Despite Brexit and coronavirus, London’s luxury property market is still attracting rich Chinese buyers – before a new tax on foreign investors

Mar 31 , 2020

A night view of London’s Chelsea Barracks, one of a number of luxury residences targeting international investors. Photo: Chelsea Barracks

New luxury apartment blocks like One Bishopsgate Plaza and Chelsea Barracks by Qatari Diar continue to attract international buyers, as the UK capital remains a beacon of relative stability for foreign investors

Uncertainty regarding the outcome of Brexit as well as the ongoing global health crisis has left many potential property investors in limbo, particularly for the London and south of England markets. A 2020-2024 UK Residential Market Forecast report by Knight Frank expects prices to either flatten or fall by the end of year.

Despite these stresses, London may still be a good place for investment, and overseas homebuyers are looking at the market more attentively after the government’s announcement that an additional two per cent stamp duty surcharge will be imposed on foreign investors.

This new surcharge will affect non-UK tax payers acquiring property in England, on top of the existing stamp duty charge and three per cent levy on second home purchases and buy-to-let properties. This will come into effect in April 2021.

“Historically, instability and uncertainty are very good for the London market,” says Mark Elliott, head of international residential for Savills in Hong Kong. “People see London as a relatively safe haven, and we think that we will continue and or increase in the coming three to six months.”

One Bishopsgate Plaza's view on the Gherkin. Photo: Handout

The city remains a top choice for overseas real estate investments, mainly due to its excellent schools, transport links and global connectivity as a global financial centre.

Elliot adds, “London is still one of the most tax efficient places to invest. It has a transparent legal and taxation system which doesn’t confuse or penalise overseas investors.

“On top of that, the UK now has a stable government, with a definitive plan [for Brexit]. Whether people like the new leadership, it provides stability which is what many investors look for.”

One Bishopsgate Plaza's view of the city at night. Photo: Handout

Earlier in the month, Rightmove reported that there has been a 26.4 per cent increase in the number of sales in London for February 2020, compared to the same month last year.