There is always something about a general election being on the horizon that makes me want to run for hills, so at T minus three weeks I decided to have a ponder about where one might run to in the event that the tide begins to turn against the top end of the market post May 7th.
As The Times recently pointed out, it does somewhat depend on what you’re after – so perhaps if you were only in London for a pied-a-terre somewhere rather lovely, you might be equally happy hot footing it to New York or Barcelona instead. You certainly wouldn’t have been in London for the winter sun, but perhaps you might decide that you deserve some after all, in which case maybe you’ll be tempted by the Bahamas, or Cape Town.
But let’s face it, buyers have been attracted to London for certain reasons – it is politically stable and the equally stable property market offers good returns and luxurious living. The favourable tax system allows the UHNW’s to “afford” their investments within the UK and let’s not forget the first class hotels and shopping the capital offers. London is a lovely place to be if you are an UHNW, but exactly how nice is it? Will it be worth the sacrifice if their stay is to be at a higher price? Is there anywhere else which will provide them with the equivalent whist welcoming them with open arms?
I recently read an interesting piece which compared Prime Central London to Monaco. It is not unsurprising that a significant percentage of buyers in London also have an address in Monaco. Both are politically stable destinations with their Heads of State being the heads of popular Royal Families, the economies of both are built upon a solid foundation of banking, commerce, tourism and culture. Both destinations are restricted in their growth and whilst Monaco is one twelth the size of Prime Central London, they are both restricted by planning issues and geography; London by The Thames and the parks and Monaco by the sea, the mountains and France (well, by their borders anyway…).
Both Monaco and London have a high percentage of foreign nationals for these reasons and it is well worth considering how over the last few years the gap between the two housing markets has been closing, in 2011 the Monaco sales premium outstripped London by 79% – that has now reportedly erduced to 49%. I think politicians could do well to remember this when they formulate their approach to our housing policies. It might be an election winner to threaten the UHNW’s but it is not sensible policy moving forward because they appear to underestimate what this investment into London really brings to the UK. I think we need to accept that property needs to play a more effective role in the revenue of taxes within the UK, it is, in my opinion absurd that those living in Prime Central London are paying the same in council tax as those in houses throughout the country which are worth only the wafer of a fraction of their London equivalent. But I think we need to do this sensibly; it needs to be fair, people need to know what they are buying into both in property tax and on May 7th 2015 because the UHNW’s do have other options, there are other places they can go…..