Rachel Reeves’ tax hikes are driving wealthy overseas investors to flee London
Chancellor Rachel Reeves’ tax hikes have had the “feared impact” of driving wealthy overseas investors to flee London to escape double taxation of their worldwide income, the company behind The Shard has said.
Real Estate Management (UK), which is ultimately owned by the State of Qatar, has revealed the exodus has resulted in it being “very disappointed” in the lack of lettings of ten newly completed apartments at the top of The Shard.
As a result of the lack of deals, LBQ Four, the owner of the Shard Residences, suspended the payment to the company of the contracted ‘Investment Advisory Agreement’ fee.
The owner said it did so because the apartments had not been let since they became available for occupation in late 2023.
Real Estate Management (UK) said the affected fee income totalled £700,000.
As well as The Shard, the company also looks after Shard Quarter, the News Building and the Retail Arcade as well as Park House in Oxford Street and 48 Pall Mall.
Reeves’ taxes hitting The Shard’s income
In a statement signed off by the board, the business said: “Whilst the company is very disappointed with the lack of letting progress, it has appealed the fee suspension on the basis that every effort has been made to achieve settings and that unfortunately the availability of the apartments has coincided with a well-attested and severe contraction in the ultra prime market both as to tenants seeking residential space at super prime rents and as to achievable rents.
“The long-heralded change in UK tax rules applied to overseas residents, which were accelerated by the current UK administration to apply from April 2025, have had the feared impact of driving many such investors away from the UK to escape double taxation of their worldwide income.
“This group of wealthy overseas investors has been the core constituency for super prime lettings in the UK.”
New accounts filed with Companies House show the firm’s revenue increased from £19.1m to £19.5m in 2024 while its pre-tax profit dipped from £8m to £7.4m.
They also show that the business cut its dividend in the year from £12.2m to £6.2m.
The manager of The Shard added: “Notwithstanding the wider economic difficulties the property under management saw void levels… at under three per cent in aggregate in 2024, rent collection exceeded 99 per cent in 2024 and rental reviews and letting activity continued to see growth in income.
“The company’s view remains that the best way to mitigate risk is to demonstrate effective management of the portfolio with a focus on keeping the buildings fully let with well covenanted tenants and on offering quality services in all aspects of investment, property and building management.”
The Shard viewing gallery remains in the red
In October 2024, City PM reported that the company behind the viewing gallery at The Shard remained in the red for a fourth consecutive year despite it its revenue continuing to rise.
The London attraction reported a pre-tax loss of £678,839 for 2023, after the firm also posted a pre-tax loss of £622,359 for 2022.
The attraction at The Shard has not made a pre-tax profit since it reported a total of £2.3m in 2019.
At the time Shard Viewing Gallery Management Limited, which is owned by Real Estate Management (UK), said its increased loss was because the attraction was closed for ten weeks from 16 June, 2023.
It also cited rising inflation, the cost-of-living crisis and other macroeconomic and geopolitical factors which negatively impacted its performance.