Overseas investment into UK property plummets as pandemic and Brexit woes take their toll

The number of UK properties bought by overseas investors fell by 58% between 2019 and 2020, with 2021 figures so far pointing towards another significant drop, according to data sourced by specialist anti-money laundering software company, SmartSearch.

The findings, curated from HM Land Registry’s ‘investment into UK property’ dataset1, highlights the shifting demand for residential property in the UK from buyers overseas, and reveals interesting market trends.

With the pandemic naturally causing global market turbulence, the impact has been felt in the property market with overseas investment appearing to fall drastically between 2019 and 2020. The downward trend appears to be continuing this year, as current figures show an estimated total of just £3.3bn paid for properties across the UK since January, compared to around £9.4bn in 2020 and £16.6bn in 2019.

Geographically, while Greater London tops the list as the most attractive area for property investment from overseas, interestingly the majority of the top five is taken up by northern counties, as the north of England continues to become a more attractive prospect for investors.

When it comes to the reasoning behind the most popular locations for overseas investors, there are many factors which might make a region more attractive. Northern cities, such as Manchester and Leeds are leading the way when it comes to rising house prices2. With experts predicting that these areas will continue to see a surge in property values of up to nearly 30%3 in the next five years, it is no surprise that investors are jumping at the opportunity to make purchases across these regions.

The north is also seeing heavy government investment via the Northern Powerhouse initiative, with more than £3.4 billion achieved in northern growth deals so far4. The focus on developing northern cities into thriving business hubs with increased transport links to the capital is something that will be of huge interest to property investors from both the UK and around the world.

While the numbers may be deteriorating due to a range of economic factors, investment into the UK property market still remains strong. For property professionals, selling to overseas buyers brings with it a range of regulations and checks that need to be strictly adhered to in order to reduce money laundering risks.

John Dobson, CEO at SmartSearchshares his advice for what to look out for when selling to an overseas buyer: “When selling to someone outside of the UK, it’s so important to do your research. Of course, this is the case when selling property to domestic buyers too, however there’s a lot more to consider when the sale is international.

“The best thing to do is find specialists who have expert knowledge of carrying out a sale to an overseas investor. Do as much research as you can on the country you’re selling to and work with your solicitors to ensure all checks and paperwork are completely watertight.

“Finally, build in as much time as possible for the sale – often more than you may think you need. This will give you some buffer time for any additional AML checks that may need to take place.”