Code Red

After a victorious election campaign Sir Keir Starmer and his Labour government are in charge after 14 years of Tory rule. Will they have a tangible impact on Mayfair’s property market? 

Words: Will Moffitt

With its shiny black door and sand-hued brick exterior, 4 Chesterfield Street looks just like any other regency-style Mayfair townhouse. Cast your eyes to its adorning Blue Plaque, however, and you’ll notice that it was formerly home to British prime minister Anthony Eden.

Widely regarded as one of the least successful of Britain’s post-war leaders, Eden ascended the stairs to high office in 1955 and left two years later. His mismanagement of the Suez Crisis is still synonymous with British failure overseas; his errors retraced and retold by historians and politics teachers across the land.

Eden’s reframing of Conservative MP Noel Skelton’s concept of ‘property-owning democracy’ has not been scrutinised as microscopically as those foreign policy blunders, but it laid the foundations for an alluring Conservative vision that equated home ownership with liberty and aspiration. Standing on a podium in 1974 brandishing a feather duster Margaret Thatcher echoed Eden’s principles, promising more homes for ordinary families.

That Sir Keir Starmer’s Labour government or indeed any incumbent party could deliver a housing policy overhaul anywhere near as impactful as Thatcher’s seems – at the point of writing – deeply unlikely.

Nevertheless Starmer and co have grand ambitions. With its “freedom to buy” scheme – sound familiar? – Labour is promising to get more young people on the housing ladder, overhaul the planning system and aims to build 1.5 million homes over the next five years. Whether it can deliver on its lofty ambitions only time will tell.

For agents and property aficionados in Mayfair and prime central London, the end of 14 years of Conservative rule marks an obvious and inevitable period of uncertainty. Not only has Sir Keir pledged to overhaul the mechanisms by which houses are acquired, approved and built, but the prospect of tax reforms and further policy implications on private school fees and non-dom residents has aroused speculation and anxiety. For others the arrival of a centrist-leaning government is no great cause for panic.

Speaking pre-election Peter Wetherell, founder and chairman of Mayfair’s eponymous property agency, said that with the outcome largely guaranteed, he hadn’t noticed a sea change in client behaviour.

“This is my 11th General Election, and I have never seen one quite like this where the result has for a long time been seen as a foregone conclusion,” Wetherell said. “Because of this mindset we have seen that buyers in London’s best addresses, and our clients in Mayfair in particular, are treating it absolutely as business as usual.

“There have never been so many properties under offer at a comparable time. It is almost as if a General Election wasn’t happening,” Wetherell added, citing a Mayfair townhouse that “had only recently hit the market just a few days ago” and was “already under offer” as an example.

Speaking to me prior to the election result Charles Lloyd, head of Mayfair sales at Beauchamp Estates, remained confident that the prime and super prime segment of the property market would be largely unaffected by a Labour government.

“The result has been a foregone conclusion for some time,” Lloyd told me. “That hasn’t stopped inquiries coming in. It hasn’t stopped people buying and making offers on property in Mayfair.”

“If you look at the property market historically going back to the end of the Second World War the market has always done reasonably well under Labour governments,” he added.

Tom Bill, Knight Frank

One of Labour’s manifesto pledges was to commit overseas buyers to paying an extra one per cent stamp duty surcharge, but Lloyd feels that is unlikely to have a significant impact on transaction volumes or property prices.

Alongside its pledge to add a 20 per cent value-added tax on fees for the UK’s elite private schools, which are currently VAT exempt, Labour’s promise to crack down on tax exemptions afforded to non-doms – who don’t pay UK tax on foreign income, and capital gains for up to 15 years – is controversial.

Part of a broader plan to get tougher on tax avoidance, the now chancellor Rachel Reeves has talked of tightening “loopholes” and removing measures like those allowing non-doms to shield foreign assets held in an offshore trust from inheritance tax permanently. She has also promised to remove a one-off 50 per cent tax discount for non-doms who bring in foreign income during the 2025-26 tax year.

There is a slight irony here given that previous Conservative chancellor Jeremy Hunt had already pledged to scrap and replace the 200-year-old tax regime. In response it was widely reported that significant numbers of HNWIs and UHNWIs were already exploring leaving the UK and moving elsewhere.

“We fear this will prove to be a huge own goal for the UK and particularly damaging to the London economy,” says Mark Pollack, co-founding director of London estate agents Ashton Chase. “Inevitably, it will result in a glut of super prime properties coming to the open market or being discreetly offered for sale which, in turn, will soften prices for these properties and inevitably, in due course, ripple down the market.”

As with many of Labour’s pledges, the nom-dom “crackdown” feels light on detail. That’s because, at the time of writing, it is. “We know the old system will be replaced but not much more,” explains Tom Bill, head of UK residential research at Knight Frank. “There was no detail in the Labour manifesto about the number of years individuals would be exempt from paying tax on their worldwide income under the new regime. Nor was there much detail around how inheritance tax (IHT) would be charged on overseas trusts.”

With these pledges yet to materialise into concrete policies Mayfair’s allure remains undimmed for now, with a broad swathe of international buyers in particular, undeterred by a change of government.

“Currently the very best homes in Grosvenor Square are achieving values of £10,000 per sq ft, which underlines the value of the local housing market,” Wetherell says. “The luxury housing market in Mayfair is characterised by significant undersupply in relation to international demand so both vendors and buyers know that investing in real estate in the district remains an extremely good long term investment.”

Will Sir Keir Starmer be as consequential as Thatcher or as unpopular as Eden? For now, it’s too early to tell. Either way it's business as usual for Mayfair’s local agents who are cracking on with the day job. As Lloyd puts it: “There’s still transactions happening in the market, people still want to buy in London and live in London… at the end of the day you need a willing buyer and a willing seller.”

Mark Pollack, Aston Chase