WWe are now in the midst of an unprecedented global election wave. By 2024, almost half of the world’s population will vote. Sotheby’s International Realty’s 2024 Mid-term Luxury Outlook Report shows that elections can bring uncertainty to the real estate market through changes in tax policy, regulatory frameworks, and political stability. Buyers may postpone their purchases and adopt a “wait and see” approach. In prime central London locations, the capital’s smartest postcodes, around 70% of buyers are from overseas, making the market particularly sensitive to these global political changes.
An important election will be held in the United States on November 5th. The past year has seen a surge in U.S. buyers. With domestic political uncertainty and the lure of the London lifestyle, it is likely to continue regardless of the outcome.
London’s relatively stable property market is ‘brewing confidence’, says Claire Reynolds
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London is resilient in the face of electoral uncertainty. Investors this year have focused more on lifestyle factors than tax policy and investment possibilities. Just 16% of buyers in London’s most prestigious postcodes this year were motivated purely by investment potential, according to data from Sotheby’s International Realty. Most buyers (38%) purchased a property as their primary residence, and 24% purchased a second home. London is not only a lucrative market but also an ideal place to live.
More importantly, more foreign parents are investing in UK homes for their children, accounting for almost 22% of purchases in the first half of 2024. Real estate has long been a safe haven for protecting and increasing wealth across generations. And stability is essential for this strategy to be successful. Compared to many countries, the UK market has a stability that inspires confidence, especially in the midst of a global election.
Election results across Europe will also have an impact on the UK property market. France, for example, is considering major reforms to its inheritance tax laws, which could prompt wealthy people to seek more favorable tax conditions abroad.
Switzerland, a long-time competitor in the luxury real estate market, has already implemented inheritance tax reforms that could move investments away from its borders. The UK tax environment could become even more unfavorable, with the proposed abolition of Dom non-tax status (a system that limits the tax that residents pay on overseas income) under the Labor government, but the luxury property market We have not yet seen a mass exodus.
• Tenants’ rights bill should protect tenants from rent increases.
At the time the proposed non-Dom policy changes were announced, the UK’s Sotheby’s International Realty had four major sales underway to overseas buyers, totaling £250m. Three of these sales were successfully completed. One buyer initially backed out, but after evaluating other global destinations, returned to the table and completed the largest transaction to date in 2024.
The truth is that extremely wealthy people are willing to spend more money to live in London, and they have immense purchasing power. Over 80 per cent of UK Sotheby’s International Realty transactions in 2024 were completed in cash. Elections around the world can create moments of uncertainty, but they also present opportunities.
Claire Reynolds is a managing partner at Sotheby’s International Realty in the UK.
