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Why the wealthy are leaving London - report

Jan 22 2018 18:22
Carin Smith

Cape Town - Last year more high net-worth individuals (HNWIs) left the United Kingdom (UK) than those immigrating to the country, according to a report by research company New World Wealth.

In 2017 about 1 000 HNWIs moved to the UK during the year, compared to about 5 000 HNWIs leaving during the same period.

This is a reversal of a trend over the past 30 years when the UK was one of the biggest recipients of "migrating millionaires", according to Andrew Amoils, head of research at New World Wealth.

He told Fin24 on Monday that this new trend will be of interest to South Africans since London and the UK have historically been popular destinations for those emigrating or wanting to emigrate from SA.

The report names a few possible reasons for more wealthy people leaving the UK:

Firstly, new taxes have been imposed on so-called "non-doms" (people living in the UK, but considered to be resident in another country) and foreigners with homes in the UK. This has made it more expensive and more complicated for "migrating HNWIs" to buy homes in the UK.   

Secondly, the UK has traditionally had high inheritance taxes. Thirdly, several European HNWIs living in the UK moved back to their home countries in 2017, possibly due to Brexit.

Lastly, the report names rising crime levels and rising religious tensions - especially in London - as a possible reason for wealthy people deciding to leave.

"London was obviously a hotspot for migrating HNWIs for many years. However, this trend appears to have changed over the past couple of years as migrating HNWIs now prefer moving to safer 'international cities' such as Sydney, Melbourne, New York and San Francisco," said Amoils.

He explained that “international cities” refer to first world cities, which attract business people from all over the world. They tend to have English as their main language.

A trend of many wealthy Londoners moving out of the city to small affluent towns such as Bray, Taplow and Marlow is also continuing, according to the report. New World Wealth picked this trend up already last year and now sees it picking up momentum.
 
"A large number of wealthy Londoners are also leaving the UK altogether – many of these individuals are going to the US and Australia," said Amoils.

He explained that wealth migration figures are a very important gauge of the health of an economy.

If, for instance, a country is losing large numbers of HNWIs to migration, it is probably due to serious problems in that country. These problems could include crime, lack of business opportunities and religious tensions.

"Conversely, countries that attract HNWIs tend to be very healthy and normally have low crime rates, good schools and good business opportunities," said Amoils.

Bloomberg reported early in January this year that London was the worst-performing home market in the UK last year for the first time in more than a decade and "may be stuck there".

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new world wealth  |  uk  |  london  |  world economy  |  wealth
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