A positive outlook for the UK Property Market
High-value London homes remain popular
Property experts from across the industry agree that the UK residential property market, particularly high-value London real estate continues to be a popular choice for international buyers, both as a place to call home and for investment purposes.
Hugh Dixon of Knight Frank's Private Office shares this view, commenting that:
'London’s super-prime residential market shrugged off Brexit and even looked through the pandemic, confirming the UK capital as the world’s leading wealth destination. After five years of price falls, the capital is set for a reset and the latest numbers from Knight Frank’s super-prime data confirm London is performing well.'
Despite recent tax changes
Prime Central London property is expected to remain attractive to foreign purchasers, even with the recent changes to SDLT, which have included:
- The introduction of a surcharge of 2% for non-UK resident purchasers completing on purchases from 1 April 2021.
- A surcharge of 3% introduced in April 2016 for purchasers who already owned a residential property anywhere in the world (and were not replacing their main residence) at the time of completion.
This means that SDLT rates for individual purchasers can now be as high as 17%.
Encouragingly, in Hugh’s experience, this isn’t having an adverse impact on the market:
'Overall this isn’t something that we’re currently seeing amongst most UHNW clients – mainly because a lot of activity is coming from domestic buyers or international buyers already based in London. When international clients return to the London market, it will be interesting to see how much of an impact this will have.
However, the cost to purchase in the UK against other markets, remains competitive. Key motivators for clients purchasing here also remain unchanged – capital preservation, the UK education system and cheap debt – all real driving factors for clients and reasons why they choose the UK and London in particular.'
Particular interest from the US
In terms of the international marketplace, Knight Frank report continued appetite from "across the pond" and Hugh observes that 'interest is coming from both the East and West Coast of the US, specifically the key wealth hubs including LA, NYC and Miami.'
Whilst many US buyers are relocating domestically to Miami to avoid the high New York and California property taxes, the UK also remains attractive due to its lower holding costs.
UK-US cross border issues
As the allure of UK property for US buyers continues to grow, it is important to draw attention to the specific UK-US cross border issues that may arise from US connected persons owning UK property. Here, we explain some of the key cross-border issues at play and reveal the planning options available to protect against these risks.
When acquiring UK property, US purchasers should seek advice on the broader tax and legal implications. In this report, Forsters’ partners along with specialists in the industry, share their insights on the current UK market for US buyers and how best to navigate the specific risks for US-connected clients.
The purchase or sale of a high value home requires expert legal advice to manage the complexities involved. Our lawyers are dedicated to sharing their knowledge to enable you to navigate the legal practicalities of buying and selling high value assets. We will support you through every stage of the process, and with the largest dedicated Residential Property team in London, we have the strength to do this. Visit our Hub to learn more.