More than 2 million British expats and overseas buyers are sinking their cash into UK buy to let, according to new research.
Britain’s buoyant buy to let market and rising property prices is encouraging investment from all over the world – but especially the Far East and China.
In five years to the end of March 2012, the number of buy to let expat landlords surged by a massive 40% and is still increasing at a rapid, says research from tax consultancy UHY Hacker Young.
The focus of millions of pounds of foreign investment is on London and the South-East, where home prices and rents are rising faster than the rest of the country, says the Office of National Statistics.
Most of the buyers are paying in cash and despite action by Chancellor George Osborne to stop offshore companies snapping up luxury homes in the capital, foreign money is still flooding in.
Buying cash is the only feasible option for most property investors the Bank of China is the only onshore lender ready to offer funds to buyers from outside the UK – and that borrowing is only offered to customers living in China, Hong Kong, Macau and Singapore.
“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,” said Mark Giddens, head of private client services at UHY Hacker Young. “This has driven fierce demand for prime property in London and the south east in particular”.
HM Revenue and Customs collected £379 million in tax in 2012 from overseas landlords, say the latest figures.
New capital gains tax rules for expat landlords from April 2014 will swell the HMRC tax take as , British expats and overseas property owners currently exempt from paying capital gains tax on residential property disposals are trapped by new rules.
Although the exact details are still awaited the forecast is capital gains tax will be deducted at source by lawyers completing sales at a rate between 20% and 28% of the chargeable gain.