David Cameron and the Conservative party’s surprising victory last month was a signicant boost for foreign buyers of property in the capital. For more than a decade, foreign capital has helped boost Mayfair’s property market, but talks of a mansion tax from the Labour party, which would have hit high-end, multi-million pound property markets like Mayfair the most, as well as rent controls and “non-dom” taxes, had scared them in the run up to the election.
Savills’ head of residential, Charles Lloyd, explains: “Some buyers were on the fence about whether or not they would go ahead with a purchase before the election. There had been a decline in the number of buyers in Mayfair and London since last year, as election fear set in. But following the election, there is more clarity and the future looks clearer. It means buyers are condent again about buying in the area.”
According to the London Central Portfolio, at least £100 million worth of sales were reported to have taken place in the weekend after the election in May alone.
Rescorp Residential, an estate agent specialising in selling property to international buyers, believes most signicantly, the Conservative win unleashed a pent-up multi-million pound wave of Indian investment into the prime London residential market.
“In the second half of last year, there was a 50 per cent increase in interest from Indian buyers but since the start
of 2015, interest had plateaued as wealthy Indian investors awaited the result of the election. This was in order to see if further transaction costs could be avoided,” says Vic Chhabria, founder of Rescorp Residential.
“There was such little clarity on the proposed mansion tax [by the Labour party], and other issues such as rent controls, which frightened buyers. It meant the buyers we usually deal with were simply put o buying here.”
Unlike other parties, the Conservatives had maintained throughout the election campaign that the Stamp Duty reforms, introduced in December 2014, were a sucient way of taxing higher priced properties. It has said no further taxes on property are currently planned.
This was a relief to many foreign buyers who still view London property as both a safe haven for their wealth, and a protable investment option. In particular, there has been a big shift over the past two years in the rise of Indian buyers purchasing homes for investment, rather than personal use.
Chhabria says India’s own election last year, which saw arendra Modi take oce as prime minister, has further helped to spur growth in the country, and wealthy Indian nationals are beneting from the change in government.
“India has always been a growing economy and, with its new prime minister in place, it has only encouraged growth in business and a rise in the wealth of individual investors from the country. As a result, interest from wealthy Indians in London property has only grown as well,” says Chhabria. “The UK election saw that stop for a while. However, we are now condent, with the new Conservative government in place, that foreign investment from countries like India will work its way back into the system again. The election result is a testament to show just how much the prime central London market needed the right government to come into power.”
Lloyd agrees that the interest from buyers from the India region has been strong in recent years. He says Indian buyers account for about 25 per cent to 30 per cent of the group’s foreign buyers, the largest of a group of three prominent buyers (the other two being Middle Eastern and European nationals).
According to Rescorp, over the past year, India-based and Indian diaspora buyers have spent an estimated £1 billion on London residential property, up from £450 million in 2013, and £290 million in 2010. For homes priced above £5 million, Indian purchasers are now the second largest overseas buyer group.
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