The “London Property Market” is an illusion.
A dangerous one because it is a generalisation that hides what’s really happening.
There are simply dozens and dozens of markets within London ranging from different areas to different price ranges within each area and then different styles of properties, e.g. houses, period conversions, mansion blocks, new developments, etc. I could go on, but you get the picture.
Right now, the market below £3m and especially £2m is still very active in many areas. Meanwhile, the market above £10m is very quiet as buyers wait and watch to see what happens in the Budget.
This is unsurprising as the new Labour government has been making some less than welcoming announcements about their thoughts on the wealthy and this has been exacerbated by the press who are doing their level best to paint the worst-case scenario.
This in turn has led to a vortex of negativity as people discuss how bad the government is and how they are guaranteed to ruin Britain. But is this realistic?
I was at a fascinating talk this morning by someone who has worked for three prime ministers (Labour & Conservative) but not this current regime. He said that Starmer is actually doing quite a good job behind the scenes, but he and his team have been hopeless at communication and have failed to promote a specific vision (they want “Growth” but have failed to create a vision or say anything about how they can achieve it).
Consequently, they have already started backtracking on some of their more aggressive announcements. There is no guarantee, but it seems highly unlikely that the worst-case scenarios will come to see the light of day.
However, while there is doubt, most people planning to acquire a property over £10m are simply watching and waiting.
Please note that I am not saying that they will not change the non-dom regime. They most certainly will. However, it can be done in a way that still attracts talent and capital. The biggest issue is the proposed “Cliff Edge” taxation of worldwide assets for IHT. This can be finessed quite easily.
All I know is that these three things are true:
- Opportunity beats socialism/communism. This is why communist countries have borders to keep people in rather than capitalist countries that have borders to keep people out.
- Different people do the same job to different standards and deserve unequal pay
- People can leave one place and move to another one that offers a better opportunity
These three points are key. Most people (although definitely not all) are happy to pay quite a lot of tax if:
- they feel there is opportunity
- they feel safe
- they feel appreciated and not unfairly targeted
- there is an infrastructure that offers them everything, e.g. rule of law, financial centre, common language, good schools, arts and entertainment, to name but a few
Now, you may argue that London is no longer safe but, relatively speaking, the centre of London is extremely safe compared to most other major cities on the planet. And it is a fantastic city on every level… unless you want to recline by a pool in the sun, in which case please choose somewhere else!
The question is, will the Labour Party continue to make wealth creators feel unwelcome? If so, then their plans for growth will be dead on arrival.
I don’t think Rachel Reeves is an idiot.
Maybe I am being too optimistic! We will find out on 30th October.
