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.

Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.