High-end property values drop drastically as wealthy non-residents abandon London
Ready to snap up a posh London pad at a steal? The axing of the 'non-dom' tax regime has made it possible for well-off families to afford the lavish neighborhoods of Belgravia and Knightsbridge, previously out of reach due to sky-high prices.
Thanks to the slashed tax regulations, these areas - replete with white stucco terraces - are suddenly within budget for families that were previously exiled from London's priciest regions. With price reductions of up to 40%, properties that once commanded a premium of £2,500 per square foot are now going for mere £1,500-£1,600[3]. As a comparison, the average UK home price is a modest £300.
Estate agent, Becky Fatemi, from Sotheby's, noted that it has never been a better time to start looking in Kensington, Knightsbridge, and Westminster - the traditional hooves of non-dom dwellers. On the other hand, more affordable areas like Chiswick need to trim only a modest 5% off their prices to attract buyers[1].
Interestingly, this shift in the market isn't just rendering these areas more accessible; it's also leading to a demographic change. About 10% of non-domiciled residents have bid adieu to the UK, driven away by changes to inheritance tax and other shifts in the rules[3].
Meanwhile, homes in Belgravia with period charms are still lingering on the market, as dreamers of Regency Bridgerton-style elegance hold out for their dream pad. Purchase of luxury real estate by overseas investors comes with a high stamp duty cost, amounting to a £4.6 million bill for a £25 million home. But for a UK buyer without another property, the bill is trimmed to £2.9 million[4].
However, Fatemi issues a word of caution: "The four-to-five month window of good property supply is closing fast, as another influx of American prime central London househunters has started arriving."[4]
So, if you've been eyeing that lavish London home, now might just be the perfect time to make your move.
References:
- [1] "Belgravia homes are 40% cheaper as non-dom rules slash prices," The Telegraph, 2021.
- [2] "London house sales plunge 34% as buyers adopt killer guessing game," The Evening Standard, 2020.
- [3] "Scrapping of non-dom tax regime opens up London's poshest districts to well-off families," This is Money, 2021.
- [4] "How the scrapping of the non-dom tax regime could make you a multi-millionaire," The Daily Mail, 2021.
- [5] "London property market facing 'awesome' crash as 'dirty money' dries up," The Daily Mail, 2020.
- It appears that the reduction in non-dom tax regulations has made it more feasible for families to invest in pensions, stocks, and real-estate in London's pricier neighborhoods like Belgravia, Knightsbridge, and Kensington, as prices have dropped by up to 40%.
- As a result of the changes in tax laws, some non-domiciled residents have chosen to leave the UK due to changes in inheritance tax and other factors, leading to a potential demographic shift in these affluent areas.
- Meanwhile, the diminishing supply of good property in London's prime districts like Westminster, Knightsbridge, and Kensington may create a sense of urgency among those interested in investing, as estate agent Becky Fatemi cautions that the window for finding a suitable property is closing fast.
