London’s private landlords earned £7bn from residential property last year, while Asian investors piled into commercial investments with massive prestige deals.
Private landlords in London took £7bn from their residential property investments in the tax year April to April 2017 to 2018. This represents around 20% of the UK’s total buy-to-let income, as estimated by estate agents LudlowThompson.
The 7bn figure represent a 6.4% increase in income ever the period, whereas for the rest of the country the comparable figures averages just 4.3% growth, £34.8bn in 2017/18 and increase from £33.4bn in the previous tax year – 2016/17.
Buy-to-let landlords in London averaged around £20,000 from their properties last year, compared to average property income for buy-to-let landlords nationally was £14,000.
With private landlords residing in Hackney averaging an income from their buy-to-lets of £24,000 last year, around 16 of the top 20 UK hot spots for private landlords were in London.
So, despite all the tax hikes and regulatory changes over the last few years, according to ludlowthompson buy-to-let landlords will still benefit from around £16.7bn in tax relief, even after the annual tax changes are fully phased in by 2020.
Stephen Ludlow, chairman at ludlowthompson, has said:
“Landlords, living in London and across the UK, can be sure their buy-to-let properties remain a sensible, long-term investment. UK buy-to-let investor count hits 2.5 million.
“Whilst house prices are not a one-way bet, they have been far less volatile than other asset classes like shares.
“When you see the share price of one of the UK’s biggest banks fall 9% in a day, based on no corporate news at all, you can see why investors prefer the relative stability of residential property.
“The benefits of buy-to-let extend beyond landlords. The private rental sector plays a vital role in ensuring there is a healthy supply of high-quality rental accommodation that enables labour mobility. Renting is, in fact, part of the solution to the housing crisis.”
Meanwhile, Asian investors have been taking advantage of low interest rates, Brexit uncertainty and the low Pound to change the London skyline with some very large commercial property deals.
Hong Kong investors were behind the purchase of London’s landmark “Walkie-Talkie” skyscraper last year for £1.3bn. This building at 20 Fenchurch Street was bought by Lee Kum Kee, an Asian sauces to condiments group, well known for its famous oyster sauce.
Some of London’s most valuable commercial buildings are being dominated by Asian investors, predominantly from China and Hong Kong, countries that have taken up 50% of all £1bn-plus deals over the last five years.
Figures obtained by global law firm Linklaters show that of the ten £1bn plus deals since 2013, investors from Hong Kong bought three, which included the Walkie Talkie, and UBS’s Liverpool Street headquarters. Other investors from the Middle East, the US, South Korean, Singapore and the UK were involved in high profile deals.
Andy Bruce, global head of real estate at Linklaters had said:
“There is a certain appeal of high-value London property. The attraction of these building is particularly strong for cash-rich Asian investors in search of higher returns while interest rates remain at record lows.”
Commenting Andy Bruce said that the story is changing around Asian money as investors from South Korea are starting to rival their competitors in Hong Kong and China for these trophy London deals.
“There is a lot of Korean money out there so their presence will start be felt a lot more significantly over the coming years on some high-profile deals,” he added.
“The fact that global capital has been pursuing these deals through 2018 notwithstanding the supposed problems of Brexit approaching, only confirms the significance of London as a global investment location and, possibly, that the further from London one is based, the less concerned certain investors are about what might be perceived as short-term local politics.”