As the uncertainty of the general election hangs in the balance and debate over the ‘non-dom’ status, mansion tax and rental freezes continues, The Resident talks to London’s top estate agents about how the proposed changes are causing a rise in demand for luxury rental properties in the capital
Labour’s proposed plans to scrap the ‘non-dom’ tax status, impose mansion tax and raise the top rate of income tax to 50p is reportedly hitting the London property market already, according to the papers. Those against his proposals claim that they will cause a mass exodus of the wealthy from London, upping sticks to tax havens like Monaco and leaving the capital’s houses empty. But those for it say it won’t harm the UK’s economy at all and could in fact bring in as much as £1bn.
It is only natural that while the UK’s future is undecided we see a shift in buying patterns, but rather than the quick departure from the city that is suggested, estate agents are reporting that there is merely a shift in where the wealth is going. They explain, that while the sale of multi-million pound houses may have slowed down pre-election, there has been a rise in clients looking for high-end, luxury rental properties, perhaps seen as a safer bet until we see what happens on 7 May.
Tom Burke, Associate Director of Waterfront Lettings at Savills told The Resident that: “Enquiries for luxury apartments along the river (£1,000 p/w and over) have seen an increase in the last six weeks compared to the start of the year.”
“Our Super Prime team, who work alongside the local offices on our properties worth over £4,000 p/w, are reporting a similar theme. While it’s not busy by summer standards, we’ve certainly seen an increase,” he says.
Similarly Ed Mead, Executive Director of London estate agents Douglas & Gordon, reports a 300% increase in professional valuations of private rental sector investment. But, he comments, “it is not the non-dom proposals per se that have prompted this. It is the aggregation of mansion tax, ATEDs (annual tax on enveloped dwellings), Capital Gains Tax, plus aggressive wealth tax talk that has given the atmosphere a distinctly 70s flavour.”
Meanwhile, Roarie Scarisbrick, partner at independent property buyers, Property Vision, thinks that it is more about the uncertainty of which way the election will go that is putting sales on hold.
“Volumes are way down but they were always going to be. We are in an election cycle and tax on property and wealth are the main topics of debate. Changes to the non dom status will deter some buyers and the talk of a mansion tax will deter others, but the main, ongoing threat to the market is uncertainty, which is crippling to all markets. I imagine that the end result will be much less threatening than people currently fear but while everything is clear as mud, confidence remains low,” he says.