The rise of foreign investors’ tax bills and the recent falling expectations of price growth in London has led to a decline in foreign investment in buy-to-let, according to Countrywide.
Overseas landlords owned 5% of all homes let in the UK in 2017, compared to 12% in 2010.
London saw the biggest fall in the proportion of homes let by an overseas landlord, from 26% to 11% over the last seven years.
Countrywide’s Monthly Letting Index also found that rents rose by 1.1% year-on-year in June. The average rent is now £950 per calendar month across the UK.
However, rents in London fell by 0.8% year-on-year, while in the south west they grew by 4.5%, the strongest rental growth across the country.
Johnny Morris, research director at Countrywide, said, “The growth of the private rented sector since 2010 has not been driven by overseas investors.
“As well as having to contend with increased stamp duty and the annual tax on enveloped dwellings (ATED), overseas investors also saw the removal of capital gains tax exemptions in 2015.”
The research also found that the number of European landlords has fallen significantly over the last few years, from 39% in 2010 to 28% in 2017. They were the biggest group of foreign homeowners in London until 2014, but have now been beaten by Asia-based landlords (33%). Outside London, Europeans remain the biggest group of foreign landlords at 37%.
Moreover, overseas landlords earned 35% more in rent in 2016 than those living in the UK, with a total of £5.4bn earned in rent over the last 12 months. Over half of this income came from rental homes in London, the estate agents found.