After over a decade, the government has finally recognised the value of international investors. Congratulations to Labour- let's hope this is genuine and their efforts will truly boost the economy.
International Buyers Comprised 45% of Central London’s Luxury Home Sales in 2023
Foreign home buyers increasingly dominated London's luxury housing market last year. According to data obtained by Bloomberg, international buyers accounted for 45% of homes sold in central London’s most affluent postcodes in 2023, up from 39% the previous year. This shift was driven by a larger proportion of buyers from Asia and the European Union, with the former comprising nearly a third of overseas home purchases in both prime central areas and Greater London. This trend was notably evident in high-end neighbourhoods such as Knightsbridge, where international interest significantly boosted the market.
In practical terms, prime properties in London typically exceed £10 million in value. For international buyers purchasing such high-value properties, the associated tax costs can surpass £1.6 million, resulting in an effective tax rate of approximately 16%.
Knightsbridge Prime Property is currently marketing this property in Buckingham Gate SW1 for in excess of £50M.
London Adds £520 Billion to The UK economy or 25%+
A buyer will use consultants and third parties, which can add at least another £200,000 to the exchequer. This is a giant cash cow, and London, as of 2023, added over £520B to the UK economy, nearly 25% of the country's total - why not let this grow?
Raj Gill, Founder of Knightsbridge Prime Property, commented, “While new tax rules for overseas buyers may shift some investment patterns, London remains a highly attractive global city. The announcement by Chancellor Rachael Reeve MP on Monday, 8th July, is encouraging and we are glad the government can see growth as a good thing and highlight London and the UK is open for business.”
Raj Gill Gives an Update Following Today's Announcement from The New Chancellor, The RT Hon Rachel Reeves MP.
Political Stability and Economic Impact
The establishment of a new Labour government is likely to bring much-needed political certainty, which has been rare in recent years. This stability is anticipated to foster a more positive economic outlook, potentially boosting market confidence and activity. Interest rates are a significant hurdle for home buyers, and investors are expected to see cuts soon. This development could ease financial pressure on potential buyers and stimulate market transactions.
Changes in Taxation and Market Dynamics
Labour’s plan to increase the already higher stamp duty rate on residential property purchases by non-UK residents by 1% is unlikely to have a significant impact. London remains a global city that attracts international professionals and investors who will adapt their property searches accordingly.
Looking Ahead
In summary, Labour's victory introduces challenges and opportunities for the prime property market. The anticipated stability and potential interest rate cuts offer a hopeful outlook, while new taxation policies and changes to the leasehold system could reshape market dynamics. Estate agents should stay agile and informed to navigate these changes effectively and capitalise on emerging trends in the prime property market.