Foreign Investment in UK Residential Property
This short House of Commons Library briefing paper considers the extent to which foreign ownership of residential property should be considered an issue for the UK housing market.
There are no official statistics on the scale of overseas investment in residential property. Market research by estate agents has tended to focus on London. For example, Savills estimated that 7% of residential purchases in Greater London in 2013/14 were made by overseas buyers.
The Land Registry holds data on ownership of property by overseas companies and there has been a move towards making this data more publicly available. The Housing White Paper, Fixing our broken housing market (February 2017) included the following commitment:
HM Land Registry will make available, free of charge, its commercial and corporate ownership data set, and the overseas ownership data set.
Regulating foreign ownershipThere are no restrictions on foreign ownership of residential property in the UK but there are rules in place to ensure that tax is paid when property is purchased and in relation to any rental income received.
Is foreign ownership a problem?It is frequently argued that foreign ownership impacts on the affordability of residential housing as it adds to demand and, in a market where there is already excess demand, can act to push up prices. There is also debate around the degree to which properties in high demand areas are bought as an investment and are left empty - the 'buy-to-leave' phenomenon.
The alternative view is that foreign investment enables development to proceed and, as part of these schemes, an element of affordable housing is secured which would otherwise not be delivered.
There is certainly perception of a problem. Foreign ownership of property is the subject of regular media reports. On 30 September 2016 the London Mayor, Sadiq Khan, said he intended to launch a comprehensive inquiry into the impact of foreign investment on London's housing market. York University's Centre for Housing Policy and the London School of Economics were commissioned to carry out this work. Their findings were published in June 2017 and are summarised in this paper.