Why is London filling up with the very very rich?

Foreign investors flooding in.

The allure of the UK to overseas buyers has been apparent for some time and certainly long before we had a home-grown Wimbledon champion, victorious rugby and cricket teams, the birth of a Royal baby and what seems like endless blue skies and hot sunshine!

Indeed, much has been made of the influx of high net worth non-UK nationals to London and its impact on London’s buoyant prime residential property market. Undeterred in most cases by the recent hike in stamp duty land tax rates imposed upon houses priced at more than £2m, statistics show that foreign investors (and especially those who are victims of the worldwide economic turmoil, euro crisis and rising wealth taxes in their home countries) continue to look to London.

It is understood that between 45 and 65 per cent of London’s most desirable areas are owned by high net worth individuals from abroad. But, what is it that makes UK, and in particular, London, so desirable?

Recent commentary suggests that one explanation for the movement of foreign investment into the UK is that beneficial exchange rates are effectively giving those buying into London huge purchasing power, with some currencies having appreciated as much as 45 per cent against sterling over the past five years. 

Overseas buyers can, therefore, enjoy a healthy discount on their property investment as a direct result of the depreciation of sterling – the deals often made even sweeter by the UK’s low interest rates.

However, experience shows that, while these economic factors are no doubt influential, there are a number of other drivers of market demand such as the UK’s stable legal system as well as its status as an unlikely low tax jurisdiction.

Indeed, the UK has an established history of political and social stability, coupled with a sophisticated legal system, and comprehensive (if occasionally unwieldy) tax code. It boasts a comprehensive network of bilateral tax treaties: principally in respect of income tax, capital gains tax and corporation tax but also inheritance tax. 

In particular, the tax regime is highly beneficial for individuals who become resident in the UK without also becoming "domiciled" here – provided they structure their affairs appropriately.

Furthermore, it is relatively simple for international UHNWs to come to the UK. As a member state of the European Union, EU citizens of course benefit from the fundamental freedom of free movement. However, for non-EU/EEA nationals, it is possible to obtain an "investor visa" by making a £1m, £5m, or £10m investment in specified "permitted investments" in the UK (with a view to obtaining settlement in the UK within 2-5 years). Surely a relatively inexpensive gateway to the UK?

The UK investment opportunities generated by strong currencies may be relatively short-lived. Much the same might be said for this glorious weather. However, London has long been regarded as a key international business centre, a safe political haven, extremely strong in its professional services offering and a centre of educational excellence. It is perhaps, therefore, not so difficult to see why, all things considered, London really is the capital city of choice for the internationally mobile UNHWs.

Lydia Essa works for private wealth law firm Maurice Turnor Gardner LLP.

This piece first appeared on Spear's.

Photograph: Getty Images

This is a story from the team at Spears magazine.

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Tony Blair won't endorse the Labour leader - Jeremy Corbyn's fans are celebrating

The thrice-elected Prime Minister is no fan of the new Labour leader. 

Labour heavyweights usually support each other - at least in public. But the former Prime Minister Tony Blair couldn't bring himself to do so when asked on Sky News.

He dodged the question of whether the current Labour leader was the best person to lead the country, instead urging voters not to give Theresa May a "blank cheque". 

If this seems shocking, it's worth remembering that Corbyn refused to say whether he would pick "Trotskyism or Blairism" during the Labour leadership campaign. Corbyn was after all behind the Stop the War Coalition, which opposed Blair's decision to join the invasion of Iraq. 

For some Corbyn supporters, it seems that there couldn't be a greater boon than the thrice-elected PM witholding his endorsement in a critical general election. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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