Slower capital growth, higher taxation and a drop in rental returns have made for a more cautious overseas investor.
The number of overseas landlords looking to invest in Great Britain is falling. In 2018 the share of homes let by international investors more than halved, from a high of 14.1% in 2010 to just 5.8% in the first 11 months of 2018.
London has been hardest hit. In 2010 – when our records began – 26% of homes let in the capital were owned by an overseas landlord but by the end of 2018 this has had fallen to 10.5%, with a 5% drop in the last two years alone. Lower expectations of house price growth, a higher tax burden and as sterling falls, a drop in rental returns, have combined to make for a more cautious investor.
Despite the decrease, London still has the largest proportion of international investors, some 10.5% compared to Great Britain’s 5.8%. Outside the capital, Yorkshire & the Humber is the region of choice for international landlords (6.7%) and where, since 2010, they’ve dropped by just 4%.
Elsewhere across the country, the share of international landlords has fallen by 10% (since 2010) in the South East and by 6% in both the North East and East Midlands.
Proportion of homes let by an overseas based landlord (Jan-nov 2018)
European based landlords has fallen by -2.1%, but these falls have been compensated for by a pickup in Asian landlords (+2.1%) and Middle Eastern investors who account for 11% of overseas based landlords, a 1.4% rise on 2010.
Sterling’s depreciation since 2016 has undoubtedly made it cheaper for international buyers to purchase property in Great Britain, but falls in sterling have also meant that conversion of pounds back to local currency have cut overseas landlord’s monthly income too.
Proportion of overseas based landlords by region
Where overseas based landlords come from (Jan-nov 2018)