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@h2o
Myth number 1 - The UK is short housing.
There isn't a shortage of housing in the UK. There's a shortage of housing where people want to live. For £200k I could buy a five-bed house in Inverness. It wouldn't make for a particularly practical commute.
Myth number 2 - all the evil Russian/Arab forrins are driving up house prices.
Maybe if you're in the market for penthouse flats in Mayfair. Most of the people buy-to-let people I've come across have been people who bought their own place before the last housing bubble burst, have remortgaged against a higher valuation after prices rose, and bought another property. Some have done that a few of times and have a small portfolio of properties. It makes sense to do that because interest rates are so low that a) there's not much else to do with the cash, and b), mortgages are cheap as chips again. And because there's so much demand in London - particularly in the popular bits - you can easily pull in enough from the rental to pay the mortgage and take an income.
I hasten to add that think it's unfair that they do that. But they aren't foreigners. Well, apart from my Aussie downstairs neighbour. I don't think he epitomises hot money in the macroeconomic sense, though.
I will caveat that by saying I have no idea who is paying £300k off-plan for a small studio flat in the appallingly named Avant Garde Tower in Shoreditch. I have met nobody who is even remotely interested. That could well be the foreign investors. I think they will get burnt, if so. The stuff looks overhyped and overpriced.