Two issues (one definite, the other speculative) show how our volatile times may hit the affluent Briton owning a holiday home overseas as much as those under the cosh of the austerity era here in this country.
The first issue is a little-publicised referendum being held on March 11 in Switzerland, in which residents will support or oppose a call for the total of second homes to be restricted to 20% of residential zones and 20% of the surface area of each regional commune.
Like many votes in Switzerland, this has come about from intense lobbying rather than a political party initiative, and Sunday’s poll (officially “to end the invasive construction of secondary residences”) comes after a high profile environmentalist’s campaign.
It sounds unexciting, until you realise that many communes - the ones where foreign High Net Worth Individuals have homes - already exceed the 20% quota. That means if the proposal is passed, not only would construction work on new homes targetting foreign HNWIs end in those communes but the sale of existing ones would have to be targetted at Swiss-national purchasers...who pay rather less for homes than do HNWIs.
As a result, existing foreign HNWI will hold off disposing and only a few distress sales would occur. Such vendors would have to settle for the ‘Swiss national’ purchase price, widely considered to be about 50% of the value to an overseas buyer.
The second issue concerns good old Greece. Officially, the country has adopted an austerity package and the ‘threat’ to the Euro appears to have subsided. Except at least two British estate agencies that deal with international sales are privately forecasting that Greece will still default, leave the Euro (or be ejected from it) and return to the Drachma.
And the effect on property prices should that happen? One agent puts the likely discount as 70 per cent...meaning those Britons with homes on Greek islands (often HNWIs, in fact) may end up with assets worth very significantly less than they paid for them.
Sharp-eyed blog readers will notice that such a scenario would also mean other Britons could snap up Greek property which would be at a relatively dirt-cheap price in the months following the currency switch. So as one door closes, another opens - but it would still be a very big hit for the HNWIs who now have premium-priced Greek homes.
Until recently the very richest have been considered immune to the effects of our age of austerity. Events like those in Switzerland and possibly Greece may just show that such a perception no longer reflects reality.
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