Foreign property investment and what it means for the UK market12th October 2016
There has recently been a surge in overseas investment in the UK, primarily from China and the Middle East. This seems to have been in response to the EU referendum and is noticeable mainly in properties above the £5 million mark. The economic situation in these regions can be fairly volatile which is why many people choose to invest their money in relative safe havens such as the UK rather than risking their money in their own national economies.
The decision to leave the EU has had a noticeable impact on the UK property market, though arguably not as severe as was predicted. Having said that, many domestic buyers have still been wary of the market and have pulled out of many sales. This has given overseas buyers the opportunity to snap up deals, particularly in London. Many property firms received vast numbers of phone calls immediately after the results of the vote was announced as the pound plummeted. The properties which have been impacted most noticeably are those in the most expensive areas in the capital where they are a fifth cheaper for anyone buying with US dollars.
Foreign investment may have peaked following Brexit but it has always been common in the UK and London has long been a popular destination for overseas investors. However, new London mayor Sadiq Khan has announced plans to launch an enquiry into the impact of foreign investment on the property market. As house prices in the capital continue to rise he has said that there are genuine concerns about the position of UK buyers. This enquiry comes after it was revealed that a new tower block in the city was 60% owned by foreign buyers, suggesting that domestic buyers are struggling to keep up with the soaring prices and increased competition.
However, many people see foreign interest in the UK market as a positive, it suggests the country is focussed on the potential positives of globalisation and that the arguments against foreign investment are simply a way to avoid discussing the real problem which is low wages and high living costs. Foreign investment has a range of positive impacts, including the building of strong relationships between nations. The investment into the economy has enabled British companies to continue building new properties which creates jobs and revenue which is pushed straight back into the British economy.
It is clear that foreign investments have played a big role in the property market and the UK economy in general. It is also important to keep in mind that the majority of foreign investment relates to high value properties and these investors are not pricing out average properties. If you are interested in investing in property in the UK, please get in touch, I have a range of experience in all areas of the law and have dealt with a multitude of overseas buyers.
11th September 2017Read more