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16 August 2018

Hamptons Rental Index – August 2018

Proportion of overseas based landlords halves since 2010

• The proportion of homes let by an international landlord in Great Britain halves from 13% in H1 2010 to 6% in H1 2018.
• More than one in ten London homes (12%) were owned by an overseas based landlord in H1 2018. This is up 5% since H2 2017, but remains down from a peak of 20% in H2 2011.
• Yorkshire and Humber have the second highest number of overseas landlords after London
• The average cost of a new let in Great Britain rose to £964 pcm in July 2018, up 0.2% year-onyear.

In H1 2018 the proportion of international based landlords in Great Britain fell to 6%, a record low. Hamptons International’s Monthly Lettings Index shows that the proportion of rental homes let by a landlord based overseas has halved since H1 2010 when our records began. In H1 2010 13% of homes let in Great Britain were owned by an overseas landlord, more than double the proportion in H1 2018 (6%). Over the last year the proportion of homes let by an international landlord has fallen a further 2%, a record low across Great Britain. (see table 1)

TABLE 1: Proportion of homes let by an international landlord

London has seen a pickup in international based landlords this year. The proportion of London homes let by an overseas landlord peaked at 20% in H2 2011, but fell back to 7% in H2 2017 – the lowest point on record. However, unlike the GB average, London saw a 5% rise in the proportion of homes let by an overseas landlord between H2 2017 and H1 2018. (table 1 above).

In H1 2018 more than one in ten (12%) homes let in the capital were owned by an overseas based landlord,  followed by 8% in Yorkshire and Humber, to display the highest proportion in the country. While at 3%, the East Midlands has the lowest. (see table 2)

TABLE 2: Proportion of homes let by an overseas based landlord by region

Where are overseas landlords based? 

Nearly half of international landlords are based in Western Europe (44%). Landlords from Australasia (16%), North America (14%) and Asia (12%) make up the next biggest groups. Middle Eastern landlords account for nearly one in ten (9%) homes let by international landlords in Great Britain. But in London, 30% of international landlords are based in Western Europe followed by one in five (20%) from Asia. (see table 3)

TABLE 3: Where overseas landlords are based (last 12 months)

The average cost of a new let in Great Britain rose to £964 pcm in July. However, the pace of rental growth continued to slow to 0.2%. Wales saw the highest rental growth with rents up 4.9% year-onyear, followed by the Midlands (2.4%) and the South West and North both recording a 0.9% rise. Meanwhile average rents in London fell for the second consecutive month, down 1.6% year-on-year. (see table 4)

TABLE 4: New Lets (pcm)

Commenting Aneisha Beveridge, Analyst at Hamptons International, said:

“The proportion of homes let by an overseas based investor has halved in the last eight years. Higher stamp duty and annual tax on enveloped dwellings (ATED) combined with a steady increase in foreign investors’ tax bills has led to a decline in foreign investment in buy-to-let. Overseas investors also saw the removal of capital gains tax exemptions in 2015.

“However over the last year, London has bucked the trend with a pickup in international landlords. Sterling’s depreciation, effectively offering international buyers a discount, combined with a softening London market, has helped offset the additional higher costs of owning a buy-to-let property in the capital for foreign investors.

“Rental growth slowed to 0.2% across Great Britain in July. Falls in London were offset by higher growth in the rest of the country. Inner London experienced the greatest fall, with rents decreasing for the third consecutive month.”

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6 August 2018

PROPERTY INSIGHT – The North / South Divide

The housing headlines over the last decade have been consistent – the country is split in a North-South divide. House price growth in London and the South has slowed, while the North has won out. Between 2016 and 2017 we saw a shift in price growth from South to North, with most regions in the Midlands and the North overtaking those in the South (table 1).  In London for example prices in 2017 rose by 3.1% (down from 10% in 2016), while in the North by 3.6% (4.4% in 2016).

TABLE1: Local Authorities with highest price growth

The simple truth is that affordability issues combined with onerous tax changes have forced many would-be London buyers to look further afield for a new home, and investors to seek out northern cities with strong investment potential where they feel there is more growth to come.

While the pace of growth may slow, we expect the North West and West Midlands to be among the top regional price growth performers over the coming year and are forecasting an increase of 2.5% and 2% respectively.

It’s interesting to see how fortunes have changed. Recent Hamptons International research shows that back in 2014, 14 of the top 15 UK local authorities for price growth were in London. Compare this to last year when Cambridge, Swale in Kent and Forest Heath in Suffolk, took the three top spots, ousting the City of London, Waltham and Newham, who’d held these places just three years earlier.

As an investor network based in the North which attracts members that are looking for opportunities in the North, the InvestorsForum York is a first-hand witness to the benefits of the ‘North-South Divide’, which is clearly evident and is driving a thriving investment market in this popular location.

While the North-South gap is narrowing, the North still has some catching up to do offering yet further potential to investors who want to test it out. House prices in the South currently average £335,500 while some areas of the North East remain below pre-crash levels.

Looking ahead we expect price growth over 2018 to be lower than in 2017, as the market continues to weather uncertainty from the economic and political backdrop and consumers navigate possible interest rate rises over the year. Across Great Britain we forecast prices to rise by 1%.

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