Significant fall in number of properties owned by overseas firms

Brexit uncertainty has prompted overseas companies to dispose of properties, particularly in London and the South East, fresh research shows.

The number of properties in England and Wales owned by overseas firms has dropped by 4,000 since the EU referendum, according to the study by Search Acumen, the property data insight and technology provider.

At the time of the EU referendum in June 2016 overseas company ownership of properties in England and Wales totalled 99,619 – this marked a year-on-year increase from 99,350 in June 2015. But since the referendum and November 2020, there has been a 4% drop in the level of overseas ownership to 95,624.

The fall in overseas property ownership in recent years appears to have been partly driven by uncertainty caused by Brexit prompting investors to see properties in England and Wales as less attractive investment opportunities. This is most apparent with ownership of properties in prime locations, including London and the South East.

Strict restrictions on international travel to curb the spread of Covid-19 is likely to have further diminished the attraction of owning property in England and Wales.

Overseas landlords may have also disposed of elements of their property portfolios to offset sharp falls in the value of their wealth reserves triggered by the pandemic.

Overseas landlords are often wealthier individuals who own equity portfolios, meaning severe stock market volatility at the onset of the pandemic could have prompted them to sell overseas properties to recuperate losses.

Comparing trends among the top ten counties for overseas investment, companies now own fewer properties in Greater London, Essex, Kent, Surrey and the West Midlands than they did in June 2016.

However, they have increased their presence in Greater Manchester, Merseyside, West and South Yorkshire. Overall, properties in the north of England have experienced an uptick in investor inflows since the EU referendum.

Trends among the top ten counties for overseas investment

County

Number of properties owned by overseas companies in 2020

Number of properties owned by overseas companies in 2016

% change

GREATER LONDON

42,193

44,378

-5%

GREATER MANCHESTER

5,396

4,929

9%

MERSEYSIDE

2,904

2,624

11%

WEST YORKSHIRE

2,621

2,525

4%

WEST MIDLANDS

2,144

2,297

-7%

SURREY

1,893

2,200

-14%

KENT

1,811

1,992

-9%

ESSEX

1,748

1,835

-5%

SOUTH YORKSHIRE

1,648

1,495

10%

LANCASHIRE

1,569

1,566

0%

The research also shows there has been a post-referendum increase in the number of properties registered to companies in Jersey, Guernsey, Luxembourg, Singapore and the Netherlands.

In contrast, the number of properties registered to companies in the British Virgin Islands, Isle of Man, Gibraltar, Hong Kong and Ireland have all fallen.

Top 10 investor domiciled areas with the greatest volume of properties owned in England and Wales in 2020 

Country

Number of properties owned by overseas companies in 2020

Number of properties owned by overseas companies in 2016

% change

BRITISH VIRGIN ISLANDS

22,066

22,868

-4%

JERSEY

20,916

20,494

2%

GUERNSEY

12,314

12,167

1%

ISLE OF MAN

10,551

10,843

-3%

LUXEMBOURG

2,667

2,291

16%

GIBRALTAR

2,398

2,592

-7%

SINGAPORE

2,089

1,890

11%

HONG KONG

1,604

2,092

-23%

IRELAND

1,591

1,863

-15%

NETHERLANDS

1,547

1,448

7%

PANAMA

1,414

1,991

-29%

SEYCHELLES

1,338

1,297

3%

CAYMAN ISLANDS

1,333

1,350

-1%

CYPRUS

1,231

1,244

-1%

Andy Sommerville, director at Search Acumen, said: “This research reveals the scale of the impact that Brexit-induced uncertainty has had on international demand for properties in England and Wales.

“Heightened unease over the nature of the post-Brexit transition relationship may have prompted investors to look beyond England and Wales for returns.

“The coronavirus pandemic and measures to contain its spread has also put downward pressure on international demand. Overseas investors are questioning the benefits of owning residential properties in London if they cannot even stay in them.

“However, the promise of an effective vaccine being distributed is fuelling hopes of economic activity reverting to normal soon, which will likely increase the attractiveness of English and Welsh based properties by overseas companies.

“As activity picks up, it is crucial legal professionals are given the tools to harness accurate data at the early stage of the transaction process when dealing with complex and potentially sensitive transactions.

“The pandemic has revealed that incorporating technology in the transaction process vastly improves it. The English and Welsh property market has the opportunity to embark on a dramatic overhaul to unlock further efficiency gains. A crucial first step in this development is creating a modern transaction process based on high levels of data consumption and access to accurate information. Doing this will help to attract international investors for years to come.”

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2 Comments

  1. Steven Herd

    I would say that the drop in overseas company ownership has also been influenced by ATED, the Annual Tax on Enveloped Dwellings.

    This year saw the ATED rate for a property valued £500k to £1m rise to £3,700pa and £7,500pa for properties worth £1m to £2m and £25,200pa for properties £2m to £5m.

    The tax originally came in during 2015 but the rates have escalated every year.

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  2. BobbyGord

    I think the European Union is deliberately putting a lot of pressure on Britain because of Brexit. And this is due not only to real estate but also in the field of mass media where the EU makes outright fakes on Britain. But I think that soon the situation will change for the better. Even the recent changes in education, which allowed students to use the service https://bestessayservicesradar.com/writepaperforme-review/ , will provide an opportunity to improve the quality of distance learning. And this is not only a step towards Britain but towards the whole world.

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