[Closed] Foreign investors buying UK property

Which bit?

[url= https://www.theguardian.com/business/2017/may/03/buy-a-home-get-a-car-free-offers-galore-as-london-estate-agents-struggle-to-sell ].....and a slightly different perspective[/url]

Because the UK is a low cost country now the currency has taken a humping

The BBC article does seem poorly sourced.

The first set of figures is from a property investment firm...

Research from property investment firm JLL indicates that Asian investors accounted for 28% of the transactions in the UK property market in 2016, up from the 17% the year before.

And the 2nd set ....

Elliot Vure is the Asia sales manager for the firm. He showed me a model of the latest development - Affinity Living - that [b]the company is building in Manchester, and selling in Asia[/b]. On average one of the flats in the building costs about £275,000.
"[b]We've probably seen 30% to 40% of the development being sold to Asian investors[/b]," he told me as we toured the firm's offices in Singapore.

.. it's an a development specifically built to be sold in Asia

It doesn't really tell you if there's an overall increase or decrease in foreign investors. Maybe it's just better marketing

UK property is cheap vs HK, Singapore and China
UK is very open and welcoming to foreigners
UK looks cheaper after currency decline
Big market for buyers, lots of attractive new build apartments (Asians used to buying off-plan), easy to rent out
Excellent long term pension/investment/bolt hole for foreign buyers

UK is very open and welcoming to foreigners

Or rather: UK is very open and welcoming to foreign criminals laundering their money through property.

[url= http://www.independent.co.uk/news/business/news/london-property-market-real-estate-money-laundering-overseas-foreign-buyers-mps-a7138176.html ]£100bn per year to be precise[/url]

+ I might add, most homeowners are quite happy to pretend this isn't happening as it makes them feel rich as their own place goes up in 'value'.

Meanwhile, anyone who doesn't own is trapped in a world of low standards of living by renting or massive debt by buying and feeling powerless to do anything about it.

UK is far from corruption-free.

OP you're not really surprised about this are you? Have you ever tried to convince a UK homeowner that prices need to come down? Even if you present all the arguments to show how the whole economy would benefit, they hate you for even suggesting it...

An awful lot of people are quite happy for the current situation to be maintained... look at the excuses listed above...
Builders
Existing homeowners
Banks
MPs (many in BTL)
BTLers
Government (keeps a big chunk of the electorate happy)

Meanwhile the young are increasingly angry and resentful... Certainly everyone I know in London who hasn't already bought is furious. There's very few prepared to be forced into buying at current insane prices.

Worth looking at the volumes being sold in Battersea (SW8) compared to volumes on the market and also Foxtons share price if you want to see how much veracity there is in the idea that current prices are either sustainable or even leading to much in the way of sales...

The investors will get a nasty shock when this invariably becomes the next target for the right and Corbyn left after we can no long blame the EU for our problems.

I reckon a politically driven housing crash is about 5 years away, around the time when May is fighting the next general election. Just need enough people locked out of buying property and not being able to meet rental prices.

2007/2008 will be replayed - this time it won't be bad loans that cause it though - but the blindness of financial markets to political resentment.

Just need enough people locked out of buying property and not being able to meet rental prices.

Have a chat to people under 40 in London and you'll find we're already there.

The idea that London would be more attractive to foreign buyers after the referendum fall in Sterling has turned out to be the total lie it always was. Foxtons share price took a massive fall in July and have continued downwards since. Prices in Prime Central London have been falling since the increase in stamp duty and showing no signs of life - just more and more panicked press releases from developers and agents trying to pretend all is normal...

Time to hedge against the housing markets.... 😆

*sigh*

Compare to Shanghai, HK and Singapore the property price in London is cheaper ... much much cheaper. 😛

Which is in all three cities, you have shanty towns. The excesses of the Asian market are not something we should be looking up to.

Private Eye for foreign ownership of uk property.

As an aside- supine government and weak legislation

Well at least... watching this slowly go all "Night of the Long Knives" as Brits look to blame everyone but themselves - is going to be entertaining in an absurdist way....the psychotic vengeful mob has been let out of the bag.

Tom_W1987 - Member
Which is in all three cities, you have shanty towns. The excesses of the Asian market are not something we should be looking up to.

That is inevitable regardless of where you go in the world. There is no guarantee everyone can make it put it this way.

Bollocks. It's measurably worse - and higher inequality leads to higher political risks - and thus higher financial risk in the long term.

This is why there are a lot of shit, corrupt countries - that stay shit and corrupt because they don't even make an attempt to reduce inequality - and they spend decades or even centuries locked in a continual cycle of ushering in idiot despots.

A countries wealth and stability is created by the hard work of it's people, it's created by the standard, culture and ethics of it's upper classes - and throughout many countries in latin America and South Asia - the quality of these people in these terms - are lacking.

It's going to get even more fun in the East, when we deindustrialise the place again through automation.

Corbyn will sort it out won't he?

It's a difficult thing to sort tbh- a nasty combination of circumstances. Of course it's the housing shortage and high prices that make it a good investment but that's also what's choking cities and making housing affordable. So that's a natural vicious circle, the best investments will always be in the most stressed areas because that's where values soar.

The trend for buying housing then leaving it empty is poison. 610000 empty homes in England of which 200000 have been empty long term - of course, not all bought as investments but frexample in Islington council, 41% of new build homes have never been lived in- they're buy-to-leave. Housing's a human need, I'd say a right, and a city that can't house its people is sick at heart.

Adding a shitload of new housing would counter it, but would also hurt all homeowners and burst the housing bubble, political death.
Aggressive squatters rights would be fun but never going to happen
Some sort of commandeering policy would be fun- leave a property empty for a year, or for more than 10 months out of 12, and the council rents it out for you. Again not real likely

So that pretty much leaves punitive taxes/charges. Islington council introduced a council tax penalty system a while back, don't know what effect that's had.

Corbyn will sort it out won't he?

I am a UK tax lawyer working in Hong Kong. In the past few years, we've seen:

- the Annual Tax on Enveloped Dwellings, which imposed a modest c.0.6% tax charge on homes owned through companies (many of which are foreign owned). ATED [b]isn't[/b] charged on rental properties, so at the very least it dis-incentivises "buy-to-leave";

- the extension of capital gains tax on gains on homes to offshore companies;

- the extension of capital gains tax on gains on homes to non-UK residents; and

- (regrettably dropped from Finance Bill 2017 due to the general election) measures to charge homes owned through offshore companies to inheritance tax.

All this has some modest impact on the desirability of UK property to investors here. Partly it's the actual tax measures, partly it's the signalling that they aren't welcome. Places like Vancouver are apparently looking a little more attractive as a result.

It's not major action, but government is genuinely trying to reduce the impact of tax-advantaged foreign buyers a bit. Obviously not a solution, but just noting that they're not completely inactive.

Very much enjoying the cut of TomW_1987's jib on this thread. He is spot on re deindustrialisation, but fails to mention the impact the same tend will have in the UK with its legions of pseudo middle class service industry jobs.

Expect financial services in the U.K. to shed 75% of current headcount by 2025 because of AI, robotics, digital and Brexit.

And that's before we mention the impact of automation on law, accountancy, truck driving and more.

And our backwards looking govt and our woeful education system (because political dogma) is leaving people totally unprepared to survive, let alone thrive in the dying days of the industrial military complex economy.

Fun times ahead.

With the wholesale move to automation and everyone being made redundant, who will be left to buy (afford) the product?

That's the very thing metal heart. Lots of money being invested in trying to figure this out in Silicon Valley. Fascinating to see Silicon Valley folks - like Sam Altman of Ycombinator - talking about experiments with a universal basic income. Reductively that means the high priests of capitalism are flirting with ideas that are fundamentally socialist, if not communist to shore up their future returns. Significantly, a universal basic income (e.g. 25k a year for everyone, no questions asked) would depend on Google, Amazon et al paying their taxes. History tells us the impact of AI will be overstated in the short term and under stated in the long run. I reckon there are only two things we can be certain of at this time:
1) Brexit is the last thing we need at the moment to distract us from wrestling with the genuinely hard things. This is no time for jingoistic nostalgia.
2) We ain't seen nothing yet. Unprecedented upheaval in the very fabric of westernised society awaits us.

Bring it, I say.

I learned some stuff this morning. Thanks people.

Adding to that mix world population having reached 7 billion sometime in April and we are indeed heading for interesting times.

It does the beg the question as to why successive governments since good old Maggie have not ring-fenced the buying of UK houses to UK residents, given they knew full well that demand was outstripping supply of new home builds for an increasing population size (exaggerated by the EU floodgates opening), partially thanks to her "right to buy" legislation for long term council tenants.

Just this last week I read something about local councils buying back homes they sold to "right to buy" tenants at a discounted price years ago, now buying them back at up to ~10x the price, trying to meet their social housing quotas!

n0b0dy0ftheg0at - Member

It does the beg the question as to why successive governments since good old Maggie have not ring-fenced the buying of UK houses to UK residents, given they knew full well that demand was outstripping supply of new home builds for an increasing population size

The housing bubble makes the economy look like a success, basically. And keeps lots of people happy because their house is going up in value.

reluctantlondoner - Member

Reductively that means the high priests of capitalism are flirting with ideas that are fundamentally socialist, if not communist to shore up their future returns.

No surprise really, they're the ones with the most to lose. UBI feels radical to most people but the truth is it's the option 2nd closest to the status quo (the closest being technological stagnation/regression). Carrying on with a wage economy at a time of mass automation is, er, challenging.

But we're not yet close to that tipping point- we're in the phase before, where the need for labour is falling but nobody's quite caught up with it. So people see automation as a threat rather than as empowering (and there'll be a lot of this of course), and we have a system which fundamentally was designed to force people to work, which is losing interest in doing so, but is still perfectly happy to punish people for not working. And it can carry on like that for potentially a very long time.

Some stress tests in recent years to see what people will stand for- what level of unemployment (especially for youths), of deskilling and loss of security, of lack of access to housing, of demonisation of the poor and unemployed and unemployable, of punishing people for the actions of their country, will we stand for. And the answer is, lots.

The utopian view is we reach a Sci-Fi future where no-one needs to work, because machines do everything for us - this also leads to the end of money. Think Iain Banks' Culture, or some of Kim Stanley Robinson's books.

The tricky bit is how we get there. And how this is managed with still-finite resources.

Look at your fellow man/woman beside you Ben, do you think that jumped up ape is really capable of creating or even living in a utopian society?

Humanity will start a nuclear war and the survivors will literally eat each other before that happens.

'Think of how stupid the average person is, and realise half of them are stupider than that.' - George Carlin

"the young are increasingly angry and resentful... "
They will grow out of it.

Not sure how ring fencing/protecting the homes for our youngsters matches the idea of opening our borders to all. I would hope that those promoting one are not promoting the other.

mattsccm - Member

Not sure how ring fencing/protecting the homes for our youngsters matches the idea of opening our borders to all. I would hope that those promoting one are not promoting the other.

That's an oversimplfication. For one thing hardly anyone wants totally open borders. But the other is to distinguish investment from habitation. Immigrants buying houses stresses the housing market but at least someone's using the house, taking them entirely out of circulation when there's a shortage is a different issue.

Overall, the issue is that there's not enough homes, and that building enough homes would endanger the housing bubble which lets people feel well off and makes the "recovery". But getting empty homes back into circulation would be a big help. Whether it's derelicts, second homes, investments.

Friend of mine bought a flat in London, for a pretty good proportion of a million quid. 2 doors down is an abandoned flat. The owner doesn't want to invest the money to bring it up to standard, but they don't want to sell because it's appreciating at a ludicrous rate. Their action is totally reasonable but it's a sign of the dysfunction of the housing market.

Actually not just housing but markets in general, things value is often divorced from their worth or purpose. The same basic problem as shorting, speculation etc, an asset becomes basically just the counter you play the game with and it doesn't really matter what it is, except when you put a company out of business or destroy someone's pension. (or it turns out that your asset is actualyl a sack full of bad debts that a credit house lied about) It'd make a lot of sense to just abstract the whole thing and set up markets that run on imaginary assets, or base it on the real world but at arms length so you invest on a model of the world not the real one. Let people play the money game without harming the bricks and mortar economy.

Eventually London will collapse. There is only so long a commute someone who works in Starbucks will put up with just to say they work in Central London.

Eventually small-medium sized businesses will move to hubs outside the M25 and the average worker will follow. Central will become a deserted wasteland with a spiralling employment crisis due to lack of people willing to commute 1.5hrs to earn the same wage they could earn in their out-of-London town.

I moved to central London about a year ago now, and I earn comfortably, but I've no plans to buy and settle in London as anywhere I could realistically afford will have a 50+ minute commute to Central where any of my work would be. I can afford the rent in a house share but if it were just me and my GF we would struggle and have to move further out.

I'd rather move out of London in 5 years, take a small pay cut (if any, skills outside of London are sometimes in demand), take a "lifestyle cut" (no pub every 20 steps). And I've been speaking to loads of people my age and their plans are the same.

That's normal; very many people kick-start their careers in the big city then, as they marry and have kids, decide that quality of life is more important than a fancy job and piles of dosh and move back out into the country. I spent 6 years working in that London (was even born there) and moved away in my late 20s.

"[i]...decide that quality of life is more important than a fancy job and piles of dosh and move back out into the country...[/i]"

...taking with them their piles of dosh, pushing up prices and ruining the housing market for the locals ! 😉

I grew up on the edge of London but moved out to the Surrey/Hampshire border. Not with piles of dosh from a city job, I hasten to add, just because I don't like London and didn't see the point paying a premium for something I didn't want anyway.

Right, but the difference is now we're doing it because we have no choice, not because we chose too - which is the difference .

I moved to central London about a year ago now, and I earn comfortably, but I've no plans to buy and settle in London as anywhere I could realistically afford will have a 50+ minute commute to Central where any of my work would be. I can afford the rent in a house share but if it were just me and my GF we would struggle and have to move further out.

This was the case 20 years ago when I moved to London the first time. I will admit that during my time there the rents went up but also the quality of the accommodation went up too. One of the places we lived had 13 people in a 5 room house which was then refurbished and let at the same overall price to 5 people. It was normal for us to commute for 50min-1hour on the tube so when I moved outside of London a 50min train ride and 20 min on the tube was not such a sacrifice (the commuting costs were though :()

New hubs for businesses were set up in Manchester and Birmingham yet still the London bubble persists.

Same thing is happening around the world - Vancouver has and continues to be inundated with Foreign, mostly Chinese investment. Majority don't even choose to live there and see it purely as way means to stash their cash in a 'safe' foreign economy: http://www.makevancouvergreatagain.org. Vast amounts of profit are being made on this - pricing the locals out.

London's exactly the same but due to the size of the city (c10m vs 0.5m) the difference is not so much in your face. If you look at the concentration of Central London property prices exactly the same trend - more of an international mix of Chinese and Russian.

dynastar - Member
Same thing is happening around the world - Vancouver has and continues to be inundated with Foreign, mostly Chinese investment.