International Landlords continue to buy new properties in the United Kingdom

Overseas landlords continue to buy properties across the UK. The number of international landlords has hit a five-year high totalling 184,000 since the EU referendum for leave (Ludlowthompson, 2021). In spite of the pandemics, Brexit, tax change Great Britain holds a sweet spot for an investment.

1. The UK property boomed because of an influx of interest from Hong Kong, where political instability gradually increases.
The mass protests and rumbles in the financial sector in Hong Kong echo the loss of faith that proceeds the city’s handover to Mainland China. Owing to increasing interference from China, the UK market has benefited from strong interest from foreign buyers and investors. According to the research by Astons, in the first 9 months of 2020, Hongkongers bought cumulatively around £306 million of prime London locations. In comparison, the first and third biggest investors in London were French and Chinese, with £365.4 and £275.7 million, respectively.
Furthermore, the number of international investors is expected to rise even more following the new visa launching for Hong Kong British National overseas passport holders. The new visas will allow applicants to live and work in Britain for up to five years, after which they would become residence holders.

2. Favourable exchange rate and the abolition of stamp duty brought a competitive advantage.
After the Brexit, the Pound sterling depreciated to the dollar, which allowed foreign investors to buy cheaper and more. In the UK, interest rates remain all-time low, making mortgage borrowing more affordable. The investors also benefited from rising property prices as well as the recovery of sterling. Favourably, abolishment of stamp duty only accelerated the sales.
Needless to say, that from the 1st of April 2021, all non-UK resident investors will be eligible to pay a 2% duty surcharge (SDLT) on residential property investments, excluding the cases where they are first-time home buyers. This is on top of the existing tax rate, which is based on the property’s value.
As the news for the SDLT charge was announced during the previous year, it may explain why so many buyers from abroad were keen to push on with their investments, but it is unlikely so.

3. British universities' reputation played a significant role in convincing overseas landlords to buy a property.
One of the most common answers to why buy a property in the UK, landlords responded: “help children/other family members into the housing market” (CML research, 2016). Similarly, overseas investors mentioned that they purchased property to provide accommodation for their children. (Ludlowthompson, 2021) In addition, they mentioned that another key attraction was education, as their children were studying in the UK. As a reminder, 36 education higher institutions in the UK feature in the global rankings this year, with 10 of those in the world top 50 (Top Universities 2020).