The largest two Swiss banks have seen contrasting property loan stories in the high end of the London property market, underscoring the volatility of a sector affected by Brexit and shifting fortunes of foreign investors.

Recent days have seen contrasting stories about multi-million UK properties involving two of Switzerland’s largest banks. In one case, UBS is reportedly trying to foreclose on a $26.6 million loan on a former billionaire’s London house. In the second matter, Credit Suisse has made a loan to a London homeowner of a $209 million property. 

In their varying ways, the stories highlight the eye-popping sums involved in the UK real estate market, the predicaments of the banks, and the trends at work in the global economy. 

UBS declined to comment to WealthBriefing about a Bloomberg report stating that it is trying to foreclose on the loan on Vijay Mallya’s house that looks over Regent’s Park. Mallya, who is from India, is fighting extradition in a separate case. UBS said that Rose Capital Ventures, the company that took out the mortgage, has not repaid the loan.

The newswire quoted UBS’ attorney, Thomas Grant, as telling a London court that Mallya wanted to turn the site, once used for offices, into a “beautiful palatial property”. “At the end of the day we are simply saying you haven’t paid your mortgage loan, as per the term, therefore we seek a remedy given to us, which is possession,” Grant was quoted as saying. 

Rose Capital Ventures is based in the British Virgin Islands and owned by a Mallya family trust, UBS’ London court filings are quoted as saying. Mallya is fighting a number of legal cases. At the root of his troubles are $1.3 billion of loans he took out for his now defunct Kingfisher Airlines.

Credit Suisse
In the second case, the owner of a property at One Hyde Park, in fashionable Knightsbridge, borrowed money from Credit Suisse to pay for it. The owner, listed as two companies based in Guernsey, paid $209 million for the apartment (source: Bloomberg, 9 October), taking a mortgage of £80 million. Credit Suisse declined to comment to this publication when asked about the matter.

Some weakening of sterling since the Brexit referendum has made UK property more affordable internationally, although government rule changes about tax exemptions on foreign-owned property and the squeeze on the status of non-domiciled residents has taken some heat out of the prime London property market. In the 12 months to the end of June this year, prices slipped by 1.8 per cent. By comparison, the main 20 global cities tracked logged a 6 per cent rise, with some cities, such as Singapore, rising by 11.5 per cent from a year earlier.

London’s prime property market may not be quite as frothy as it was since the Brexit shock and the gradual tightening of taxes and interest rates, but it is certainly not dull.