Wealthy overseas buyers and others fretful about the type of Brexit deal the UK eventually strikes should not delay but buy now, a conference in London organised by a Singaporean private bank has heard.

As the clock ticks down to the UK’s exit from the European Union, in 2019 at the earliest, and with the ruling Conservative government neck and neck with the left-wing Labour Party in the polls, overseas clients might wonder whether to hold off from buying UK real estate.

If a painful Brexit comes to pass, it may mean it makes sense for potential property buyers to act sooner rather than later, argued Camilla Dell, managing partner at Black Brick, a property buyers’ agency, told a Bank of Singapore conference in London this week. 

“There is a window of opportunity, in our view, from now and over the next 12 months,” Dell told delegates who had gathered at the Institute of Directors’ building in Pall Mall.

Besides Brexit, the UK’s diplomatic row with Russia over claims that Russian agents in March tried to murder people in the UK city of Salisbury with nerve agents, Dell said there had certainly been a fall in visa enquiries by Russians. However, the overall impact is likely to be muted, she said. “We haven’t noticed a rush of Russian sellers [of properties]. They are here because they want to be out of Russia,” she said. 

Brexit certainly created a headwind for the UK real estate market, she continued. On the other hand, the recent changes to the ruling families in Saudi Arabia meant that there are new Saudi potential buyers in the UK, she said. 

Since UK voters decided in June 2016 to go for Brexit, debate has raged on what sort of departure the country will have, such as whether it leaves the EU customs union entirely, thereby freeing the UK of any limits on forging its own free trade deals, or whether it goes for a “soft” Brexit, staying in the customs union without any ability to shape its rules. Critics say departure without any deal will force the country to adopt World Trade Organisation rules, although “leave” defenders say the risks are exaggerated and that so far, the UK economy hasn’t suffered as much as their critics claim.

A sign of how the Brexit issue is being treated came yesterday from Mark Ward, head of trading at Sanlam UK, the wealth management firm. “The UK and EU is now over a year into negotiations as to how the future relationship will look, and despite media dramatisation and political point-scoring from sniping politicians, a fair amount of progress has been made thus far,” he said.

“The financial settlement of UK obligations and the rights of UK and EU Citizens have been agreed, and there are now proposals for the issue of the Republic of Ireland and Northern Irish borders. A hard Brexit is looking unlikely, and an arrangement styled on the Canadian free-trade agreement will possibly be used. There is also to be a two-year transition period after 2019, so as to further mitigate the risk of a hard Brexit,” Ward said.

That Bank of Singapore was holding a conference in London was significant; the bank, owned by OCBC from the Asian city-state, has moved to increase its European presence, along with that of fellow Singaporean bank DBS. The conference also coincided with the British Commonwealth summit in London this week (a former colony, Singapore is a member of the Commonwealth).

UK politics was briefly mentioned at the event; the Conservative Party, led by Prime Minister Theresa May, is polling around 40 per cent, the same as the Labour Party under its hard-left leader Jeremy Corbyn. The latter is seen as favouring higher taxes on the wealthy, more regulation of business and nationalisation of certain sectors, such as the rail industry. However, even under the Tories, the administration has continued to make a point of clamping down on forms of tax avoidance used by certain wealthy persons. 

French attractions?
Black Brick’s Dell, reflecting on potential pressures on the UK housing market, said another issue to consider is that other countries might seek to compete with the UK in encouraging wealthy people to invest and buy properties there. 

Recently, the French administration of President Emmanuel Macron has cut taxes on the rich, such as via changes to the wealth tax brought in by the previous socialist administration of Francois Hollande.  
Dell, like some other speakers at the BoS conference, noted that overall, the UK residential market, such as for properties valued at £1.0 million ($1.42 million) and above, has been hit by a number of tax rule changes and levies under the current and previous governments. Stamp duty hikes, removal of tax shelters for foreign-owned properties, tightening of rules for non-domiciled residents, and pushes for more transparency around beneficial ownership, all combined to take heat out of the UK housing market, she said. 

Policymakers are urged to make it easier for first-time buyers to get into the housing market, but by hitting higher-value properties with high transaction taxes, the market was suffering. “The solution [to the housing issue] isn’t to tax the hell out of it….it is like pouring glue into it,” she said.

Another speaker at the conference, Jonathan Burt, formerly of Harcus Sinclair, a private client law firm, and due to take up a new role at Harbottle & Lewis on 8 May, took delegates through the mass of laws and tax changes that have combined to make it harder for wealthy foreigners to stash illicit money in the UK. On the downside, more complex and onerous laws have created a number of serious challenges, he said. 

“It has never been more important to get it [tax] right but never harder to get it right because of mishmash of rules,” he said.