Estate Agent Today: Foreign buyers increasingly-deterred by property taxes, agents say
Thu 19 Nov 2015
cases increasingly attracted to property funds.
In the first report Naomi Heaton, chief executive of London Central Portfolio, says her recent tour of investmentsources in Hong Kong, Singapore and Kuala Lumpur shows a notable shift in attitude amongst investors whowould have traditionally chosen to hold property directly.
This is down to the increased taxation and bureaucracy attached to landlords and rental property management,she says.
Theres now a very real appetite to diversify their Central London residential holdings through fund structures ....
exempted from the new non-resident capital gains tax, upcoming non-dom injeritance tax, and unaffected by thenew rules on mortgage relief. This seems very compelling for many investors, alongside the benefits of buyingpower, strong projected returns and competitive financing arrangements she says.
Heaton - who is now touring investment sources in Bermuda and the Middle East - says even those investors whostick to buying physical properties rather than funds are changing their behaviour.
Recent tax changes such as Annual Tax on Enveloped Dwellings and the upcoming non-dom inheritance taxmakes buying in a company much less attractive. People who have previously bought this way, may be opting tobuy in their own names she says.
This emerging shift from direct ownership to indirect investment comes at the same time as London estateagency Marsh & Parsons reports that domestic buyers have risen to a new level of prominence in the capitalsproperty market.
During the third quarter of this year 79 per cent of property purchases were made by domestic UK buyers, upfrom 75 per cent a year ago according to the agency.
A statement by M&P says: Sales activity from domestic buyers has surged forwards to fill the gap left byoverseas buyers and investors, who have been left more cautious by the strong sterling, stricter governmentmeasures on non-domicile status, and heftier stamp duty for higher value purchases.
The agency says overseas and foreign nationality buyers accounted for just over a fifth of all prime GreaterLondon property purchases during the third quarter of 2015, down from 25% of all sales during the third quarter of2014.
This pattern is also being mirrored in Prime Central London, traditionally favoured by overseas investors, with theproportion of foreign buyers standing at 32 per cent, down from 34 per cent in Q2 and 37 per cent a year ago.
London has had to bear the brunt of some trying taxation changes in recent months. This has cast someshadows over the capital, but the millions of Londoners who live and work in the city have acclimatised muchmore quickly to the property taxation changes, and have risen up to fill the void left by overseas purchasers andinvestors says Peter Rollings, CEO of Marsh & Parsons.