The number of foreign landlords investing in UK property has now passed the two million mark, according to accountancy group UHY Hacker Young.
An analysis of HMRC data by the group shows the number of overseas landlords renting out property in the UK jumped by 6% in the past 12 months to 2.04m from 1.93m in the previous 12 months. In the past five years the number of foreign landlords has risen by 39%, up from 1.46 m in 2006/07.
However, UHY Hacker Young says that the consistent growth in the number of foreign landlords investing in UK property may come to a halt following the Government’s recently announced plans to charge Capital Gains Tax (CGT) on the sale of properties owned by foreign investors from April 2015. UHY Hacker Young warn that this could discourage foreign buyers from investing in the UK.
Mark Giddens, head of private client services at UHY Hacker Young, says: “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 foreign investment in UK property is not just about the purchase of trophy homes. Increasingly overseas investors are targeting buy-to-let properties, and in particular their investment in new build properties is funding a much needed boost to the supply of quality homes in the rental market.”
UHY Hacker Young points out that over the past five years, the tax taken by HMRC from foreign based landlords who have rental properties in the UK has increased by 64% from £230m in 06/07 to £379m last year.
“While HMRC has already increased its tax take on foreign-owned properties in recent years, the Government’s Autumn Statement is looking to ensure that the Exchequer gets an even greater share of the substantial revenue generated by London’s high end property market,” says Giddens.
UHY Hacker Young adds that the incoming measures are also designed to address concerns that a housing bubble is being created by foreign buyers who regard flats and houses, particularly in London and the South East, as a safe investment.