Super-rich foreign buyers show jitters over Labour government prospect

In the first sign that interest from super-rich foreign buyers may be cooling, a London agent has said that the prospect of Labour winning the next election could be scaring them away.

Richard Barber, partner in residential sales at W. A. Ellis in Knightsbridge, said there has been a decrease in foreign purchasers of properties over £5m.

He said this was down to apprehension about the 2015 election “with the belief that if a Labour government was elected, they would eventually introduce a mansion tax”.

However, Barber said that the sub-£2m market remains healthy, with a “strong appetite” in investment property from buyers in Singapore, Hong Kong, China and India.

If Barber is correct that foreign interest in £5m-plus properties has cooled, then this will have happened over the last few months. In May, Land Registry data shows 27 transactions in this price bracket, compared with 15 in May last year. All but one of these £5m-plus sales in the UK were in prime central London.

According to Naomi Heaton, of property fund London Central Portfolio, a handful of such high prices are skewing real average prices. She says one-third of all sales in prime central London were in the £500,000 to £1m band in May.

Meanwhile, London MP Simon Hughes has argued in the Commons that the Government should crack down on foreign investors snapping up property in London.

In a debate in the Commons, he said they were pricing local people out of the market. 
The deputy leader of the Liberal Democrats said: “People who have lived here for five years, 10 years, 15 years or all their life, now cannot find a place they can afford.

“Developers find foreign purchasers to buy straight from plans. They pay their money up front, which helps fund the development.

“It is estimated that in prime London markets, up to 75% of buyers are from overseas.”

He called for properties to be advertised locally at the same time as they are sold abroad.

Housing minister Mark Prisk said: “We need a balance to be struck, but overall, London benefits from being an open and diverse city that attracts investment from around the globe.”