Fears of CGT rises ebb away, suggests real estate expert
Concerns that capital gains tax could escalate in the United States under Kamala Harris have fallen away following Donald Trump’s election win, according to a real estate expert, potentially making the US more economically attractive to British property investors.
The founder of Alistair Brown International Real Estate, a global agency specialising in high-end vacation and investment homes in Central and South Florida, believes the Republican’s victory over the Democrat Vice President could have a seismic impact.
“Anyone who thinks the outcome of the US presidential election will have no effect on UK property investors, would be mistaken,” said Alistair Brown (pictured). “In fact, the re-election of Donald Trump could have a huge effect on the value of investments.
“There’s the possibility that it could pave the way for more favourable economic conditions for property investors in the UK. The fears that corporation tax and capital gains tax could be hiked under Kamala Harris have receded, which might pave the way for a more conducive environment for investors.”
He added: “Trump’s policies, focussing on low taxes and de-regulation, not only promise to provide a stable environment for investors, they should also give the UK government pause for thought on further tax increases here.”
How much UK interest is there in US property?
From speaking with UK investors, Brown senses a continued interest in US properties, but believes it’s becoming more about securing assets in stable markets which provide long-term growth and tax advantages, rather than political considerations alone.
“There’s a bit of uncertainty in how the US political climate will evolve,” he said, “but in terms of property investments, buyers are focused on practical factors like low interest rates, appealing exchange rates, and strong rental markets, especially in holiday hotspots like Florida.
“UK investors seem to view the US as a haven for diversifying their portfolios, with the political landscape not a major deterrent. At the same time, many are keeping a close eye on tax policies, particularly as political shifts might signal changes in regulations affecting property owners."
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US and UK elections – plus Budget – provide certainty
In Brown’s view, the conclusion of key political events on both sides of the Atlantic will provide greater certainty for property buyers.
"The combination of both the UK and US elections, along with the Labour government’s Budget, does bring a sense of clarity, at least in terms of the direction that both countries are heading politically and economically,” he suggested. “The clearer political picture in both countries may now offer investors the reassurance they need to make informed decisions. In terms of the knock-on effect to the UK, the recent Budget was obviously the key driver which will have the most impact.”
In her recent Budget, Chancellor Rachel Reeves announced an increase in Stamp Duty on second homes. Those purchasing a second UK home, will have to pay an additional 5% on top of standard Stamp Duty rates. As well as this, the rates on capital gains tax have been raised from 10-18% at the lower rate and 20-24% at the higher rate. This, Brown believes, may make investors think twice about UK assets and look more widely for investment opportunities.
“The US has long been an attractive option, especially for investors seeking greater tax advantages,” he said. “We have seen an increase in the number of UK residents looking to buy holiday homes overseas in order to safeguard their retirement pots.”
Brown advises UK-based brokers who are assisting investors to buy in America to focus on the core selling points of US investment: tax incentives, relatively low property prices, and strong rental yields, especially in prime holiday home markets like Florida.
“It's important to stay informed about the nuances of the US property market, such as local property taxes, zoning laws, and the evolving exchange rate, which can have a significant impact on the final cost,” he said. “Brokers should keep a close eye on any changes in US immigration or tax laws, as these can affect the decision-making process for foreign buyers.”
Brown acknowledges the possibility of political shifts influencing the migration patterns of certain groups, including US citizens who may feel the need to relocate in response to the Democrats’ defeat.
“London, as a global financial hub, often sees some movement from high-net-worth individuals or political expatriates, especially during periods of political unrest or significant change in the US,” he shared. “London’s property market, especially at the higher end, can be attractive due to its international appeal and established status.”
