Foreign buyers of British homes up by 40pc
01-03-2014
New analysis shows a surge in foreign buyers snapping up UK homes.
There are now over two million foreign investors that own UK property
By Kyle Caldwell
More than two million foreign investors own UK property for the first time, according to analysis of data from HM Revenue & Customs.
Research by accountancy UHY Hacker Young also showed there was a surge of around 110,000 new buyers in the most recent year for which the figures were collated.
It meant the total rose 6pc from 1.93m to 2.04m between 2011 and 2012.
The increase over five years was 39pc increase in the number of overseas landlords, climbing from 1.46 million in 2006.
Huge numbers of homes in central London in particular have been bought as long-term investments by wealthy foreigners and expats in recent years. London is seen as a safe haven by investors, who have driven a boom in prices.
The house price boom, in which house prices in London have shot up 9.4pc over the past year, is expected to continue in the coming years. Analysts at Knight Frank have forecast a 24pc rise in the value of UK house prices by 2018.
Mark Giddens, of UHY Hacker Young, said: “The UK economy is one of the world’s most liquid, and UK property is seen globally as a safe haven from the effects of a financial crash or from national governments’ interference in the assets of private individuals.
“That has driven fierce demand for prime property in London and the South East in particular.”
But the high levels of demand from overseas investors could cool next year, argue UHY Hacker Young. This is because earlier this month the Government announced that foreign investors will have to pay capital gains tax when they sell homes in the UK from April 2015.
Previously overseas investors did not have to pay tax on the profits they made from British homes. The Government is expecting to rake in £125m from the "oligarch tax" between 2015 and 2019.
The rule change makes UK property a less attractive investment option for overseas investors, who have been blamed for helping to push property prices to record highs and taking home-ownership out of the reach of many UK workers.
“While the Treasury has already increased its tax take on foreign-owned properties in recent years, from £230m in 2007 to £379m last year, it is now looking to ensure that it gets an even greater share of the substantial revenue generated by London’s high end property market,” said Mr Giddens.