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Non-Doms Leave London but Keep Properties: What It Means for Investors

Update The Impact of Non-Doming: Staying in London Yet Leaving Recent changes in the UK tax rules have prompted many high-net-worth individuals, known as non-doms, to reconsider their residency status. While some are choosing to leave London altogether, a surprising trend is emerging: many are retaining their properties in the city. This phenomenon highlights the unique status London holds in the global real estate market. Understanding Non-Doms and Their Choices Traditionally, non-doms enjoyed significant tax advantages, allowing them to reside in the UK without paying taxes on their overseas wealth. However, with new regulations making these benefits harder to come by, an increasing number of non-doms are opting to relocate to countries with more favorable tax regimes, such as Italy, where expatriates can take advantage of an annual flat tax. According to Stuart Bailey, head of prime central London sales at Knight Frank, this shift doesn't necessarily equate to a total sale of properties. Rather, many non-doms are keeping their London homes as they appreciate the city's long-term appeal over other global capitals. "Many are keeping their property because of London’s long-term credentials compared to other parts of the world," Bailey stated. Current Trends in the London Property Market As of mid-2025, property listings in prime central London (PCL) have shown a notable skew towards lower price brackets. Despite economic uncertainty, new sale instructions in this area have surged by 32% compared to the five-year average (excluding 2020). In contrast, for properties priced above £5 million, the increase sits at a softer 14%. Furthermore, average prices in PCL have seen a decline of 2.5% as of June 2025, marking the most significant drop since April 2024. This downturn in prices reflects broader market pressures but also offers opportunities for savvy investors. Prime outer London (POL) has experienced a 0.9% increase in prices, driven largely by domestic buyers looking for homes post-pandemic. Rental Market Dynamics Amid Changing Regulations The lettings sector is also experiencing a notable sense of uncertainty. Gary Hall from Knight Frank indicates that landlords are in a challenging position, particularly with the upcoming Renters’ Rights Bill that might affect rental regulations. Many property owners trying to sell may be reluctant to let go, particularly if they're unable to secure their asking price, leading to a back-and-forth between letting and selling. This environment can create opportunities for investors, as landlords who cannot sell might turn to more favorable leasing terms, making the rental market dynamic and, at times, lucrative. Global Comparisons: The Continuing Allure of London Despite the attractive benefits of moving abroad, many non-doms choose to remain connected to London through their property investments. London maintains a reputation as a global financial hub, drawing investors from around the world due to its culture, education, and economic opportunities. This unique position reinforces the idea that while relocation may be an option, the intrinsic value of London properties endures, making them compelling assets for long-term holding. The Road Ahead: Predictions for the Market Looking towards the future, it's essential to monitor how the regulatory landscape continues to shape the property market in London. As tax frameworks evolve and the demand for both rental properties and sales continues to fluctuate, potential buyers and investors should remain vigilant. Understanding these dynamics will empower them to make informed decisions and seize opportunities in a continuously shifting market. In conclusion, the story of non-doms leasing property while adjusting to new tax realities illustrates a more extended narrative about London's enduring appeal. With the proper insights, there's potential for growth, making it an exciting time for property owners and investors in the UK market. If you're interested in navigating these changes and exploring opportunities, stay informed about market trends that can influence your investments.