Ministers accused of 'mindless' behaviour over richest buyers

Nearly four in ten high net worth overseas investors have London real estate in their sights as a place to put their money.

The finding emerged in a joint survey of rich foreigners by two agents with global offices, Cluttons and VPC Asia Pacific.

The global appetite for London property means that 57% of wealthy foreign investors see it as an asset class, which has led to an astonishing 90% of commercial property in London being snapped up by overseas buyers in recent months.

The findings led to a furious outburst from John Hitchcox, chairman of the trendy global property firm yoo.

He accused the Government of failing to understand the market – and of ‘mindlessly’ penalising it with hikes in Stamp Duty and the threat of an annual property wealth tax.

Hitchcox stormed: “Foreign investors are around 60% of prime London buyers and contribute £1.2bn yearly to the economy just through buying homes to rent.

“Each one fuels the food-chain of other firms – from cleaners to estate agents. Yet we’re seeing a mindless attack on this sector from all sides of the political sphere.

“No other major export is treated with such contempt by the Government.

“Prime property is a huge income generator – and by that definition, export.

“Taxing these people out of town does nothing for our long-term growth and is nothing more than badly calculated political point-scoring.”

As London agents optimistically brace themselves for new business from France, ahead of the new 75% tax rate announced by president Francois Hollande on people earning over €1m, Cluttons said almost all (86%) of rich international buyers pinpointing London as their top investment city already have strong ties to the UK.

This might be through second homes, children’s education or expansion of an existing investment portfolio.

The survey found that 71% of the rich foreigners polled are planning investment activity in the next three to six months.

Bill Siegle, senior partner at  Cluttons, said: “This new survey takes a unique insight into the live investment intentions of high net worth individuals across the Middle East and Asia Pacific regions.

“Quite remarkably, 43% of these highly mobile investors state that the global financial crisis has had no impact on their view of London as a top investment target location. In fact, almost a third (29%) go on to claim that London is better-placed because of the eurozone difficulties.

“The fundamentals of the London economy remain strong; the city attracts dynamic businesses and skilled professionals from around the globe. This gravity effect underpins the city’s appeal to wealthy individuals looking for investment opportunities in the next 12 months.”

Meanwhile, agents salivating at the thought of more French business include Ed Mead of Douglas & Gordon.

He said: “Monsieur Flip-Flop appears to have realised the worst French fears. The expected increase of those heading to the 21st Arrondissement in South Kensington and Wandsworth looks likely to now materialise. Bad for France, great for south-west London.”