London’s super-prime £10 million plus market has experienced both a sluggish July and August, as uncertainty around the election has been replaced with nervousness on what we’re going to see in the budget at the end of the month.
There were 22% fewer transactions in the year to July than the previous 12 months
Investors are worried about changes to non dom rules, as well as alterations to capital gains tax, inheritance tax, carried interest for private equity funds and pension tax relief. That’s on top of new VAT rules for private schools from January.
Stuart Bailey, head of London super-prime sales at Knight Frank, said: “It’s the overall sense of uncertainty rather than any single measure that is making some people hesitate.
“Despite the fact supply levels are good, buyers at this level are very discretionary.”
Some 74,000 individuals currently live in the UK but don’t pay tax on their global income.
The prospect of tighter rules and uncertainty over new inheritance tax regulations in particular mean some have already left the UK.
Bailey added: “I would say that about 30% of deals above £10 million in London have involved non dom buyers over the last two years.
“We completed more than £100 million of super-prime deals in the six weeks after the election, which was 20% higher than last year. It shows that irrespective of what may come in October, many buyers believe prices are at a low ebb.”
Average prices in prime central London above £10 million are 14% below their last peak in September 2015, Knight Frank data shows.
For buyers denominated in or pegged to the US dollar, the equivalent decline is 25% given the weakening of the pound since the Brexit vote against the dollar.
