Interview with Real Estate Lawyers Donald Millar and Michael Morris of Spencer West LLP

Nick Uzarewicz (Empire Global): Gentlemen, it’s a pleasure to have you here today. We’re in the midst of some really interesting changes in the UK property market, especially after the last couple of turbulent years. I’d love to get your thoughts on where we stand and what the outlook might be coming out of 2024 and beyond. Let’s start with you, Michael. Where do you see the UK property market right now?

Michael Morris (Spencer West): Thanks, Nick. It’s a fascinating time, no question about it. The UK property market has always been resilient, and while the aftermath of the 2022 mini-budget and the rise in interest rates created some challenges, we’re now seeing the first signs of recovery. In fact, by August 2024, Nationwide reported a 2.4% annual growth in house prices, which really signals a turning point. And with the Bank of England easing interest rates and lenders, like Lloyds and Halifax, offering competitive mortgage products, including lending limits of up to 5.5 times household income, it’s starting to stimulate buyer demand again, particularly among first-time buyers.

Nick: That’s promising, especially after what’s been a bit of a rollercoaster over the last few years. Are you seeing this recovery across the board, or are there certain areas and property types that are bouncing back faster?

Michael: It’s definitely not uniform. Some areas are recovering more quickly than others. London, for example, remains a focal point, particularly the prime central London market. Despite everything, international buyers still see London as a global financial hub, and with the pound remaining relatively weak, foreign buyers are seeing good value. For instance, in Kensington or Mayfair, prices remain below their previous peaks, so we’re advising clients that now is a great time to consider purchasing in those areas. They’re historically strong locations, and with a long-term view, the prospects for capital appreciation remain excellent.

Nick: What about outside of London? I know you’re keen on areas like Birmingham.

Michael: I went to Law School there so it was my old stomping ground. Birmingham is benefiting massively from infrastructure investments like HS2 and the ongoing regeneration projects. For someone looking to invest around the £1 million mark, areas like the Jewellery Quarter or Edgbaston are really attractive. They offer a good mix of potential capital growth and strong rental yields. You also have areas like Solihull, which are appealing to families and commuters, and they’re seeing steady demand.

Nick: Donald, you’ve always had strong roots in Scotland. What are you seeing in Edinburgh and up north?

Donald Millar (Spencer West): Edinburgh’s market remains robust, particularly in the New Town and Stockbridge areas. These are desirable, historically rich locations that continue to attract both domestic and international buyers. Edinburgh’s also got a strong rental market, driven by the university sector and financial services, so you get good returns there. For anyone looking to invest between £1-2 million, these areas are definitely worth considering.

I’m a Manchester United fan, and so I also keep a close eye on what we call the “golden triangle” in Cheshire, Alderley Edge, Prestbury, and Wilmslow. These areas have long been favoured by high-net-worth individuals, including footballers and business professionals, and they’re within easy reach of Manchester’s booming economy. That proximity to Manchester, which is seeing huge regeneration projects, especially around the city centre and Northern Quarter, means that demand for property in this triangle remains very high.

Nick: Manchester’s really come a long way, hasn’t it?

Donald: It really has. Manchester’s undergone a transformation over the last decade or so, and it’s now a thriving city with a strong cultural and business scene. If you’ve got £500,000 to £1 million to invest, areas like Deansgate, Castlefield, and even parts of Ancoats are incredibly exciting for both capital growth and rental yields. There’s also significant interest from overseas investors who see Manchester as a key player in the Northern Powerhouse initiative.

Nick: It sounds like there’s plenty of opportunity in both the North and Midlands. Shifting gears a bit, how about the Channel Islands? I know Spencer West has a strong presence there. Michael, what’s the latest in Jersey and Guernsey?

Michael: The Channel Islands are unique in the sense that they offer a combination of lifestyle benefits and financial advantages, particularly for high-net-worth individuals. The property markets in Jersey and Guernsey have remained relatively stable compared to mainland UK, largely because of limited supply and strong demand. In Jersey we’ve seen an uptick in enquiries for properties priced above £5 million.

Guernsey is much the same. The island’s appeal lies in its privacy and the security it offers, which are big draws for international buyers. The island is a prime location for those seeking a combination of tranquillity and convenience. Despite the small size of the market, the demand remains high, and with favourable tax regimes, it’s easy to see why wealthy buyers are drawn to both islands.

Nick: It seems the tax angle is a big factor. How do you think Labour’s proposed reforms, particularly around non-doms, will impact the luxury property market in the UK?

Donald: That’s a big question right now. The Labour government has made it clear that they want to abolish the non-dom tax status, which could certainly have a knock-on effect on the prime property market. Historically, non-doms have been a significant part of the buyer base in London, but with the potential changes, there’s uncertainty. Some buyers are sitting on the sidelines waiting for more clarity.

That said, the number of non-doms who will be affected is relatively small, and the broader appeal of London, its role as a global financial hub, its cultural heritage, and its world-class education system, will continue to attract high-net-worth buyers. If anything, we might see a brief adjustment in prices, but I don’t anticipate a significant long-term decline in demand for prime properties.

Michael: I’d agree with that. We’ve seen this before with the stamp duty reforms in 2014 and Brexit in 2016. The market took a hit, but it bounced back. London’s property market has proven its resilience time and again, and I believe that, even with the tax changes, the fundamentals that make London attractive to international buyers remain strong.

Nick: Let’s talk about Spencer West’s international reach. You’ve mentioned the Channel Islands, but you also have a presence in key offshore jurisdictions like the BVI, Cayman, and Bermuda. How do these markets compare to the UK and Channel Islands?

Michael: Our offices in the BVI, Cayman, Bermuda, and even places like South Africa, allow us to offer a truly global service. We’ve seen strong demand for high-value properties in these regions, particularly from clients looking for a combination of lifestyle and financial benefits.

Donald: Similarly, in the Cayman Islands, the demand for luxury homes has surged, especially post-pandemic. These markets offer excellent privacy, tax advantages, and incredible lifestyle options, something our high-net-worth clients find very appealing.

Nick: You can’t ignore the allure of the Middle East either. At Empire Global, we’ve just set up an office in Dubai, and it’s a market that’s attracting huge interest. With a practically tax-free environment and year-round sunshine, it’s no surprise that buyers are flocking there. I’d recommend anyone looking at properties like villas on Palm Jumeirah or penthouses in the Burj Khalifa, they’re standout options.

Michael: Dubai is definitely one to watch. It’s a city that’s grown exponentially, and with its combination of luxury, tax incentives, and infrastructure, it’s on the radar for many of our clients as well.

Nick: It sounds like there’s plenty of opportunity both at home and abroad. So, if someone is looking to invest, whether they have £1 million or £10 million, what advice would you give them?

Donald: If you’re working with £1 million, I’d suggest looking at the regeneration hotspots in cities like Manchester or Birmingham. They’re offering great growth potential, particularly around new transport links or areas that are being redeveloped. It’s all about getting in early and holding for long-term gains.

For £10 million, the prime central London market still offers a lot of value. Areas like Mayfair, Chelsea, or Kensington are established and continue to be in demand. Alternatively, luxury country estates in Surrey or Hampshire are also worth considering if privacy and space are a priority.

Michael: I’d agree. The key is to think long-term, especially in markets like London, where demand will always be high due to its global status. Even with some short-term fluctuations, prime properties are likely to appreciate over time. For those interested in international markets, I’d suggest looking at the Channel Islands or even some of our offshore jurisdictions. They offer both financial benefits and a unique lifestyle.

Nick: Thank you both for your insights. It’s clear that despite the challenges, there are plenty of exciting opportunities for investors in 2024 and beyond.

Donald: Absolutely, Nick. It’s all about understanding the market dynamics and making informed choices.

Michael: Exactly. With the right advice and strategy, there’s no doubt that property investments will continue to deliver strong returns in the long run.