The phrase “never let a good crisis go to waste” is often cited in political circles as a way of extracting maximum opportunity from events beyond the day-to-day control of a government, be that from a political perspective, or crucially, an economic one.
The latter is certainly the case in the recent pronouncements by the UK Chancellor of the Exchequer, Rachel Reeves, in wanting to encourage wealthy expats in the Gulf to come to ‘safe harbour’ Britain through a promise to revisit residential tax rules currently considered a barrier to any commitment.
Add us as a preferred source to see more super-prime intelligence in Google.
As part of this, the Chancellor is particularly keen on attracting American citizens who have left the Gulf but are reluctant to move back to the US. Though equally, the overtures apply to the many thousands of UK citizens who, for a variety of reasons, currently reside in the Middle East.
Stimulating appeal among the expat community
Changes to the taxation regime, and other incentives, are undoubtedly helpful in making the UK a more attractive destination, but that’s not enough. It needs to be matched by a comparable housing offer to attract said expats to the UK, and that has to start with London.
It is more than fair to say that UK government policy over recent years hasn’t been all that favourable to London’s prime residential market. With a mixture of taxation and other changes it has been made less appealing to investors and buyers alike.
Yet it is this very element of the residential market which the UK government now actively needs to support if it genuinely wants to make an appealing offer to wealthy Gulf expats.
A jab-in-the arm for market structurals
While there is emerging evidence that the Prime Central London (PCL) market is starting to strengthen as a result of expats returning home, this is still weighted towards those seeking to rent as opposed to buy.
This comes after a number of years where government policy interventions have had a significant chilling effect on the market, especially through measures such as the introduction of stamp duty surcharges for non-UK residents.
None of this has been conducive to creating a vibrant existing property market, or in providing confidence for major developers who look to commit to the buildout of major schemes. Evidence for this can be seen in the collapse in starts-on-site across London, especially in prime neighbourhoods.
Competing with Europe’s capital havens
So a rapid re-appraisal is urgently required, especially as London is competing with the likes of Milan and Zug. That means reversing some of these policy decisions to encourage greater investment and creating a climate which is encouraging to the kind of housing offer that would appeal to these expats.
Be that through an enhanced rental offer delivered through super-prime Build to Rent or Single Family Housing, or removing some of the disincentives to ownership for would-be buyers.
If this is addressed then there is no reason not to suspect that capital won’t continue to flow into London, and into the residential market in particular, as global shocks dislocate it from locations once viewed as relatively stable.
Assessing the impact on London housing supply
Undoubtedly such an influx would be a boon for the wider London housing market and the London economy in general.
Boosting demand and confidence to convert existing planning applications into actual housing, as well as bolstering the market for existing dwellings for both sale and rent. This is crucial given the dire levels of new housing delivery across the capital city.
Once developers and agents marketed new build schemes off plan to overseas investors, who were keen to invest in the UK, until the government actively intervened to discourage it. Now it urgently needs to reverse that position and do so quickly.
A call to action beyond the economics
This is critical in seeking to maximise the opportunities afforded by this expat dislocation, as well as steal a march on other locations keen to benefit from this displacement.
So absolutely the time has come for both the government and the movers and shakers of the London residential market to start to extoll the virtues of London life and London living, and actively encourage them here, economics alone simply can’t do this.
And it’s fair to say that we need this support right now – and more than ever.
