Posted by Leonard Steinberg on April8th, 2014
Perceptions are changing throughout the world, much of it instigated by large-scale government action: Switzerland was always known as the safe-haven for funds that others should not know about…….this week I heard of several extremely wealthy people avoiding bringing their assets to Switzerland because of the new widespread government scrutiny of banks. Switzerland recently voted down an attempt to limit CEO pay by an overwhelming margin of 65%, but the fact that Switzerland of all countries in the world would even have such a vote is an eye-opener! A change in law can change the demographics of who is attracted to living in a City or Country.
BMW, Mercedes and Audi were luxury brands that traditionally focused on large powerful cars for the bulk of their business: this is changing quickly as each brand introduces a host of smaller, less powerful, less expensive and more fuel efficient models to their line-ups. These companies are being forced to do so by new government standards set for company-wide fuel efficiency. They also see opportunity in the more mass market.
In London, owning a property and not using it provided some tax breaks: not anymore. The UK government has taken steps to make absentee ownership less attractive amid concerns that some London neighborhoods are becoming blighted by darkened streets lined with unoccupied homes. In March 2012, the UK levied a 15% tax on residential real estate valued at more than 2 million pounds bought using companies set up to avoid taxes. The tax was applied to empty homes worth 500,000 pounds or more in March.
Government can be useful: water consumption in New York City has dropped by about a third since 1979, mostly because of government imposed building standards for faucets and toilets.
As the drumbeat of extreme income inequality continues, it is very possible additional government legislation will erode the many ‘legal perks’ enjoyed by the very wealthy: how will this affect the high end of the real estate market?