Mansion Global

London’s Post-Election Property Pickup

With the Conservatives back in power, foreign investors are flocking to the U.K. capital

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With the "mansion tax" dead, the London luxury market is booming.

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With the "mansion tax" dead, the London luxury market is booming.
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International buyers, particularly from China, are returning to the luxury London housing market following the Conservative victory in the U.K. general election, property agents report. Tim Fairweather, director of Sandfords, an agent based in central and north west London, said inquiry levels in the central London market, particularly for property in the £2 million to £3 million price bracket, are higher than they were pre-election, with a large proportion of the interest coming from overseas. “Interest is at an all-time high. We have had a lot of calls from buyers in West Africa, Nigeria, Guinea and China, who are now eager to invest here.” Markets hate uncertainty, and the specter of a “mansion tax” on all properties worth £2 million or more, plus proposals to change non-domicile status under a Labour majority, has held back wealthy international buyers as well as vendors. Many had threatened to avoid the London market if Labour had won a majority in the May 7 election. “Foreign nationals were particularly concerned about a mansion tax on top of recent tax changes,” said Jonathan Adams, director of prime central London estate agency Napier Watt. “The outcome has signaled that the U.K. and London is open to continued foreign investment.” Nearly half of all prime central purchases over the past three months were made by investors, the highest proportion on record, and up from 30% a year ago, according to the latest London Property Monitor from agent Marsh & Parsons. This corresponds with an uptick in foreign buyers, with the proportion of purchases made by overseas and foreign nationality buyers reaching 30% over the past three months, up from 21% a year ago. Camilla Dell, managing partner at property buying agency Black Brick, which has buyers with budgets as high as £50million plus, said the Chinese are becoming more prevalent in the London market. “A lot of our Chinese clients buy properties in London for their children, especially if they are about to start studying in the U.K. We exchanged contracts on May 8 for a wealthy Chinese client buying for their son in Queens Gate Gardens, South Kensington.” But she warned that the strengthening of sterling off the back of the election result will make London more expensive for most international buyers. Jonathan Hewlett, head of London for Savills, says the agent has exchanged contracts on a number of homes over £5 million where buyers had, before the election, adopted a wait-and-see approach. Savills five-year forecast for prime London is for steady growth at 22.7%. However, Hewlett said: “Prime London residential property had begun to look fully valued pre-election, particularly given higher stamp duty charges, and further sharp price rises do not seem sustainable."