Global Britain or Britain alone?

One of the eternal bugbears of the media in the UK (particularly the left-wing media) is that foreigners are buying property, driving up house prices and thus making life harder for Brits. Well, foreigners have been increasingly reluctant to buy property in the UK over the last six years, it seems.

A team of researchers from Copenhagen and Munich have combined a vast array of data sources from the UK’s land registry to sales records and leaked information about the true ownership behind trusts and other offshore vehicles to estimate how much property in the UK is owned by foreigners and what the motives are for owning property in the UK.

According to this study, foreign ownership of UK residential properties stands at 1.25% of the whole market but this number disguises the large differences across regions and value. Among houses worth more than £5m, foreign ownership is as high as 15% and in regions like inner West London, it exceeds 25%. For some reason unbeknownst to me, though, County Durham also seems to be a hot spot, with more than 10% of homes owned by foreigners there.

Share of UK homes held by foreigners

Source: Johannesen et al. (2022)

Most homes, especially high-end homes, are held through trusts and other offshore vehicles to provide secrecy and tax shelter, but the various data leaks of the last five years allowed the researchers to estimate the ultimate ownership of homes held via offshore vehicles. No surprise there that many homes are ultimately owned by British citizens. But what surprised me is that Russian make up for a rather low share of the ultimate owners. Instead, Africans make up a rather large share of the owners.

Ultimate ownership of UK homes held through offshore vehicles

Source: Johannesen et al. (2022)

Another interesting result of the study is that foreign homeownership in the UK has plateaued since the Brexit referendum in 2016. Since the referendum, fewer foreigners have been buying property in the UK and more British citizens are buying property from foreigners. Whether that is a good or a bad thing I leave it to the readers to decide, but the fact is that the UK as a place to own property has become less attractive for foreigners since 2016 and homeownership in the UK is no longer becoming more international.

Change in property transactions since Brexit referendum

Source: Johannesen et al. (2022)