It’s been almost exactly two years since we launched Property Vision International. At the time, we expected our role would predominantly be in helping clients buy holiday homes abroad, or pieds-à-terre in major cities.
Both are still core parts of the business, of course. The wealthy will always be attracted to Europe’s cultural hotspots and the world’s most beautiful coastlines.
However, there’s been a noticeable shift over the last 12 months. Most of the demand we’re seeing now is less about “going somewhere”. It’s more about clients wanting to leave something behind.
Capital flight.
There’s been a lot of ink spilt recently over the ‘exodus’ of millionaires from the UK. While some of the headlines are overblown – it’s unlikely that one in five will leave, whatever the Daily Mail may claim – they clearly contain a grain of truth.
Labour was never going to overturn Jeremy Hunt’s decision to end the special non-dom tax status, but the October budget also contained some unpalatable surprises.
Inheritance Tax was squarely in the government’s sights. Relief on AIM shares is to be cut from 100% to 50% next April, and the tax advantages of trusts have been slashed back. Most significant of all, unused pension funds’ exemption from IHT will end in 2027.
Such a wholesale re-writing of estate planning rules will inevitably lead some to look overseas, especially once you throw in the growing suspicion that an extreme wealth tax might be on the horizon. The irritant of even more punitive SDLT rates on second homes is yet another reason to act.
If relocations from the UK are being driven by tax changes, many of the USA’s wealthiest citizens are seeking escape from something altogether more unpleasant.
Cultural refugees.
All wars create refugees, and culture wars are no exception. Fuelled by social media, the environment in America is becoming more toxic by the day. Natural disasters like the LA wildfires and Florida hurricanes add to the general sense of things breaking down.
From a distance, the antics of Trump/Vance/Musk may simply seem bewildering. Up close, they can feel highly menacing. Remember, this is a President who explicitly vowed during the election campaign to bring retribution to his enemies. Some, including prominent members of the LGBTQ community, aren’t waiting to see if Trump follows through on his promise. They’ve already packed their bags and headed across the Atlantic.
Compounding all this, the financial future suddenly looks much less predictable. It’s not just the impact that tariffs and other policies are likely to have on the stock market, the dollar and the broader economy. There are fears that ‘Making America Great Again’ could extend to imposing capital controls, restricting the ability to move assets offshore.
For the wealthy, there’s another side to the coin. Trump has said he’s keen to end the “double taxation” of overseas Americans, meaning someone who’s lived abroad for three years would only be subject to US tax on US-sourced income and gains. This would be complex legislation to enact and may never happen…but for those wanting to secure a fall-back position, it’s a further incentive to buy property overseas.
Increased demand ≠ Increased supply.
Since the autumn, we’ve spoken to a lot of these ‘tax and culture refugees’ – and we always remind them of the immutable law that governs our market. However high demand goes, the stock of truly great properties always remains roughly the same. Yes, there are plenty of luxury developments underway with places like Dubai and the Caribbean pushing particularly hard. While the very best of these will prove to be wonderful investments, many will not.
We also underline how the sands in Continental Europe are shifting. Conscious that it may have swung the pendulum too far, the Greek government amended its Golden Visa programme last year. With too many unoccupied and unloved properties in the most desirable parts of the country, Portugal did the same in 2023.
Popular unrest has been loudest in Spain. In response, the government stopped accepting any further Golden Visa applications earlier this month. (Luckily, we were able to help a number of clients beat the 3rd April deadline while still acquiring investment-grade properties.)
These changes won’t suppress demand. But they will shift it, with more evolved markets like Switzerland and Monaco well placed to benefit. Meanwhile, locations such as Jersey – the latest addition to the Property Vision International network – have spotted the opportunity and are ramping up their marketing efforts.
Taking the long view.
More investment concentrated into fewer countries will have real consequences. Buyers should think through the implications carefully.
In sought-after areas like Tuscany and Provence, it’s never been easy to find a Grade A* property that satisfies the needs and wishes of every family member. Acquiring it at fair value is even more difficult…and the spike in demand means prices are only heading one way.
But the issues run deeper than that. More than ever, investors need to consider what’s likely to change in the future and how it might affect the very things that drew them to the property in the first place. What are the chances of their neighbours also selling to overseas buyers? If they do, in what ways could the new owners alter the buildings or land? How might an influx of expat arrivals change the character of the surrounding villages and towns? What will be the impact on the local community or the services it provides to homeowners? The list goes on.
Every one of our clients chooses an overseas property for different reasons. The attraction could be the opportunity to own an architectural gem with the perfect view, the authentic local culture, or simply the promise of peace and privacy. It’s tempting to think these things will last for ever, but that’s not always the case.
The British system of property transaction may not be perfect, but it does generally provide sufficient professional oversight to protect the interests of the buyer. Most will borrow to finance a purchase which will necessitate both a formal ‘Red Book’ valuation and a survey. Solicitors will also be involved to legally represent both the buyer and the lender, and Local Authority Searches will be obtained to highlight any potential blights.
The same level of professional oversight simply doesn’t exist in many overseas territories and buyers need to find a credible way of replicating it.
There seems little doubt that the current trend for relocation is set to continue; setting up home in another country is no longer scary, it’s a well-worn path and the internet provides instant comfort to those wishing to give it a try. However, whether a tax or cultural refugee, or holiday home buyer, one thing is for sure, finding great property in idyllic spots is only going to get harder.
