While the Chancellor talked up Britain’s appeal to global investors in Davos last week, the property market is still digesting Labour’s first two Budgets.
The Chancellor offered encouraging words in the Swiss town of Davos last week about the importance of attracting overseas capital to the UK.
“Britain is a haven of stability in an uncertain world as this government makes the UK the premier destination for global investment,” Rachel Reeves told the World Economic Forum.
Based on recent events in Venezuela, Greenland, Iran and Japan, the first part of her statement certainly rang true.
Emotions have been running high in the early weeks of 2026 after the US intervened militarily in Venezuela and warned it may do the same in Greenland. It threatened eight countries with trade tariffs unless it could bring the Arctic nation under its control. A framework deal between the US and NATO appears to have avoided such an outcome and the whole exercise felt like the latest chapter in Donald Trump’s ‘escalate to de-escalate’ playbook.
Or, depending on where you sit politically, perhaps it was the latest example of a TACO (Trump Always Chickens Out) moment?
Either way, the tariffs Trump was threatening to levy would have hurt the UK economy and, ultimately, buyer sentiment.
UK Swaps Edge Higher
The Greenland drama followed sustained civil unrest in Iran earlier this year and a jump in global borrowing costs last week ahead of a snap election in Japan, where the favourite to win may undermine the country’s fiscal stability by lowering taxes and raising spending.
UK swap rates, which lenders use to price fixed-rate mortgages, edged higher although financial markets were still largely pricing in two Bank of England cuts this year.
All this geopolitical volatility means the stage feels particularly well set to attract wealthy investors to the UK, but whether they come is another matter.
Following the abolition of non dom status and the ringfence around worldwide assets in late 2024, some left for countries including Italy, Dubai and Switzerland, weakening demand for prime UK property, as we explored here.
The direction of travel contrasts with the period following the 2008 global financial crisis, when buyers from around the world were drawn to the safety of bricks and mortar in prime central London.
Not that the capital has entirely lost its sheen, as explained by Berkeley executive chairman Rob Perrins on the latest episode of the Housing Unpacked podcast. It’s also worth noting that not everyone leaving the UK is selling their property. Some may return in future while others are keeping their options open by renting, as we explored here and here.
Whether Keir Starmer lasts his full term as Prime Minister is one question they will be weighing up, as discussed on a recent episode of Housing Unpacked with former Treasury special advisor James Nation.
Underlining the ramifications of what a change in Prime Minister could mean, UK borrowing costs moved higher last Thursday on speculation that Manchester Mayor Andy Burnham could challenge Starmer and take the party further to the left, a move that could mean wealthy overseas investors are again on the wrong end of tax and spend decisions.
Stemming the Tide
In the meantime, lobbying is underway for a global investor visa to stem the tide of departures. Leslie MacLeod Miller, chief executive of Foreign Investors for Britain (FIFB), told Housing Unpacked last year the government needed to take urgent action.
“FIFB is already working to help shape a modern policy offer that matches the bold rhetoric at Davos with hard-edged competitiveness on the ground,” he said.
“But if Britain is serious about being, in the Chancellor’s words, ‘the best place in the world to invest’, a global investor visa must sit within a wider package that reinstates meaningful non-dom style protections for international investors who base themselves and their families here.”
FIFB has proposed a flat tax similar to the Italian model. It would have an annual fee starting at £200,000, a minimum investment of £2.5 million in the first year and is projected to raise £225 billion over a decade.
Despite the absence of such incentives for now, the performance of prime property markets has been relatively strong since November’s Budget. There was relief that mansion tax rates were not set higher although uncertainty remains over possible future increases.
The market’s performance has certainly been better than the period following Labour’s first Budget in October 2024, when non dom status was formally scrapped.
The number of £5 million-plus exchanges in the UK was 36% higher in Q4 2025 than the same period in 2024, Knight Frank data shows. However, for context, the figure was 14% below the five-year average.
For the market to recover and momentum to build, it is clear the UK requires concrete incentives to match the optimistic tone set in the Alpine ski resort last week.