A proposed mansion tax on high value UK properties priced at £2 million upwards could potentially act as a deterrent to wealthy buyers from Qatar. Estate agents are as yet unsure how such a tax might impact on the high end property market in the capital. Whether the tax will be introduced next year is not clear at this stage as there is no political consensus on the proposal.
The debate over the possible impact of the new tax comes at a time when the UK press is full of stories about overseas buyers having a negative impact on the capital.
Recent reports have painted a picture of exclusive parts of London resembling ghost towns as swathes of top end properties bought by wealthy overseas investors from places as diverse as Doha, Dubai, Abu Dhabi, Hong Kong, Moscow, Kiev, Mumbai, Tehran and Paris stand empty.
Walk along some of the most exclusive streets in the capital on any given evening and it is, say the reports, not unusual to see just one or two windows lit up, indicating rare signs of life in luxury wastelands.
This kind of copy makes for compelling reading and arouses indignation, especially among those who blame overseas buyers for pushing house prices far beyond the pockets of UK citizens who once might have aspired to living at a ‘posh’ address in London.
However, according to Liam Bailey, head of Residential Research at Knight Frank, this unhappy picture may be exaggerated as it relies mostly on anecdotal evidence rather than proper research. “I think the issue of empty homes has been blown out of proportion,” he said.
However, he added, his company is keen to try to get a handle on the true nature of the situation using data such as energy consumption. “We are looking at data on energy usage to try and get a proper view of what is happening,” he said.
He noted taht historically houses in Mayfair, Belgravia and Chelsea had been built to serve as second homes for gentry who kept a house in the country and a residence in London. “These places were built as second home locations – that was the whole point of them,” he said.
Bailey said that according to Knight Frank’s research, UK buyers account for 50% of the prime property market in London.
Buyers from the Middle East account for about 8% of the top end market, with buyers from China and Hong Kong leading the field closely, followed by eastern Europeans.
Buyers from Qatar are increasingly looking at properties in the £2 -£5 million bracket, he noted. London is still an attractive proposition for overseas buyers though the taxes levied have increased over recent years. “There has been a clampdown on corporate ownership (whereby buyers purchase properties within a corporate structure sometimes, in the view of the government, with a view to avoiding stamp duty) and stamp duty has risen (up to 7% on properties over £2 million),” said Bailey. Despite these measures, he observed, to date, “the market has held up pretty well”.
Regarding the types of properties that buyers from Qatar find most attractive, Rupert des Forges, Head of Knight Frank’s Knightsbridge office, said that there was a preference for fully serviced apartments in new builds with high level security and underground parking.
Preferred locations are prime post codes around Hyde Park, Knightsbridge and Belgrave Square.
“The Qataris like properties which are pretty much ‘turn-key and ready to go’,” he said. With regard to decor, he noted: “There is a preference for a contemporary look with clean lines. However, for the ultra high net worth Royal family related members there is sometimes a preference for a more ornate interior.”
Education, he added, was one of the key motivations for families choosing to buy properties in London.
