International News: UK Agents Angry at Moves to ‘Milk’ Property Deal

According to a new survey, four out of 10 high net worth property investors currently see property in London as a good bet, and foreign investment already accounts for 60% of prime property purchases in the city, to the tune of GBP1,2 billion a year.

Each of these purchases of course supports a chain of local enterprises, including cleaners, repairmen, security companies and, of course, estate agencies, and helps to create or keep much needed jobs in a sluggish economy. So it is no wonder that agents are up in arms about recent hikes in Stamp Duty (the UK equivalent of SA’s transfer duty) and a government threat of an annual “Mansion Tax” on properties worth over GBP2 million..

Their anger is summarised in an outburst by one top agency head, who said: “We are seeing a mindless attack on this sector from all sides of the political sphere. Prime property is a huge income generator for the country and taxing the owners out of town will do nothing for our long-term growth. It is nothing more than badly calculated political point-scoring.”

Another said the government moves were particularly worrisome in the light of the fact that the city was expecting a surge in purchases by wealthy French investors, ahead of the new 75% tax rate announced by president Francois Hollande on people with annual earnings of over 1 million euros.

It has also been pointed out that the UK already has a comparatively high tax take on property. Compared with the OECD average of 1,8% of GDP,  property taxes in the UK contribute 4,2% of GDP and high-end property buyers already pay a disproportionate amount of that. The latest available figures show that the highest 1,6% of sales yielded 26% of all residential stamp duty land tax receipts in 2010, while the top 0,7% of housing stock held at death contributed 36% of inheritance tax receipts.

Quoted on www.estateagenttoday.co.za, the recent survey of wealthy foreign investors was conducted by international real estate firms Cluttons and VPC Asia Pacific and Bill Siegle, senior partner at Cluttons, said it provided a unique insight into the live investment intentions of high net worth individuals across the Middle East and Asia Pacific regions.

“And 43% of these highly mobile investors said the global financial crisis had had no impact on their view of London as a top investment target location.”

As it is, Fine & Country recently reported that its flagship Mayfair office in London has not sold one property to a UK buyer since 2005, and Jones Lang LaSalle says that 81% of buyers of new central London developments are from overseas, with over half being Asian.

Indeed, demand from Asia is so high that Winkworth recently opened a China desk at its Mayfair premises, and Knight Frank has just revealed that in the past 12 months, 59% of all prime central London lets have gone to international tenants.

Julian Lilley of Fine & Country’s Mayfair office says: “London is seen as a safe haven both from a security and a financial perspective. London’s property market seems to defy gravity. Whereas most of Europe and many parts of the UK are showing declines in excess of 10%, central London prices continue to rise, with some areas such as Mayfair and Knightsbridge showing increases of over 20% in the last year.”

 

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