Prime London home prices slump on non-dom clampdown, agent says
Prices are now down 20% since their last peak a decade ago
[LONDON] Britain’s clampdown on wealthy foreign residents is having a chilling effect at the top of London’s housing market, with prices falling by the most in over four years.
Estate agent Knight Frank said that average prices in prime central London slumped 3.2 per cent in the year to August, the biggest drop since March 2021. Prices are now down 20 per cent since their last peak a decade ago.
The figures suggest the fallout from a squeeze on non-domiciled residents is spreading amid lingering concerns of a further tax raid on Britain’s wealthy as the government scrambles to raise money. Prime central London properties are those in well-heeled parts of the capital, such as Kensington & Chelsea, Westminster and parts of Islington.
Knight Frank’s head of residential research Tom Bill said that reforms to how non-doms are taxed has sent “a message” to overseas buyers. He also pointed to the uncertainty facing the wealthy ahead of the autumn budget.
“The UK is probably feeling slightly less friendly if you are a wealthy overseas investor than it was a few years ago, so that demand has fallen away slightly from overseas,” he said. “There’s a mood of hesitation, I think in markets such as prime central London because of the speculation around what might happen around taxes in general.”
The previous Conservative government and current Labour administration have targeted the preferential tax treatment previously enjoyed by non-domiciled residents. The Tories scrapped rules that allowed non-doms to avoid UK taxes on their overseas earnings for up to 15 years, replacing it with a shorter time frame. Labour then went further by eliminating inheritance tax breaks on their overseas assets.
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There have been warnings that an exodus of highly mobile wealthy foreign individuals could curb the amount generated from the non-doms reforms.
Fears of a further tax raid are mounting in the run-up to the Nov 26 budget as Chancellor of the Exchequer Rachel Reeves looks to find tens of billions of pounds to meet her self-imposed fiscal rules. Her razor-thin headroom is expected to be wiped out by higher bond yields and a weaker growth outlook. BLOOMBERG
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