With the news of overseas’ property investors ‘snapping up’ UK property, many people make assumptions on the believed negative impact this has on the housing market. Throughout this article we are going to dispel some of the common myths of overseas property investors and explain why these assumptions are not as fair as they may first appear.
Whilst it is easy to understand why some people tend to make assumptions such as these, it can also be argued to be a rather simplistic view. In realistic terms, what many people fail to see is that overseas buyers, and property investors looking to expand their investment portfolios, actually perform a crucial role in the property development cycle. It can be argued to be highly unjust to accuse these investors of simply absorbing up the supply of houses and thus, driving up demand.
Many new housing developments would struggle to get off the ground without the help of overseas investors as financing is often only secured once the first few units are sold off-plan. These developments provide much-needed housing stock for the UK and are helping to combat the housing shortages around the country. Many of these investors are from places such as China, Malaysia, Singapore and Hong Kong, with these areas representing the biggest funding markets for off-plan purchasing. In addition to this, these areas also provide the liveliest sources of starter capital for many different types of projects in the United Kingdom.
Heading for the Hill post-Brexit?
With all of this being said, you may well be wondering what impact the Brexit mayhem and confusion has had on overseas property investors? Well, it is true to sa y that their appetite for investments in the UK has not faltered, in fact, it can be said that quite the opposite has happened. As the pound sterling has weakened, demand has continued to be driven from overseas buyers looking to grab a bargain and invest in a country that remains to be seen all over the world as a safe bet.
This is a common myth believed by many at the moment, and not surprising having read the headlines splurged across newspapers nationwide regarding the slowdown of the prime London property market. It can be true to say that London is not currently attracting the traction that it was some months ago, however this is not reflective of the UK as a whole, instead overseas investors have just become more selective, moving their money and their interest to other key cities, many which have been overshadowed by London for far too long. These places include Birmingham, Cambridge, Liverpool and Manchester.
Stealing our short supply of Housing
Perhaps one of the biggest myths held in today’s society regarding overseas property investors, is that they are taking away what few houses we have left in a time of widespread housing shortages in the UK.
In actual fact, the vast majority of overseas investors rent out the properties they buy, meaning that they are playing a key role in the growth of the private rental sector, an area under increasing pressure in the generation of renting versus buying (whether through choice of not).
The assumptions and myths surrounding the negative impacts of overseas property investors still persist in our society, leading to some dangerous movements in UK legislation. The government is currently consulting on proposals to increase stamp duty land tax for overseas investors by 1% in each property value bracket, a bold move in an area we cannot afford to lose.
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