Whatever else the UK loses with Brexit, being attractive to the super-rich from elsewhere as a place to live is not apparently going to be on the list.
In fact, quite the reverse appears to be happening. The number of High Net Worth and Ultra High Net Worth individuals who applied to come to the country on a Tier 1 investor visa actually rose by 46 percent in the 12 months from March 2017. Personal experience supports the statistics.
We should not be surprised. The UK is still what it has always been: a financial and geographical platform with global reach; and London is perhaps one of only three cities in the world with a truly worldwide appeal to the very wealthy. The others being Paris and New York.
In that context, the UK should be seen as essentially an asset class in itself; and one which continued uncertainties elsewhere is keeping highly valued. The particulars of Brexit are just not affecting the fundamentals of why wealthy individuals want to be within its borders: security, stability, safety and sophistication.
Meanwhile, every fall in the value of sterling since the referendum on EU membership has made prime London property ever cheaper and ever more attractive. Perhaps that explains why the property developer Nick Candy, who specialises in developments for HNWs and can be assumed to keep a close eye on where their sentiment lies, recently re-mortgaged his personal Knightsbridge penthouse to give it a value of £160 million. A certain kind of wealth is not put off by whatever currently dominates the political and media agenda, but takes a longer view.
This assumes that London is likely to remain what it has always been, regardless of which international clubs the UK belongs to at any given moment. The UK legal system especially cannot be undervalued as a lure, particularly when it applies to property ownership, and that is not going to be threatened by Brexit. For many people whose wealth may have its roots in countries where no home is safe from expropriation by the state, this is an almost visceral issue. The highly regarded private education opportunities are also unlikely to be affected adversely.
However, this may just be the calm before the real storm: Capital flight ahead of the next general election amid fears of a left-wing Labour Government. It has been a generation since Labour chancellor Denis Healey announced that he wanted to ‘squeeze the rich until the pips squeak.’ Will we hear echoes of that ambition from John McDonnell, Labour’s shadow Chancellor with an interest in the works of Karl Marx? We shall see, but many may prefer to do so with their wealth safely offshore.
The UK is still, at least in theory, some way off a general election thanks to fixed term Parliaments making the next one in 2022. This may be why those with significant money and mobility are biding their time. The advice as the due date approaches is likely to be for foreigners to have as little of their personal wealth as possible invested in the UK.
Those who hope that they can off-set the pain of a wealth tax, for example, by taking out loans against property and then setting them against any levy may find that the UK quickly follows the French example, which makes that very difficult to pull off.
Meanwhile, we should not confuse words with actions. Whilst there are signs of wealth advisers already encouraging people to shift their liquid assets offshore, the evidence of take-up is unclear. Prime London property, which is a more visible and perhaps reliable benchmark of current sentiment, remains highly priced. We might conclude that for non-domiciled residents having wealth in the UK is still to have won the lottery, not to be taking part in one. At least for the time being.
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