London's appeal to the world's wealthiest remains strong despite non-dom abolition

Perhaps unsurprisingly, London is location to 230,000 millionaires, cementing its presumption arsenic Europe’s hotspot for high-end residential.

CBRE’s inaugural Luxury Real Estate study delves into the interaction of the luxury improvement marketplace connected wider existent estate, and points to a caller spur successful request crossed 3 residential categories: Luxury, Ultra-Luxury, and Exceptional.

Over the past 3 years, conscionable implicit 60% of location income were astatine the 'Luxury' terms constituent (£1,440 per sq ft), a alteration from the longer-term mean of 70% betwixt 2014 and 2020. In contrast, determination has been an summation successful the stock of income for ‘Exceptional’ properties (£3,090 per sq ft), much than doubling from 8% betwixt 2014 and 2020, to 17% betwixt 2021 and 2023. This important emergence of transactions astatine the apical extremity of the marketplace highlights London’s presumption arsenic a planetary hub for residential concern and a mainstay for existent luxury living.

The UK has ever been charismatic for residential investment, peculiarly overseas buyers, owed to its historically favourable “remittance basis” taxation regime, which is 1 of the astir appealing successful the world. This has had a peculiar interaction connected precocious extremity pricing successful London, wherever prices per sq ft are importantly higher (£2,320) erstwhile compared to cities similar Paris and Amsterdam. Amsterdam is becoming much fashionable among high-net-worth individuals (HNWI) owed to a taxation vantage that allows expatriates to person 30% of their gross wage tax-free for the archetypal 5 years, contributing to a circa 40% summation successful millionaires successful the metropolis betwixt 2013 to 2023. Although it remains costly by examination to different cities. It does, however, person appealing taxation advantages for individuals looking to found companies successful The Netherlands.

Our existent Government has stated its intentions to guarantee the UK is an charismatic jurisdiction to allure (and retain) ultra-high nett worthy (UHNW) individuals. However, the Chancellor, Rachel Reeves, delivered her archetypal Budget past period and the announcement of a emergence successful inheritance taxation is definite to person implications connected the HNWI marketplace successful London and the UK much broadly.

The taxation for non-UK domiciled (non-doms) individuals volition acquisition important changes, with the remittance ground of taxation being abolished from April 2025. Abolishing the non dom taxation mightiness not beryllium arsenic detrimental arsenic initially thought, arsenic the remittance ground was analyzable and costly, but its interaction volition surely beryllium felt.

The positives are that from April 2025, caller UK residents who haven't been taxation residents successful the past 10 years tin bring their offshore income and gains to the UK tax-free for the archetypal 4 taxation years, a large positive for those seeking acquisition successful the UK.

Additionally, non doms already residing successful the UK tin usage the 'Temporary Repatriation Facility' from 6 April 2025 to remit overseas income and gains astatine a peculiar taxation complaint of up to 15%, arsenic opposed to the existent complaint of up to 45%, with a three-year play to determine and nary bounds connected the amount.

Exempting 2nd homes from changes to Capital Gains Tax (CGT) should boost capitalist confidence, but higher stamp work connected 2nd properties whitethorn enactment arsenic a deterrent fixed its summation from 3% to 5%.

And erstwhile we look beyond the luxury market, the increases to Stamp Duty Land Tax (SDLT) connected 2nd homes is inactive material. A £300,000 2nd spot present incurs an further £6,000 successful tax, and a non-UK nonmigratory purchasing a £5m 2nd location faces an SDLT complaint of £861,250, up from £761,250. This accrued taxation load materially affects backstage landlords, who ain astir 2nd homes, and could dissuade would-be landlords from entering the market, creating a apt impact connected the proviso of caller homes.

Although a SDLT emergence for overseas buyers was anticipated, fewer expected it to use broadly to each 2nd location buyers. In reality, we volition spot this summation being absorbed and reflected successful asking prices.

Other cities successful Europe are coming to the forefront for HNWIs, specified arsenic Milan and Geneva. All connection favourable taxation regimes and charismatic climates, bringing successful the question - does London person the powerfulness to stay Europe’s apical prime for HNWI’s?

It has ever been costly to bargain a location present and that hasn’t changed. There are fewer cities up of, oregon straight comparable to London and it remains the bellwether.

A premier absorption for investors, London is recognised arsenic Europe's fiscal centre and a person crossed galore industries including media, sports and amusement to sanction a few. Also successful request are its prestigious backstage schools and backstage wellness services, nevertheless the erstwhile whitethorn present travel into question with the removal of VAT exemptions and concern rates relief.

CBRE’s income information points to London’s resilience. This year, we’ve recorded a 33% summation successful full GDV for agreed sales. A ample percent of London’s luxury transaction volumes are inactive coming from the astir affluent boroughs including Kensington, Chelsea and Westminster, collectively accounting for 77% of transactions. This fig has remained the aforesaid since pre-pandemic, demonstrating that appetite astatine the apical extremity of the marketplace seldom moves from these mainstay locations.

Whether the latest Government argumentation volition person an interaction connected HNWI involvement successful London remains to beryllium seen. But what our study resoundingly proves is that our superior holds a chiseled presumption and has a important power connected the residential existent property marketplace globally, underpinned by the luxury pricing achieved per sqm compared to its European counterparts.

We indispensable proceed to bolster London’s presumption and support its enduring entreaty arsenic the luxury residential destination of choice, oregon other we hazard losing HNWIs – and with that, a nonaccomplishment of idiosyncratic and concern business successful our capital.

Sharief Ibrahim is caput of residential bureau astatine CBRE