Investor Complex

Going by the insights gleaned from the property community, agents inform us that in prime London boroughs such as Kensington and Chelsea, Camden and East Finchley, as many as one in ten new-build homes are bought by overseas investors and then left empty.

 

What can be noted, and has already been established as a matter of fact, is that this phenomenon has up until now remained fairly centric to London. However with a dearth of available ‘prime’ real estate this phenomenon is now spreading to other parts of the UK. 

One senior partner at a London surveyors that we work closely with reliably informs us that there has been a trend with overseas buyers to acquire property and then to simply ‘park it’ as an additional asset in the portfolio. 

Few investors go on to set foot in the property again, with apartments and houses bought for cash and providing some relief in answer to the first world problem of where to deposit funds that can be convertible, with provision for an estimated amount of capital appreciation. 

Investors properties are then left empty and preserved in pristine condition, yet registered as occupied, with services such as council tax, basic utilities and service charges covered. These costs are offset by the apparent capital growth that far exceeds monthly running costs. A property that has not been lived in also offers appeal to Far Eastern buyers, who will accept paying a premium for such a property. 

This considered and with the majority of properties administered by an overseas entity, or trust, where the need for secrecy is the guiding principle there is little appetite to sweat the asset by offering it to the rental market.

Data released earlier this year by the Land Registry paints a stark picture, with a reported 200,000 homes across the UK lain empty, with 20,000 of those in London alone. 

With this trend now extending beyond London to other major cities such as Manchester, and even Milton Keynes, the effect that this has own the market is two fold; rising prices and a scarcity of available homes for native citizens.

 
Sven Andersson