"The current tax regime for overseas landlords could lead to them paying less tax on rental income than an equivalent UK landlord, and it is time for the government to consider equalising these rates. This would help encourage domestic investment to complement the interest from overseas"
- Neil Cobbold - PayProp UK
New data from automated rental payment and client accounting specialists PayProp has revealed the top three countries that have received the most rent from UK tenants.
Since June, 17.1% of overseas landlord payments from the platform have been sent to Singapore, with 16.2% remitted to Switzerland and 15% to Hong Kong in China over the past three months.
With millions of pounds of rent from UK tenants remitted overseas, this market represents a significant opportunity for UK estate and letting agencies prepared to work with landlords in other markets – and with some domestic landlords now exiting the market, overseas investment could become even more important to the UK lettings industry.
High rents and stagnant property prices at a time when some domestic landlords are selling may also make the UK an attractive market. Currently, the UK has higher average rental yields than Singapore, Switzerland or Hong Kong according to property data website Numbeo.
Non-residential landlords also have a different tax regime than UK landlords. For individuals, it is initially charged at the basic rate of tax, while for companies and trusts it ranges from 19% to 25% according to UK Property Accountants.
Compliance complexity
For overseas investors considering buying UK rental properties, navigating the complex non-resident landlord scheme and other regulations can be challenging.
Neil Cobbold, Commercial Director, Reapit | PayProp, said: "Overseas landlords represent an important segment of the UK rental market.
“For overseas landlords, engaging a letting agent’s fully managed service is not just a convenience but an important insurance policy. Having a team of UK-based property experts to help them navigate international payments, tax issues, right-to-rent checks, anti-money laundering laws, EPC certificates, local licensing, and other regulations the landlord may not be familiar with is essential.
"That key relationship helps ensure compliance with UK law, protects their investment, and helps avoid costly legal pitfalls.”
“While there are some additional compliance complexities in servicing overseas landlords, our suite of powerful PropTech delivers for agents keen to engage this important part of the market. Being able to do all of this within the Reapit environment saves a significant amount of time for agents and helps reduce the compliance burden.”
Equal taxation
Cobbold concludes: "The current tax regime for overseas landlords could lead to them paying less tax on rental income than an equivalent UK landlord, and it is time for the government to consider equalising these rates. This would help encourage domestic investment to complement the interest from overseas.
“As the UK property market will continue to attract international interest, it’s clear that both letting agents and policymakers need to adapt to evolving market trends. For letting agents, there is a significant opportunity to tap into the demand from overseas, providing tailored services that not only meet the needs of international landlords and aid compliance but also boost their own business growth.”
