Non-doms are trying to sell London homes, but no one wants them
There was a 22% year-on-year jump in these homes on the market at the end of May
[LONDON] The number of London homes for sale at £5 million (S$8.6 million) or more rose to the highest on record last month, as the nation contends with the departure of wealthy foreigners looking to escape tax hikes.
There was a 22 per cent year-on-year jump in these homes on the market at the end of May, according to data from researcher LonRes. However, there were 15 per cent fewer deals compared with the same month last year, hinting that the UK’s decision to abolish tax breaks for non-domiciled residents has weakened demand.
“There are many motivated vendors out there, with high numbers of new instructions and price reductions,” said Nick Gregori, head of research at LonRes. “But it seems the available stock is not necessarily what buyers are looking for – and even when it is, it might not be at a price they want to pay.”
A number of wealthy individuals are leaving the UK after it scrapped a two-century-old tax break for about 74,000 people with non-domiciled status in April. A Bloomberg analysis of 5 million company filings shows a big spike in departing business leaders over recent months, with more than 4,400 disclosing an overseas move in about the last year.
But those looking to sell their luxury London homes are facing a slump in demand driven by the same pressures that have prompted them to consider leaving the UK. There were 45 per cent more price reductions on £5 million-plus properties between January and May than the same period last year, as vendors resorted to discounts in a bid to attract interest, LonRes data show.
“Values in most markets haven’t seen much growth but there isn’t much confidence that they have bottomed,” LonRes’ Gregori said. “Unfavourable tax changes continue to limit demand.”
Still, reports that Chancellor of the Exchequer Rachel Reeves is considering reversing a decision to charge inheritance tax on the overseas assets of non-doms could ease the strain on London’s luxury housing market. Property adviser Becky Fatemi said the inheritance tax changes were “the nail in the coffin” that “tipped many non-doms over the edge,” adding that a U-turn could convince some wealthy individuals to stay in the UK and even tempt a few to come back.
“It won’t reverse the exodus overnight, but it could stop the bleeding,” said Fatemi, executive partner at UK Sotheby’s International Realty. “We’ve seen clients go to extraordinary lengths – restructuring, relocating, spending significant time and money – simply to avoid a punitive future for their estates.” BLOOMBERG
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