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An Island Affair: the British Isles have one identity but many cultures

An Island Affair: the British Isles have one identity but many cultures.

An Island Affair: the British Isles have one identity but many cultures

Although not an island getaway in the traditional sense, the British Isles offer diversity and opportunity in terms of property investment.

 British IslesThe British Isles are an archipelago – a group of islands – off the north-western coast of Europe and although it includes over six thousand smaller isles, it formally refers to the United Kingdom of Great Britain and Northern Ireland (Great Britain includes England, Scotland, Wales, plus the Isle of Wight, Anglesey, the Isles of Scilly, and the Hebrides); Ireland; the Channel Islands; and the Isle of Man.

Technically the Channel Islands and Isle of Man are not part of the UK but  are instead considered Crown Dependencies (self-governing but possessions of the British Crown).  Occasionally, however, the UK extends legislation which covers the Isles and so it is useful to have a term to refer to the collection of territories: the British Isles.

Great Britain is the largest island and together with Ireland account for over 95% of the landmass of the Isles and 80% of the population, leaving only 4.5% to the remaining islands. The vast majority of these with permanent residents belong to Scotland, with 97. England, by comparison, has only 19 permanently inhabited islands. One of the Channel Islands, Jethou, is privately leased, and by the Isle of Man, the Calf of Man, has only two permanent residents.

The remaining inhabited isles, however, have a great story to tell.


It’s a long name for a sovereign state, but then again, it includes a lot of territories.




England in general, London specifically, has one of the world’s top-ranked property markets, and lately its luxury market has been doing rather well – for now.

According to the British Land Registry, house prices in London are slowly nudging their way up. From 2011 to 2012, there was an increase of 0.9% overall. However, there does seem to be a cooling in the luxury market with the number of sales in this sector slumping by 0.25% from a year ago. And although the Registry notes that while the prices in London are rising quickly, up 5.9% from 2011, the luxury market is down by a whopping 26%. What happened?

The Olympics and the Queen’s Jubilee festivities happened, and many are blaming these as a distraction from the day-to-day course of the property market.

Nevertheless, London’s property market is still outperforming the rest of England’s and Wales’, especially in terms of property prices. This is despite a scheme introduced by the government in the fourth quarter of 2012 to increase mortgage availability and even encourage price wars between mortgage lenders, which affects the nation as a whole, not just London.

London Rental MarketRental Returns

Foreign investors have and probably will always have a love affair with London, owing in part to its cosmopolitan status, multicultural population, geographical accessibility to continental Europe – and the soaring rental returns.

During England’s recent economic woes, lending criteria were tightened making it harder for renters to become owners. This lead to a higher number of renters overall, which drove the prices up. Add to this an increasing cost of living for the Londoners and wage growth that is slower to recover from the economic difficulties than is being seen in the growth of the property market, and it is a hard time to join the property ladder in London.

While sad news for the renter living in London, this is great news for an investor with the ‘dosh’ to purchase property in the nation’s capital, especially when a mortgage is not required.

2013 tax laws for England’s luxury market

There have been a few amendments to the tax laws in England, especially for foreign buyers:

Foreigners owning a property with a value of US$3.2 million (£2 million) will be charged an annual tax for residential property. The Annual Residential Property Tax (ARPT) takes effect from April 2013 and is based on valuation scales starting at £2 million and going up to properties valued in excess of £20 million.

For foreigners who are not residents, there’s a new capital gains tax of 25%, also starting in April, on high-value homes.

The following are highlights of the property market across England. The average prices per home are according to the Land Registry of England and Wales, while the price per square metre for renting come from statistics website, Numbeo.

For property investors, the attraction to England, especially London, goes beyond current market volatility. While always a factor, it’s more about buying into the name and associated benefits of owning in the UK.

England Property Market Averages








Isle of Wight

More than half the area of the Isle of Wight is designated as an Area of Outstanding Natural Beauty. Sometimes called a miniature version of England, and known in the academic world for its dinosaur fossils, and in the beer world for its breweries, the population of about 150,000 is both sports-orientated and proud of its unique culture and heritage.

With tourism as a major economic driver, the relatively young property market (on an international level), combined with sound infrastructure on the island, will open up the property market to the world in the coming years. With 57 miles of coastline and a climate more temperate than the rest of England, it’s a unique option for owning a holiday home.

Considered a county of England, Wight is the largest island in England, and is located in the English Channel. The largest town (there is no city) is called Newport, in the island’s centre.  The locals speak English, but with their own distinct accent. Being a small location, however, there is little reported on its property market.

According to the Land Registry of England and Wales, the average house price here is US$316,524 (£199,475) with a annual price change of +0.4%, and the average apartment price is US$214,110 (£134,933).

Isle of Scilly

A distinctly Cornish set of five islands (archipelago), Scilly, populated by about 2,000 Scillonians and owned in large part by the Duchy of Cornwall (freehold land, at least). It is another example of a British isle with an economy based on both tourism and agriculture. In the last few years, however, it has been home to some of the poorest people in Britain. In 2009, the average household income fell below US$26,600 (£17,000). Thought to be a problem owing to an overdependence on tourism, local authorities are developing a set of projects to encourage new industry. It can be difficult to draw in new business, however, due to the transport costs from the mainland, the low average income and relatively high cost of living.

There are few statistics available on the small island with its small population and small property markets. No one seems to be keeping tabs on the number of property transactions or average house/apartment prices. Perhaps it’s the way of the laid-back island life.

Northern Ireland

Northern Ireland, by comparison to England, is a lessor-known property investment destination. The capital city of Belfast is the 14th largest in the UK by population, and the second largest in Ireland behind Dublin to the south.

Unfortunately Belfast and Northern Ireland are perhaps still best known for their period of internal conflict referred to as The Troubles, an era of political and religious violence between its Catholic and Protestant populations fighting for (or against) independence from the United Kingdom. Although today, the city is calm and reaping the benefits of peace through economic growth.

The population of just under 300,000 is overwhelmingly Caucasian, but there are however about 1,500 Asian residents in Belfast. Each year, in fact, it’s becoming a more multicultural and cosmopolitan destination, with every amenity one would expect to find in a large city.

The property market, virtually untapped by foreign investors, at least on a large scale, is ripe for the picking, with prices still under market value and plenty of renters who need accommodation. At the end of 2012, government statistics show that Northern Ireland’s property prices dropped more significantly than anywhere else in the UK, plummeting over 12%. At the same time, the performance of the rental market increased by exactly the same amount. Coincidence? I think not. After all, buyers who cannot buy, rent. Investors with the money to buy, buy and then rent out.

According to the Land Registry of Northern Ireland, the average house price in Belfast is US$241,933 (£150,176), although an apartment averages about US$167,210 (£103,793). The annual change in price is +5.5%.

Numbeo puts the price per square metre for an apartment in the city centre at US$2,964 (£1,836) and US$2,110 (£1,307) outside of the city centre. To rent a three-bedroom apartment in the city centre runs on average US$966 (£600) and outside the city centre US$765 (£475).

House prices and rental costs in rural areas decrease substantially.


North Sea, Scotland mainland makes up the northern third of the island of Great Britain. With mild winters and cooler, wet summers, it is the nation for golf, whiskey and haggis. And while the primary language is English, it can be difficult for even native English speakers to understand the accent – but that’s part of the charm.

The national identity of the Scottish is also something of note. It’s a place where even immigrants see themselves as part of the nation. Asians, including Pakistanis, for example, call themselves Asian-Scots, leaving truly native Scots to identify themselves instead by the accent used.

Indeed, immigration to Scotland has steadily increased since World War II, making for growing enclaves of Asian, Pakistani and African communities.

To aid both foreign and local property buyers in Scotland, in 2008 the government decided that all homes sold must include a Home Report, which is a collection of three documents: 

1 A survey, which is an assessment of the value and quality of a home, carried out by a surveyor,

2 An energy report, a part of the surveyor’s report, to assess the home’s energy efficiency and its environmental impact

3 A property questionnaire, a form filled out by the seller and includes tax and other costs useful for buyers,

Although property is sold across the entire country, of course, the two major cities in Scotland offer a more useful discussion, especially for foreign investors: Edinburgh and Glasgow.

Edinburgh is the capital but the second largest behind Glasgow. Each has very different property markets. Consider simply the disparity between the average house price in each city: US$362,935 (£228,719) in Edinburgh and US$208,855 (£131,619) in Glasgow.


Although not the largest city of Scotland, it is second only to London as the UK’s most-visited tourist destination. A city of charm, history, and culture, it hosts a number of annual festivals, further adding to its tourism attraction – and rental returns for its property market.

Neighbourhoods of the city of Edinburgh are separated by residential areas with a connected or adjoining park, retail street and a historic street. The south and the west portions of the city are considered the wealthier areas, but each area has its charm. Old Town, for example, is a magnificent preservation of medieval buildings with a castle, squares, and markets. New Town by comparison is considered a marvel of urban planning, even by modern-day standards, while still maintaining its historical roots.

While the average number of properties in Edinburgh went up in 2012 by 11%, the average price dropped slightly by 3%. Reports from the BBC say this has to do with a growing realisation by the Scots regarding the actual current market value of their properties, and adjusting their prices accordingly.

Although still in recovery mode and prices have yet to return to pre-crisis levels, the Edinburgh tourism market and optimism of its populace are driving the market forward.

According to the Land Registry of Scotland, the average house price in Edinburgh is currently US$366,933 (£228,719) with an annual price change of +1.4%, while the average apartment price is US$308,134 (£191,984). Numbeo gauges the per-square-metre, average price of renting a three-bedroom apartment to US$4,997 (£3,114) in the city centre, and to US$3,085 (£1,923) outside of the city centre.



As Scotland’s largest city, and third largest in the UK, Glasgow is known primarily – at least historically – for industry and shipbuilding. As it also happens to have fairly cold and overcast winters and variable summers (although spring is pleasant), Glasgow’s reputation for tourism or property investment is somewhat grisley.

There are reasons for optimism, however, at least in the Glasgow property market – 2012 ended up for both volume of transactions and average price. Glaswegians are also looking forward to 2014 when there’s an expected hike in rental returns for properties in the area due to it hosting the 2014 Commonwealth Games.

Also driving tourism is the city’s architectural heritage, especially representing the Victorian era, as well as the expansive number of art museums and artistic organisations based in Glasgow, including several theatres and a vibrant music scene. If Glasgow can manage to spread the word and drive tourism further, even more optimism can be expected for the property markets.

As it stands, however, the average house price in Glasgow is significantly lower than in its sister city, Edinburgh. Fighting a battle between council areas and urban areas, which also draw a line between wealth and poverty, Glasgow may need further urban planning to draw foreign investment and improve its property market.

According to the Land Registry of Scotland, the average house price in Glasgow is US$211,248 (£131,619) with an annual price change of –5.1%, and the average apartment price is US$185,276 (£115,437). Numbeo gauges the per-square-metre average price of renting a three-bedroom apartment to US$1,601 (£1,000) in the city centre, and to US$1,120 (£700) and outside of the city centre.

The Hebrides

The Hebrides are yet another archipelago set within the archipelago that is the British Isles.  Although this one is located off the western coast of Scotland and divided into two groups called the Inner and the Outer Hebrides.

The Inner Hebrides has more islands than the Outer Hebrides, but the Outer Hebrides includes Lewis and Harris, the largest island in Scotland and the third largest in the British Isles after Great Britain and Ireland. In the portion of the Lewis and Harris islands called Lewis, there is a rising population with a wide range of entertainment, including restaurants, hotels and bars.

While industries such as crofting, fishing and tourism play an important role, the islands perhaps receive their largest economic bolster from the local oil and energy business. The Outer Hebrides especially are rich in renewable energy resources, and with new government incentives and projects planned to expand its oil and energy policies – and therefore jobs – across Scotland but especially to the smaller regions and islands, there is reason to expect an increase in populations of the outlying, remote areas.

With a combined population of less than 50,000 – and falling – there are in fact few resources for current statistics on the property market or its people. It seems rather than investing in and moving to the Hebrides, the island’s inhabitants, especially young adults who leave for education and rarely return, are not investing in the Hebrides’ future.


Bordered by England and the Irish Sea, Wales has a population of over 3 million people, 1,200 kilometres of coastline, and manages to retain a distinct cultural identity (not political, however) from the rest of Great Britain.

While the people of Wales, the Welsh, refer to their property market as competitive, the truth is that it is suffering compared to the markets in England, Ireland and parts of Scotland.

According to the Land Registry of England and Wales, the average price of a house in Wales is US$248,955 (£155,500) with an annual price change of +0.7%. The average price of an apartment, meanwhile, is US$190,341 (£118,889). In addition, Numbeo gauges the per-square-metre average price of renting a three-bedroom apartment to US$1,332 (£825) in the city centre, and US$1,170 (£725) outside the city centre.

On the plus side, long-term investors with the ability to park their cash and wait will find excellent deals in Wales or specifically in its capital city of Cardiff. Life in Wales is distinctly pleasant, affordable, and the people are friendly and outgoing (famed Welshmen include Anthony Hopkins, Tom Jones and Catharine Zeta-Jones).

Many English consider Wales to be nothing more than a necessary detour when on their way to Ireland. But if you enjoy wide-open spaces with lush countryside, sheep and folk songs echoing through the valleys, then Wales might just be the right property investment for you.

Isle of Anglesey

Off the north-western coast of Wales, and the largest Welsh island, Anglesey hosts a population of mostly Welsh speakers (over 68,000, according to the 2010 census).

Rather than one or two large or centrally located cities, Anglesey has several well-dispersed towns that populate the island quite evenly. With a pleasantly mild climate, the economy is driven by a mixture of agriculture and tourism, and about 2 million visitors reach the island each year.

Tourism is one thing, and property investment, while often driven by growing tourism (holiday properties, rentals, etc.), is still another matter entirely. Still – just what in the name of King George is going on with the property market on this small island? The average cost of an apartment is almost £80,000 higher than the price of a house – and the average house price appreciated by rather a lot (up 9.3% to be precise).

The numbers may be startling, but the number of transactions in 2012 as of the beginning of December last year was just 200. In such a small market, it’s possible for one or two particularly large or small deals to rock the boat, so to speak.

Or, could it be that local royalty, Prince William and his bride, Princess Kate, have made their home here? As one of the world’s most famous couples, privacy is paramount. On a secluded island, privacy is delivered.

According to the Land Registry of England and Wales, the average house price is US$271,017 (£167,844) with a annual price change of +9.3%, and the average apartment price is US$400,989 (£248,337).

The Republic of Ireland

As for the property market, the ‘luck of the Irish’ strikes again. Along with some sound, productive work between the politicians and bankers of the republic, Ireland needs now some good fortune.

Much of Ireland is still within the throes of a recessive economy that sees properties standing vacant simply unable to find buyers, or property prices falling by as much as 20% in the span of a year (2012). Even now, the total number of properties up for sale is at its lowest in at least five years.

But, if you hold your breath and listen carefully, you’ll hear a whisper of optimism emerging from a few Dublin streets. It’s not recovery, but perhaps an inkling of stability. Prices in some parts of Dublin rose in 2012 (instead of falling dramatically as in 2011).

Where did it go wrong?

Denise Casey, Irish national and partner in the real-estate firm APSS, believes that during the most recent property boom in Ireland, beginning in the late 1990s through to the early 2000s, businesses and property investors were drawn to Ireland for its market growth and well-educated work force. Additionally, Dublin, as London, is a strategic hub in the British Isles and a gateway to Europe. ‘But it’s the skills and education of the populace that brought in companies during the boom,’ says Casey.

The local builders, with the blessing of the local governments, overcompensated by building to a point that the supply well over matched the demand. And then they built some more.  And some more. The builders were getting richer, as were the bankers and even the politicians. As for the people of Ireland, however…

‘Yes there was population growth. And yes the Irish nationals abroad were moving back home to take advantage of the growing economy and job market. But the amount of new homes being built made absolutely no sense in terms of supply and demand.’ Even still, Casey continues, ‘extremely greedy politicians throughout the country handed out planning permission left, right and centre. So developers built more and more homes, and not just in and around Dublin, but in rural areas where there would never be a demand. The politicians didn’t put a stop to it.’

Incentives were also offered to foreigners to come and invest in Ireland, which proceeded to push the greed even further. By the time the recession began in the USA, Ireland was already up to its eyeballs in a property bubble, and ‘even if the recession from the US hadn’t spread to Europe, Ireland’s market would have crashed on its own,’ says Casey.

Casey is certain that Ireland’s was a case of absolute oversupply, and the politicians who offered the planning permissions, as well as the bankers who gave out loans, should have stopped. With no regulations and no advisors, first-time investors, for example, were pulled in up over their heads, receiving 100+% loans. Now they’re in debt.

It will take time…

In 2012 in the main centres of Ireland, such as Cork and Dublin, prices have bottomed out.  That’s the first step on the way to a market recovery. The entire economy of Ireland is suffering, however, and with a poor job market, there’s something of an exodus going on at the moment. The Irish are leaving for the greener pastures of Australia, New Zealand and Canada.

Casey believes that it’s still possible to consider Ireland as a property investment, but that it comes down to buying in the right locations. ‘Good deals are to be found,’ she explains, ‘provided you’re prepared to hold for the long term.’

The Property Services Regulatory Authority says the average price of a house in Ireland is at US$112,400 (£137,000).  Numbeo gauges the per-square-metre average price of renting a three-bedroom apartment to US$2,422 (£1,500) in the city centre, and to US$1,937 (£1,200) outside the city centre.

 The Channel Islands 

JerseyThe Bailiwicks of Jersey and Guernsey 

Located off the French coast of Normandy, Jersey is the largest of the Channel Islands and is best known to tourists for its sandy beaches, tea and fudge, and the breed of cow named after the island. The official languages are English and French, although Jerriais is regarded as the national dialect. The capital city is St. Helier.

The Bailiwick of Guernsey is slightly further north of Jersey but enjoys a similar climate and also speaks English and French, but has its own regional dialects of Guernésiais and Sercquiais. The capital city is St. Peter Port (St. Pierre Port).

The Bailiwicks also include smaller islands that, due to their strategic location between the north of France and the south of England, contain a history relating to the centuries of war between the English and French.

Fortunately trade, not war, paved the way for these islands, laying the foundations for prosperity and neutrality where agriculture and shipbuilding became the norm.

Today the Channel Islands are self-governing parliamentary democracies (although still considered possessions of the British Crown) and maintain as well a Bureau in France in order to negotiate their own matters, although with a non-diplomatic status. The Bailiwicks of Jersey and Guernsey each operate separate from each other under their own laws and issue their own coins instead of using British sterling.

Regarded as having their own international identities and treated as part of the European Community, they derive their prosperity from the financial sector and tourism. In fact, the purchasing power parity (PPP) in Jersey is higher than any other of the world’s developed economies due to a specialisation in a few high-return sectors of finance. However, the standard of living is comparable to areas just outside of central London.

Holiday rentals is a strong bet for property investors: tourism is booming due to the mild climate and historical sights, some of which date back to the Bronze Age, although the lack of VAT, driving down the cost of luxury goods on the island, may also have something to do with it. Jersey and Guernsey are also not subject to EU fiscal legislation, making them an ideal haven for businesses and investors.

The Land Registry of Jersey puts the average house price at £226,950 (US$360,172) with no annual change in the price.

Numbeo gauges the per-square-metre average price of renting a three-bedroom apartment to US$3,229 (£2,000) in the city centre, and to US$2,583 (£1,600) outside the city centre.

Guernsey is currently looking into setting up a Land Registry. However, Numbeo gauges the per-square-metre average price of renting a three-bedroom apartment to US$3,552 (£2,200) in the city centre, and US$2,179 (£1,350) outside the city centre.Jersey2

Jersey and Guernsey residence and foreign investment laws

Citizens of EU member states may work and live in Jersey or Guernsey freely but non-EU citizens must apply for permission. Permission to work is typically granted, however, only if there is no other local suitable or available to fill the position.

Permission for long-term residency is also a challenge for outsiders and exceptions are usually only made for those already owning a residence – and the purchase of the residence is also subject to permission.

Basically a foreign investor stands a better chance of receiving permission to buy a property in the Bailiwicks if qualified to purchase a luxury property, or, if the investor can find some other means to make a significant contribution to the community through a hefty payment of taxes. In other words, if rich enough, an investor can buy his or her way in.

The law specifically states, in fact, that it will consider permission for foreigners to purchase property based not only on his or her contribution to the tax revenues but also on the ‘business/social background of the applicant and the associated benefit that could arise … as a result of the taking of residence’ and ‘any other general benefits’.

It would seem, then, that the governments have set up the application so that, at the end of the day, it’s their choice as to who gets in and who doesn’t.

Commercial property investors will find it much easier to receive permission for their transaction as long as they are investing in an existing business and not creating a new one.  

Additionally, the Islands tend to be more lenient in granting permission to foreign investors when the transaction is considered ‘passive’ – for investment purposes rather than long-term residence. Indeed, the Islands deter foreign investment for new businesses or immigration and, therefore, do not offer any incentives to attract foreign investment.

European Union nationals

In 2005, the EU started an information-sharing practice called the Savings Tax Directive. This requires financial institutions to share income information based on investments of EU nationals back to their home country primarily so that foreign investors could not place their monies into one country in order to avoid taxes back home. Jersey and Guernsey, however, opted for a tax withholding scheme instead, which means at the time of the investment transaction, a percentage of the investment cost is put aside and then passed back to the home country of the investor. Although this applies only to bank interest, bond interest, and income derived from bond funds, money-market funds, loans and mortgages, this tax, which currently stands at 35%, may be hefty and so needs to be considered with any investment into the Bailiwick.

 Isle of ManThe Isle of Man

Just as the Channel Islands, the Isle of Man, or simply Man, is also a possession of the British Crown, but is located in the middle of the British Isles in the northern Irish Sea, approximately equidistant between Great Britain and Ireland, closest to Scotland. The climate is mild with cool summers and temperate winters, although with a high percentage of rainfall throughout the year.

With its own Parliament dating back to the days of the Vikings, it is considered to be the oldest Parliament in the world. The capital city is Douglas and the official language is English although Manx Gaelic is considered a dying dialect.

Between the years of 2002 and 2008, the average house price grew year on year at a rapid rate. In 2009 it dropped suddenly by just over 4% but 2010 evened out the loss. The latest information from the Land Registry only goes up until 2011 when the average house price was US$458,204 (£286,056), down again by 1.6%. Overall, there is growth in the sector.  Rental costs average about US$2,422 (£1,500) across the island, as there is no proper ‘city centre’ by other city standards.

The property market in the Isle is transparent and open to foreign investors. In fact, there is a sizeable Asian community. However, the capital city (town?) of Douglas has a population just under 30,000 (84,000 on the entire island), meaning that the rental return market for property investors is significantly less attractive than most other capital cities. Fortunately its tourist economy lends some relief. Instead, the primary goal of a foreign investor is the tax benefits offered by this offshore economy, especially to wealthy entrepreneurs.

Known in fact for its offshore banking and tourism, nearly a quarter of its work-age population is in the finance and banking sector. Considered a ‘low tax economy’, which includes no capital gains tax, wealth tax, stamp duty or inheritance tax, its income tax maxes out at 20%. Although there are also no corporate taxes, exceptions are made for bank profits and profits from rental or other income derived from land or buildings. Additionally, incentives are offered to businesses that want to set up shop on the island, especially in high-growth sectors like technology, banking and insurance and film and media.

Fortunately, the immigration and property purchasing powers of foreigners operate similarly to those of the UK, which is to say that the market is transparent. The Isle of Man welcomes foreign investment believing that an influx of new residents will serve to boost the population and its economic growth.Isle of Man

While certainly a major victim in the recent economic crises seen across Europe, which also drove even further the immigration off the island instead of to it, its status as a tax haven has helped a recovery, as well as the fact that it has a broad range of homes available, from apartments and condominiums to starter homes to high-end luxury estates.

Such a small amount of geography to encapsulate such a large amount of history, commerce, industry, culture, language…and property markets. The British Isles are not your typical ‘island getaway’, but for a property investor looking for a primary residence, holiday home, or rental investment, there is perhaps no greater diversity – or opportunity – in the world.





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This entry was posted on February 13, 2013 by in Future, Investment, Property and tagged , , , .

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