UK housing market is a ‘goldmine’ for wealthy foreign buyers

Sales of houses worth over £10m tripled after sterling slumped following Brexit vote

The global super-rich have taken advantage of the Brexit-induced decline in the value of sterling to buy up three times as many £10m-plus luxury homes as before the referendum vote.

Some 300 homes sold for more than £10m each in the tax year to April 2017 (the latest for which figures are available), an increase from the 100 sold during the preceding 12 months. The figures, released by HM Revenue and Customs on Wednesday following a freedom of information request, were rounded to the nearest 10 by HMRC.

Jonathan Samuels, the chief executive of property lender Octane Capital, said the 13% drop in the value of the pound compared with the dollar since the June 2016 referendum had turned the UK into “a goldmine for foreign investors seeking a bargain”.

“The mainstream property market saw transaction levels tail off considerably following the EU referendum vote,” said Samuels, who submitted the FoI request. “But at the very top end of the market activity levels soared as ultra-wealthy opportunist buyers cashed in on rapidly softening prices.

“The weakness of sterling means a fair percentage of these buyers were almost certainly based overseas, as some of Britain’s wealthiest cities became a goldmine for foreign investors seeking a bargain.

“While many homeowners sit on their hands during times of political and economic volatility, the ultra-wealthy often use these periods to acquire assets at a significant discount.”

Samuels said the fall in the pound, which has declined from $1.46 on 23 June 2016 to $1.26 on Wednesday, had “more than compensated” for the 3% second homes stamp duty surcharge the government introduced in 2016. The pound was worth $1.59 in June 2015.

Stamp duty on properties selling for more than £1.5m is 12%, rising to 15% for second homes. In the 2016-2017 tax year, stamp duty raised £7.3bn for the government – £3.4bn of it in London. The Treasury raised £4.1bn in stamp duty on second-home sales in the 2017-18 tax year, a 21% increase on the previous year.

Samuels said the highest levels of property spending had been in London. “Brexit had a particular impact on super-prime properties in the capital so for many very-high-net-worth individuals the fallout from the EU referendum vote was an investment opportunity,” he said.

Source: The Guardian, 2019

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