How Americans Are Bailing Out London’s High-End Property Market
Townhouses in Notting Hill.
Photographer: Kristina Blokhin / Alamy
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The tippy-top of the London real estate market has been in a funk lately, but a surge in American buyers is helping shore up sales, Bloomberg finance reporter Damian Shepherd explains. Plus: The Netherlands makes its housing crisis worse.
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Reluctant as we are to admit it, we Brits rely on the US: Batman and Avengers movies, pop superstars (see: Taylor Swift in London last week) and caramel Frappuccinos from Starbucks. These days, though, we’re increasingly counting on Americans to rescue our capital’s battered luxury-housing market.
As recently as last year, despite high interest rates and fears of rising taxes, brokers still managed to squeeze out deal after deal. Sharing coffee with a high-end agent would often lead to clues about another £30 million ($40 million) mansion selling at the super-secretive top rung of London’s property ladder. But not this year.
A massive gap in expectations—one deal closed only after the seller shaved 30% from the asking price—has shoved transaction volumes off a cliff. There are huge concerns about a looming shake-up in Britain’s rules on “non doms”—a fancy name for foreigners who pay little to no tax—prompting some rich buyers to look to sunnier climes such as Dubai or Milan.
Enter the Americans. Armed with a strong dollar, US buyers aren’t particularly fussed about taxes in the UK. These glass-half-full billionaires and multimillionaires have already calculated their currency discounts before jetting off to Heathrow (or Farnborough, for those flying private), and brokers say they’re more willing to shrug their shoulders at the tax plans of the new Labour government than buyers from elsewhere are.
Sure, it’s a broker’s job to talk up the market. But in this case, the data backs them up: Americans this year made 6.1% of all London home purchases, almost double their share from last year. Consider the sale of a £32 million mansion in fashionable Notting Hill (remember the Julia Roberts/Hugh Grant vehicle?), one of the biggest deals of the year: The buyer was ... an American (though his identity remains hush-hush).
Instead of dallying over purchases or trying to wrestle the price toward the cellar, Americans are ready to buy. With their home country’s gun crime, high property taxes and concerns about a second Donald Trump presidency—Kamala Harris’ surge in the polls notwithstanding—growing numbers of Americans (including some from the private-jet crowd) are looking to relocate across the pond.
The trend echoes planned moves to the US from south of the border. Rich Mexicans have been rushing to find safe havens for their assets since this summer’s landslide win of the populist President-elect Claudia Sheinbaum. Google searches in Mexico for “Miami real estate” and “Florida real estate” soared after the election.
Whether a second Trump presidency would actually lead to an exodus of Americans is unknowable right now. History suggests it might; there was a surge in US buyers moving to London during his first term. Sure, they benefited from a weak pound—but that’s also happening this time around. So don’t be surprised to see more befuddled Yanks looking the wrong way crossing the street in Mayfair.
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Another Housing Crisis
Two years ago, Nine Moraal and her two children moved into a one-bedroom flat near the Dutch city of Utrecht, a comfortable spot close to family and friends. Although she had only a two-year lease, she expected to be able to extend it and stay until she could get one of the Netherlands’ many rent-controlled apartments.
But last spring, her landlord told her she’d have to move out in November, because renting the flat was no longer profitable. Despite “frantic efforts on social media, phone calls, visits to realtors and housing agencies,” the 33-year-old educator says she hasn’t found anything. “The cost isn’t the problem, but a real shortage of housing is.”
Moraal is among the growing number of Dutch people struggling to find a rental property after a new law designed to make homes more affordable ended up aggravating a housing shortage. Aiming to protect low-income tenants, the government in July imposed rent controls on thousands of homes, introducing a system of rating properties based on factors such as condition, size and energy efficiency. The Affordable Rent Act introduced rent controls on 300,000 units, moving them out of the unregulated market.
To read more of Cagan Koc and Sarah Jacob’s take on the Netherland’s rental woes, go to: How Rent Controls Are Deepening the Dutch Housing Crisis
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