Safe havens, not tax havens
Making sense of the latest trends in property and economics from around the globe
3 minutes to read
When choosing where to live, wealthy individuals typically prioritise security, stability, privacy, and a tax regime they perceive as fair. Other amenities matter too - such as access to good schools - but nations that deliver convincingly on those core criteria tend to see consistent inflows of ultra-high-net-worth individuals.
The wealthy are more mobile than ever, and even minor changes to these key factors can trigger significant shifts in where they choose to live. New Zealand, for example, eased the rules of its golden visa programme in February and the changes came into effect last month. The revamped programme attracted 65 new applications in the first six weeks, 55 of which came from the US, the FT reported on Wednesday.
"Many of the people applying are of a different political persuasion to President Trump," Stuart Nash, a former immigration minister who now runs the consultancy Nash Kelly Global, told the paper. "In the past, the vast majority of applicants were looking for tax havens... now they’re looking for safe havens," he added.
Sore subjects
Golden Visas are a sore subject among the political leaders of western economies. Aside from concerns over corruption and money laundering, the EU believes these schemes turn citizenship and residence rights into commodities that can be bought, undermining the fundamental principles of EU citizenship. A growing body of evidence also indicates the economic benefits of Golden Visas are negligible - the resulting funds generally end up in passive investments rather than the productive sectors of the economy.
It's been well over a decade since Portugal introduced what is considered to be the first Golden Visa and nations are still struggling to get it right, but these challenges pre-date that by centuries.
Studies from Scandinavia showed limited economic effects when tax-motivated wealthy individuals opted to leave, for example. When the UK tightened its non-dom rules, increases in reported investment income came almost entirely from foreign sources becoming taxable, not new investment into the economy. Policy makers seem to be taking the view that tax motivated movers are less likely to make productive investments than those seeking out political stability, personal safety, and rule of law.
This view is driving a shift in how governments treat and tax the wealthy. Portugal, Greece, Singapore, and the UAE have all reformed their golden visa and residency-by-investment programs to favor active investments that create jobs or drive innovation. The UK's reforms to the non-dom regime, on the other hand, were criticised not just for their execution, but for a lack of vision. Ministers dismantled a long-standing framework without introducing compelling alternatives that would maintain the UK's competitiveness in attracting global wealth.
A balancing act
The government is clearly aware that it’s dropped the ball, and is now scrambling to correct course. Prime Minister Keir Starmer’s administration is in the early stages of drafting a new investor visa scheme targeted at those willing to fund strategically important sectors like artificial intelligence, clean energy, and life sciences, Bloomberg reported last week. The aim is to counteract the economic blow from recent tax increases and tougher immigration rules, which have prompted a noticeable outflow of the UK’s wealthiest residents.
How this transition is handled will likely play a key role in shaping private real estate investment in the coming cycle. While policymakers may aim to steer affluent individuals towards backing businesses rather than focusing exclusively on property, the two are intertwined.
Back in New Zealand, Prime Minister Christopher Luxon thinks he's got the balance right, though it's too early to tell. In the first two weeks after the investment scheme's relaunch, 44 applications were submitted amounting to at least US$154 million in potential investments - that's in addition to the US$20 million already approved.
The potential gains are significant—Luxon's government estimates the scheme could attract billions in investment and drive substantial economic growth.
In an increasingly volatile geopolitical climate, the value of stability and security, especially for the globally mobile wealthy, is only rising.
Striking the right balance will be crucial, and no country has fully succeeded yet. Could the UK be the first?
In other news...
Rayner admits the 1.5 million homes target is a stretch (Bloomberg).