Financial changes enforced on buy to let landlords have made Britain one of the most expensive countries for property tax in Europe.
Expats renting out property have been hit by a slew of tax and mortgage changes aimed at levelling the market for first time buyers and taking the heat out of house prices.
The taxes include enhanced stamp duty rates on purchase, withdrawal of mortgage interest relief for high earners and higher rates of capital gains tax on sales.
The overall effect is to drop yields for landlords renting out homes in the UK to 4% – the fifth worst of 25 countries.
Eire tops table
Only Austria, France, Croatia and Sweden offer a lower than 4% yield, mainly due to high property prices and low, static rents.
Top of the yield table for buy to let is Eire, according to money transfer firm WorldFirst.
Landlords are picking up an average 7.08% a year return on their investment.
The average rent of a one-bedroom apartment in Dublin has hit £1,000 a month, making the Irish capital the second most expensive country to rent behind Luxembourg, where a tenant would pay £1,166 a month for a similar sized apartment.
Other countries at the top of the table with yields of more than 6% are Malta, Portugal, The Netherlands and Slovakia.
Beginning of the end for buy to let?
Edward Hardy, economist at WorldFirst said: “The correlation between a country’s housing sector and the health of the wider economy is clear. It may now be the case that the deteriorating dynamics of the UK’s rental market is sounding the alarm for a wider slowdown in residential housing and thereby broader economic wellbeing.
“While the UK remains in a purgatory-like state between EU membership and Brexit, long-term investment decisions have become increasingly difficult to make and falling returns for property investors could mark the beginning of the end for one of the UK’s most successful investment avenues of the past 25 years.”
For expats and overseas investors buying in the UK with a foreign currency, the real price of property has dropped with the value of the Pound since the Brexit referendum in June 2016.