By Damien Shepherd
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US demand seen as a bright spot in a tough market, brokers say
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City’s housing under pressure from stricter tax rules on rich
At one time, the £32 million ($42 million) deal for a home in the trendy Notting Hill district would’ve raised few eyebrows among London’s high-end brokers, who have seen dozens of similar purchases over the past decade. But amid a slump in luxury transactions this year, the sale stood out — as did the nationality of the buyer: he’s American.
Estate agents looking to sell the city’s priciest homes are increasingly seeing US buyers as their best hope for reviving a market hurt by tougher taxes on the rich. Jo Eccles — the Eccord Ltd. managing director who represented the buyer of the Notting Hill mansion in last month’s sale — is among the local brokers who say that political and social challenges across the US, along with a strong dollar, are prompting a surge in migration to the UK capital.
“Americans are being much more decisive with purchases, partly because they don’t want to return to the US due to issues such as gun crime,” Eccles said in an interview. “With exchange rates in their favor, Americans have already done their number crunching and are armed with their offer, aware of the tax considerations before they arrive. This is a stark contrast to three years ago, when our American clients would typically rent before buying, taking longer to put down roots in London.”
The US is the only international source of higher year-on-year demand this summer, according to a survey of London estate agents by researcher LonRes, with some luxury brokers saying they’re relying on Americans as their primary client base.
The share of US buyers purchasing London homes rose to 6.1% in the first six months of the year from 3.3% in the latter part of 2023 — the second-largest half-on-half increase in the past 12 years, according to data from brokerage Knight Frank.
The Notting Hill buyer — who Eccles declined to identify for privacy reasons — relocated his family to expand his business in the UK after viewing seven off-market properties on a trip to London. He outbid another prospective international buyer to land the mansion. Another US client purchased a home in Kensington for £18 million roughly a year earlier, partly because of gun violence back home, Eccles said.
The number of US nationals applying for investment-migration programs climbed in 2020, when the pandemic spurred wealthy Americans to broaden their portfolio of citizenships and residency rights because of the global uncertainty, according to migration advisory Henley & Partners.
American interest in London has continued since, driven by currency discounts from a weak pound — despite a looming overhaul of Britain’s “non doms” rules, poised to abolish preferential tax treatment for wealthy foreigners. This year, US applicants more than doubled from a year earlier in the January-through-March period, then rose an additional 86% annually in the second quarter, Henley & Partners said.
Share of Prime Central London Homes Bought By Americans
Source: Hamptons
Note: 2024 refers to first quarter of year
“Whenever there has been a financial or political upheaval over the last 50 years, the rich bees have always flown to the honey pot of London,” said Trevor Abrahmsohn, managing director of luxury real estate firm Glentree. “We’re nursing three inquiries at the moment, up to £100 million, where clients are looking for trophy properties in London to house their families in their new British guise.”
Abrahmsohn said that wealthy Californians “greatly disillusioned” with the state — crime, drug use and high taxes locally are among their concerns, he said — are increasingly interested in purchasing London mansions.
Charles McDowell, an agent known for selling some of the most expensive mansions in the capital, said some of his American clients are starting to plot a move, partly over fears that former President Donald Trump may return to the White House following November’s election. During the four years of his presidency, the number of Americans buying £15 million-plus homes in London rose roughly 20% compared with predecessor Barack Obama’s second term, according to a Beauchamp Estates, and the brokerage expects a similar influx should Trump return to office. Trump’s presidency also coincided with a weak pound.
“People are already making preparations,” said McDowell, whose firm, McDowell Properties, advises wealthy clients on purchasing London homes. “There is a real concern that a Trump government will be very unstable.”
The number of deals for London’s priciest homes has been falling this year, defying a broader bounce-back in the city’s housing market. Transactions priced at £5 million or higher slumped 19% last month from a year earlier, according to LonRes, marking a worsening decline. This year through July, sales of such homes fell 10% from the same period in 2023.
UK’s Non-Dom Population Rose in 2023
Total still below pre-pandemic levels
Source: HMRC
Note: Data for 2022 and 2023 is provisional.
But a bright spot in London’s battered luxury-housing market is offered by buyers holding their wealth in US dollars, as a weak pound combines with limited price growth to offer relative value, the researcher said in a report this month. In London’s most affluent central postcodes, values in July were 14% below their 2014 peak in sterling — and down 30% in dollars.
“Marketing to an American audience has become essential,” said Peter Wetherell, a broker based in the high-end Mayfair district. “Road shows for London trophy homes regularly take place in Manhattan, Miami and Chicago, and UK property firms are spending vast sums of money advertising in American newspapers.”
In the US, persistently high interest rates have brought the housing market to a crawl, especially with the prevalence of long-term, fixed-rate mortgages discouraging prospective homeowners from moving if their current loan has a low rate. Prime-residential prices dropped in Los Angeles, Miami and New York in the first half of the year, according to data from brokerage Savills Plc.
Will Watson, a partner at The Buying Solution, a property agency that represents London homebuyers, said Americans now make up at least half his firm’s clients, a share that’s increased over the past three years. Inquiries from Americans have risen 25% since the start of the year.
“The upcoming election has added a layer of urgency for wealthy Americans seeking property in London,” said Mauricio Umansky, chief executive officer of The Agency, a US brokerage. “We’re seeing heightened interest in prestigious neighborhoods as these buyers position themselves strategically ahead of potential policy shifts, especially in London with its timeless allure as a safe haven for international investment.”
Share of Greater London Homes Purchased By Foreign Buyers
Source: Hamptons
Note: 2024 refers to first quarter of year
Concerns among Americans include the presidential election, gun violence and levies on assets, with some seeking “the fire insurance of an alternate citizenship,” said David Lesperance, a tax adviser to the ultra-rich. One billionaire US client he declined to identify is moving his family to London and plans to refurbish a property they already own in the city, said Lesperance, who grew up in Canada, just across the border from Detroit.
Foreign buyers took over more of London’s luxury-housing market last year, purchasing 45% of prime central London homes sold in the city’s most affluent postcodes, up from 39% in the previous year.
This year, one of the biggest home deals in central London was a 3,270-square-foot (304-square-meter) duplex on Mayfair’s Charles Street with reception and dining rooms, study, courtyard garden and three en-suite bedrooms — once a pied-à-terre of the Earls of Crawford — that sold for £11.5 million in January to an American financier and his family, according to Beauchamp Estates.
Still, headwinds in the high-end London market, from stubbornly elevated interest rates to concerns about higher taxes, could discourage some rich Americans from making the move. The close presidential race — with Trump and his Democratic rival, Vice President Kamala Harris, in a statistical dead heat in polls — may also come into play.
“American nationals that are currently residing outside of the US, and that have been considering moving back to the US to live and reside on a more permanent basis, will wait to make their decision after the US elections,” said Thomas Scott, group head of real estate at Henley & Partners. “This ‘wait-and-see’ mentality is as much about social and political stability as it is as much about house-price growth and appreciation potential.”
Camilla Dell, managing partner at buying agent Black Brick Property Solutions, said 20% of her clients purchasing luxury London homes through her firm this year have been from the US, mostly from the West Coast. The main factors are the prevalence of gun crime in the US, superior infrastructure in London and the explosion of wealth in the tech sector that’s prompting the rich to buy foreign assets, she said.
“For many of our US clients, they see London as a safe haven compared to the US, where anyone can own a gun,” Dell said. “There has also been an explosion of wealth in the tech sector in the US. When people get wealthy, they buy assets, and London is a key recipient of that.”
— With assistance from Paulina Cachero and Benjamin Stupples
