London HNWI buyers scared by tax changes
Even rumours of a so-called “mansion tax” were enough to stagnate the prime property market in London, a panel of experts heard today
At a property debate hosted by asset manager London Central Portfolio, panellist Paul Emery, real estate director at PwC, said the government couldn’t keep “tinkering with the regime.”
“When the government first toyed with the idea of a mansion tax, we saw transaction activity in that part of the market stagnate overnight,” he said, when asked about stricter tax regimes putting off international buyers of prime property.
The government, he said, had “have the collection machinery for a mansion tax”. This refers to changes in the tax system over the stamp duty paid by offshore companies. Offshore companies, through which many high net worth individuals (HNWI) buy property in London, that own homes worth more than £2m must now pay an annual stamp duty charge of between £15,000 and £140,000.
At the debate, which was hosted by the Today programme’s John Humphreys, the panel debated the impact of HNWI buying properties in prime central London (defined primarily as the areas around Hyde Park), and whether it created a property bubble for the rest of the city and Britain.
Matthew Sinclair of Europe Economics, formerly chief executive of the Taxpayers Alliance, said the number of properties sold in that small prime area of London were not enough to make any substantial difference to the market.
“In reality we are talking about a couple of hundred people globally. There are too few of them to actually be making any difference to people’s affordability. The small group of people that can afford to buy in prime central London can do so just for the hell of it.
“It’s a political fraud which says there’s a foreign other that you should hate because it’s their fault you can’t buy in London.”
LCP CEO Naomi Heaton said the prime central London property market had growth by an average of 9% every year since the Second World War. She said London property continued to be attractive to the “high net worth community of the world.”