1st July 2025
9mins
Is There a Non Dom U-Turn on the Cards?One of the biggest challenges being faced in Prime Central London (PCL) right now, is the hangover that April’s end to the non dom tax regime has caused.
The decision to remove wealthy international residents’ ability to avoid paying full UK tax on overseas earnings, has caused an exodus of the world’s wealthiest from the British capital. The move has dealt a blow to PCL and the financial cost to the Treasury has been immense.
According to Knight Frank – which earlier this year cut its price growth projection for PCL from two per cent to zero – the change created a £401m Stamp Duty black hole in the year to May, thanks to a collapse in the number of £5m+ sales in central London, down 14 per cent year on year.
Meanwhile, the newly-published Henley Private Wealth Migration Report 2025, found that the UK will lose 16,500 millionaires this year, the largest net outflow of high-net-worth individuals experienced by any country since the firm began tracking millionaire migration a decade ago.
Unsurprisingly, the Government is alarmed, and according to reports, Chancellor Rachel Reeves is considering removing a key plank of the new regime – imposing inheritance tax of 40 per cent on resident’s worldwide assets.
“I don’t think this will suddenly bring back people who have already left – unless they are having a horrible time elsewhere,” said Camilla Dell, Black Brick’s managing partner. “Relocation is not for the fainthearted, it is not an easy thing to do and it is not cheap. But it may stop people who are thinking about going, and it will be good for sentiment.”
Years of tinkering with the regulations surrounding rental properties – notably Stamp Duty hikes on second homes introduced in 2014 and 2016, Capital Gains taxation, and a ban on offsetting mortgage interest payments against tax – dealt what has felt like a death knell to small scale rental investment in London and the UK as a whole.
But as house prices have fallen and rents increase, the prospect of buying a London property to rent it out is starting to look much more appealing. “We have seen a bit of an uptick in investors looking to buy in PCL – something we have not seen for quite a while,” said Dell.
Tom Kain, a partner at Black Brick, notes that investors can find properties which will offer a gross yield of around five per cent, which is not only a little more than they would earn by simply putting their assets into a savings bond, but gives them the hope of capital growth down the line.
Ironically, jitters amongst owner occupiers – of which more later – are helping to fuel this trend. People who could quite easily afford to buy a London property are increasingly coming to Black Brick asking to be found a comfortable rental while they get to know the city, and await a return to price growth before putting down roots.
By all statistical measures, the latest PCL research published by analyst LonRes, makes alarming reading.
Sale prices are down 3.4 per cent year on year, and stand some 14 per cent below where they were in the run-up to the pandemic.
Transaction levels, already low, are now 36 per cent below levels seen in May 2024, and the number of homes under offer is also falling. Meanwhile, stock is gathering dust on the metaphorical shelf. The malaise is particularly pronounced in the £5m+ sector, traditionally dominated by overseas buyers.
“I think that people are just really nervous about the fall out of all the wealthy people leaving,” said Dell. “Buyers are nervous about catching a falling knife. Our buyers at the £10m, 15m, £20m level totally get that it is a buyers’ market, but they are wondering how much further prices will fall.”
Of course, there will always be people who want a London home and the escalating crisis in the Middle East only serves to underline the city’s reputation for peace, stability, and safety, as well as a comfortable year-round climate and world class schools. Beyond the Middle East, the UK is not the only nation cracking down on wealthy residents – from Switzerland to Italy to Portugal, governments are tightening up on residency arrangements and tax. “The grass is not always greener,” said Dell.
Black Brick’s deal book for the first half of 2025 shows that our client numbers have barely shifted year-on-year, but the amount they are spending is going up. Year on year, we’ve seen an increase in average purchase price from some £2.8m to around £3.9m.
This comes, despite the fact that the size of discounts we are achieving is growing. “Sellers are now very pragmatic,” said Dell. “I think people will look back at this as a golden moment to buy real estate at a distressed price.”
Amidst a backdrop of falling prices, there are a couple of neighbourhoods in PCL which are – amazingly – seeing prices continue to grow.
Postcode level analysis, again from Lon-Res, has found that South Kensington and a swathe of the West End (Fitzrovia, Bloomsbury and Soho), both appear to have turned a corner with prices starting to climb in the past year.
South Kensington, hugely popular amongst European buyers for generations, was badly hit during Brexit, hitting a low of around £1,500 per sq ft last year. At that point, Kain believes its average prices hit a critical mass and began to rebound to the current circa £1,700 per sq ft level. “They have reached a level which makes sense to people as good value to live in a really great part of central London,” he said.
The West End also seems relatively affordable to buyers, particularly since the regeneration of King’s Cross hiked prices north of the Euston Road, and Crossrail began providing super-fast, comfortable train journeys to Heathrow, the City, and Canary Wharf.
At around £1,600 per sq ft, the West End also looks like brilliant value, right on the doorstep of popular Marylebone currently priced at almost £1,800 per sq ft, even though it is just a few minutes’ walk away.
Pretty, villagey, and incredibly leafy, the most surprising thing about Rightmove’s revelation that the London Borough of Richmond has become the latest corner of the capital to join the million pound club, is that it wasn’t there already.
But, over the past year, the property portal has calculated that the average sale price in the borough has inched into seven figures for the first time, at a little over £1.1m.
Of course Richmond village, nestled by the River Thames, has been in this category for years. The best of its country-manor style homes sell for £10m or more. But more suburban neighbourhoods like Barnes, Sheen, Mortlake, and Kew, with their solid period housing stock and well-loved high streets, have started to grow in popularity, driving average prices upward. They offer, quite simply, the chance to experience market town style living whilst still remaining in the city.
“This is a story about how the outer boroughs of London are performing very differently to PCL,” said Kain. “These are places where people tend to settle long term so the supply is fairly restricted, the schools are very popular, state and private, there is lots of open space, and they are ideal for all those who have been called back into their offices two to three days per week.”
Richmond also enjoys great press. It was recently named the best place to live in Britain by the Sunday Times.
The other factor in Richmond’s favour is that it is not dependent on international buyers. Its bread and butter is domestic buyers – who have so far represented 41 per cent of Black Brick clients this year compared to 25 per cent last year – and as a result, its £2m to £3m family homes market is performing strongly.
Our clients wanted to invest in a family apartment in London. They are based in Switzerland but their children are working or studying in the UK, and they wanted a prime central flat which they could use when visiting.
Their wish list was challenging. The property had to be in Mayfair or Marylebone, in a secure, high quality apartment. And since the wife is an interior designer, she had a keen eye for good layouts, high ceilings and plenty of natural daylight.
We found them a newly-renovated first floor apartment on sought-after Mount Street, which was being discreetly marketed off market. This is typical of Mayfair, where the best opportunities rarely hit the open market.
Now that they have bought the flat, the clients have engaged Black Brick’s private client property management team to make sure the property is secure and meticulously maintained and ready for them whenever they visit.
Long considered one of north London’s premiere streets, leafy Winnington Road is lined by large, ambassadorial residences with an average sale price of almost £12m.
But what might a house yet to be built be worth?
A client came to Black Brick for help with an unusual scenario. During the pandemic they had bought a rare empty plot of land on the road with planning permission to build a 16,000 sq ft home. For various reasons, they never started the work and rather than hold on to what was effectively a very expensive strip of scrubland, they eventually decided to sell up and move on.
To inspire buyers, Black Brick commissioned new images showing what the house could look like once built, and we also used video and drone footage to bring the location and its potential to life. We advised on pricing too and, through our network of contacts, managed to find the perfect buyer willing to exchange and complete rapidly.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.
