1.1bn, with the same amount owned in Manchester, but these are significant values for the sector.

Fifteen of the top 20 areas, though, are found within the capital. Westminster, one of the priciest boroughs, has the highest value of homes owned by someone living abroad, at £11.8bn. Kensington and Chelsea, another high-value area, sees £10.7bn worth of property foreign-owned.

Why UK property?

One of the most obvious factors that has drawn overseas investors towards the UK property market is the price growth that we have seen in recent years. This has benefited UK residents and foreign owners alike.

Marc von Grundherr, director of Benham and Reeves, points out: “Despite attempts to deter foreign interest, the value of homes owned by overseas buyers remains considerable, to say the least.

“While London is home to the highest concentration of foreign-owned property market wealth, it’s certainly not confined to the boundaries of the capital alone, and overseas buyers remain an important segment of the market across England and Wales.”

Of course, although London property has historically seen some exceptional price rises, the market has floundered in some areas in recent years, with house price growth in regions such as the north west and the Midlands quickly overtaking the capital.

Focusing on location is key for any property investment, and parts of the UK that are proving popular have seen increased investment into transport, infrastructure, regeneration of centres and new developments. This certainly applies to the likes of Liverpool, Manchester and Salford.

Changing landscape

The attempts to deter foreign interest in the UK property that von Grundherr refers to include the additional 2% stamp duty surcharge that now applies to all property purchases made by non-resident buyers. There is also a register to identify overseas property owners.

The stamp duty rule came into play in April 2021, so although it is too early to tell the full impact yet, figures from the Centre for Public Data show that, of the 250,000 homes owned by non-residents, 8,500 were bought in 2021 – and that’s despite any holdback due to the pandemic.

Figures from the Centre for Public Data also show the number of foreign owners of UK properties has trebled since 2010. Buyers in South East Asia and the Middle East have been particularly keen on the housing market in this country during that time.

So it seems that the draw of the UK housing market continues to prove ultimately attractive, despite crosswinds facing investors.

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What’s bringing overseas investors to the UK housing market in 2022?

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