International purchases of UK real estate reach an all-time low among foreign buyers.
Foreign Home Buyers in the UK Hitting Record Lows: What's the Story?
In a surprising turn of events, the percentage of international buyers seeking to purchase a home in the UK has dropped to an all-time low, according to new data from Hamptons. These overseas investors currently account for a mere 1% of the total market share, a significant decline from a high of 3% back in 2009. This trend is particularly noticeable in Prime Central London, where the number of international buyers has fallen to 2.9%, down from a peak of 7.9% in 2009.
Hamptons attributes the decrease in demand to fewer Europeans relocating to the UK, with Europeans accounting for 43% of international house hunters in Q1 2025. North Americans and Middle Eastern buyers are trying to compensate but aren't doing so at a pace that halts the overall descent.
So why are foreign buyers staying away? Aneisha Beveridge, Head of Research at Hamptons, reveals that it's a question of what isn't. "Political events worldwide continue to impact demand for UK property from international buyers," she says. However, the major catalyst seems to be tax changes, which Beveridge states have curbed the flow of international property seekers. Stamp duty increases, specifically targeting second home buyers, alongside Brexit and adjustments to the tax treatment of non-doms, have increased expenses and reduced the lure of UK property for many international investors.
Nonetheless, London remains the focus for overseas home buyers, with more than half of potential applicants eyeing the capital in the first quarter of 2025. Interestingly, those in search of more affordable homes are moving north, with 10% looking at the north east, north west, and Yorkshire, representing a jump from 5% a decade ago. Of these potential buyers, 75% are seeking a permanent home, according to Hamptons. Liverpool has emerged as the most attractive city for Northern England-bound buyers.
"The case for buying a home, particularly in Prime Central London, has become daunting for some international buyers," Beveridge continues. For temporary immigrants or those unsure of their stay duration, the high cost of purchasing property and the prospect of little or no capital growth in Prime Central London have become discouraging factors, pushing many to choose renting instead.
However, London's abundance of amenities, cultural offerings, and robust legal system continues to draw overseas capital, especially from those looking for long-term investments.
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James Fisher, our Deputy Digital Editor at the platform, writes about property, travel, motoring, and topics that ruffle feathers. He chooses to reside in the bustling city of London.
Insights:
- The Abolition of the Non-Domiciled (Non-Dom) Tax Regime: In April 2025, the UK terminated its Non-Dom tax status. Previously, high-net-worth individuals (HNWIs) could pay UK taxes only on UK income, not their total income, after four years of residency. Now, HNWIs are taxed on worldwide earnings, a change that has deterred many foreign buyers from investing in the London luxury property market.
- Oversupply and Rising Inventory in Prime Central London: An oversupply of luxury properties, particularly in Knightsbridge and Belgravia, has led to a buyer's market, with listings for properties priced over £5 million increasing by 30% year-on-year in early 2025. This oversupply and the declining demand have resulted in falling prices.
- Shift to Renting Over Buying: Many wealthy individuals are opting to rent out their high-end properties rather than sell or occupy them, likely as a strategy to avoid immediate tax liabilities. This decision has caused rental prices to rise by 7.9% quarter-on-quarter in Prime Central London, while sales activity has declined.
- Broader Market Weakness and Transaction Slumps: The UK housing market has experienced a drop in transactions, with a 28% year-on-year decrease in April 2025 and a significant monthly decrease in March–April 2025. This decrease mirrors buyers rushing to complete purchases before changes in Stamp Duty Land Tax (SDLT) in April 2025. Furthermore, mortgage approvals have decreased for several consecutive months, indicating reduced buyer interest and tightened borrowing conditions.
- The decline in foreign buyers in the UK property market can be attributed to factors such as political events worldwide, tax changes, and the abolition of the Non-Domiciled (Non-Dom) Tax Regime, which has increased expenses and reduced the lure of UK property for many international investors.
- Despite the decrease in demand from foreign buyers, London continues to attract overseas capital, particularly from investors seeking long-term investments due to its abundance of amenities, cultural offerings, and robust legal system; however, many potential buyers are shifting their focus from buying to renting, which has caused rental prices to rise in Prime Central London while sales activity has declined.
