Non-doms are leaving the UK however promoting their London dwelling, for some, is clearly a step too far, in response to Knight Frank.
It could seem that some international traders are considering past the five-year lifetime of this Parliament.
“Underneath the outdated guidelines, non-doms might reside within the UK with out paying tax on abroad wealth,” mentioned Knight Frank’s Tom Invoice. “New laws are tighter and include a four-year time restrict, which suggests nations like Italy, which has an annual flat tax that ringfences abroad property, have develop into extra enticing.
Knight Frank calculated final month that the federal government has misplaced greater than £400m in stamp obligation on gross sales above £5m for the reason that reforms had been first flagged by Conservative chancellor Jeremy Hunt in March 2024.
Nevertheless, provide has not risen noticeably within the capital’s highest value brackets.
Invoice defined: “The variety of new gross sales directions within the first six months of the yr in prime central London (PCL) was 32% greater than the five-year common (excluding 2020), Knight Frank knowledge exhibits.
“Above £5m there was an equal enhance of 14% and above £2 million, there was an increase of twenty-two%. In different phrases, property listings within the first half 2025 had been skewed in the direction of the lower cost brackets.”
Total, provide is rising as a result of inventory overhang from March’s stamp obligation cliff edge, consumers re-activating plans placed on maintain final yr as a result of political upheaval, landlords promoting resulting from pink tape and vacation houses coming to the market resulting from current council tax adjustments.”
“Whereas there’s proof of non-doms leaving London and taking their tax {dollars} with them, it doesn’t imply they’re essentially promoting up,” mentioned Stuart Bailey, head of prime central London gross sales at Knight Frank.
“Many are conserving their property due to London’s long-term credentials in comparison with different components of the world. In some circumstances, they’re renting out their houses as a short-term possibility and searching past the subsequent 4 years of the present authorities,” Bailey added.
It has led to stronger exercise within the prime and super-prime lettings market within the capital.
The variety of exchanges above £5m in London fell 15% within the yr to June versus the earlier 12 months, Knight Frank knowledge exhibits. Under that threshold, the numbers had been flat.
That mentioned, demand total is recovering effectively following a weak begin to Q2, which was marked by uncertainties over world commerce and a stamp obligation cliff edge. The variety of presents made in PCL and POL in June was 21% greater than the identical month final yr.
Nevertheless, on account of the harder political panorama, common costs in PCL fell 2.5% within the yr to June, which was the widest decline since April 2024 and the second largest fall since March 2021.
In the meantime, costs in prime outer London (POL), the place demand is pushed by home and needs-based consumers, are being squeezed by greater ranges of provide.
Common costs in POL rose 0.9% within the yr to June, which is down from a determine of 1.5% in March. A decline of 0.4% within the three months to June was the steepest quarterly fall since November 2023.
It echoed what came about within the wider UK market in June, with Nationwide posting an annual enhance of two.1%, which was the slowest tempo of progress in two years.
So far as the prime London lettinsg market is worried, landlords promoting a first-rate London property face the problem of downwards stress on costs, Knight Frank has reported.
Extra are exploring a sale as a result of harder regulatory surroundings. Along with the prospect of stricter vitality effectivity guidelines, the forthcoming Renters Rights Invoice might make it extra onerous to regain possession of a property and raises the danger of void intervals.
Nevertheless, attaining their asking value will not be assured.
Common costs in prime central London (PCL) fell 2.5% within the yr to June, which was the second largest fall since March 2021, partially as a result of political local weather.
In the meantime, costs within the extra home and needs-driven market of prime outer London (POL) are below stress resulting from greater ranges of provide. In addition to an overhang of inventory following March’s stamp obligation cliff edge, there’s competitors from different landlords who’re additionally attempting to promote.
The result’s that some homeowners are caught within the no man’s land between promoting and renting out their property.
“There’s a sense of limbo in the intervening time within the lettings market. We have now the Renters’ Rights Invoice on the horizon however there’s hypothesis that it might be delayed,” mentioned Gary Corridor, head of lettings at Knight Frank.
“These landlords which can be attempting to promote are discovering they aren’t essentially in a position to take action shortly as a result of there’s a lot inventory round. Various them are due to this fact bouncing between lettings and gross sales and again once more after failing to get their asking value.”
As extra landlords try to promote, the result’s fewer new properties accessible to let.
The variety of lettings directions from landlords fell 8% within the yr to June in comparison with the earlier 12 months, Knight Frank knowledge exhibits.
It tallies with knowledge from Rightmove, which exhibits the variety of new rental listings in prime central and outer London was 11% under the five-year common (excluding 2020) within the first six months of the yr.
There are stories that the Renters Rights Invoice faces delays and should not come into pressure this yr. After final week in Parliament, it actually can’t be essentially the most urgent situation dealing with the federal government.
Common rents in PCL elevated 1.5% within the yr to June however rose 1.7% over the primary half of the yr. It was the largest enhance over a six-month interval since January 2024, a interval when rental worth progress was cooling after the market skilled provide shortages throughout the tail finish of the pandemic – see chart.
It demonstrates how rents have began to climb greater as inventory ranges fall. In POL, annual progress of 1.5% was pushed by a rise of 0.8% during the last quarter. The three-month progress determine was final surpassed in November 2023.
What occurs subsequent to prime London rents relies upon greater than regular on the efficiency of the gross sales market.
