Sometimes the only constant is change.
The recent turnover in the UK government and its shifting policies have impacted financial markets. Many people have questions about opportunities to invest in London property: Can I take advantage of current conditions? What exactly are the tax and planning implications? What’s next?
These days it seems harder than ever to forecast with certainty; however, you can still form a point of view on the market. A perspective on the past and an understanding of underlying fundamentals can give international investors the confidence to make critical decisions.
The dollar exchange rate has recovered since the shock of the ‘mini-Budget’ of September. It seems to have stabilised at around $1.15 to the pound before the US elections, which is still what the FT calls ‘historically favourable.’
That translates to an advantage for a dollar-denominated buyer who would find that a house in Kensington, for example, costs 40 percent less than in 2014, according to Savills.
The Stamp Duty Land Tax (SDLT) changes were left in place, but almost everything else changed. SDLT is still an issue for buyers, as is inheritance tax (IHT). But the consensus is that in terms of financing, dollar-based buyers have a dual advantage in terms of the exchange rate and current prices.
You will see many articles about ‘if you had bought in 2014, or 2008, etc.’ The market always goes in cycles, and ‘what if’ math is a fun parlour game. While not wholly rational, it shouldn’t be dismissed either. For many investors who have objectively tracked the market, such a data point could be a moment—the signal they were looking for. Not only Americans, but US-dollar-based buyers from other jurisdictions, such as Hong Kong and Singapore, may take notice and act so as not to miss out this time.
SDLT is a consideration when planning for investing and holding property. And the UK rules around corporate entities buying and holding have property changed. Thus, as ever, it’s still important to consult an expert.
One thing never changes: every situation is unique, and a conversation to discuss your goals is always a good place to start.
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