London’s poshest properties being bought at HUGE reductions not seen since 2009 due to non-dom tax modifications

Buyers of London‘s poshest homes are enjoying price discounts not seen since 2009, as the end of non-dom tax status and stamp duty hikes on second homes put a dampener on the super-prime housing market.

High end estate agent Savills has reported that the average property in prime central London, which includes well-heeled postcodes such as Knightsbridge, Mayfair and Belgravia, is currently priced 21.2 per cent lower than its peak in June 2014.

This means buyers are making a saving of £1.2million on the average prime central London property, which is currently worth £4.6million.

The deep discounts are comparable to those seen in the early 1990s and in the immediate aftermath of the global financial crisis, Savills said. 

It blamed the falls on Labour’s abolition of non-dom tax status, which will affect those domiciled for tax purposes outside of the UK from 6 April. 

Non-dom status meant these people only paid UK tax on money they earned in the UK. They did not have to pay tax to the UK government on earnings from abroad, unless they transferred the money to a British bank account. 

Bargain basement: Homes in areas such as Knightsbridge (pictured, stock image) are being heavily discounted due to the less attractive tax regime for overseas buyers

‘The abolition of the non-doms tax regime and imposition of an increased stamp duty surcharge on additional homes sits firmly behind a further easing in prices in central London,’ says Lucian Cook, head of residential research at Savills. 

Existing residents who have earnings from abroad can make use of the Temporary Repatriation Facility, a three-year scheme which allows them to bring their assets into the UK tax regime at a lower initial rate of tax. 

Meanwhile, new arrivals will get 100 per cent relief on foreign income and gains in their first four years of tax residence.

The non-dom abolition was initially tabled by the Conservative government, but Labour’s version of the policy is stricter, for example because it also brings foreign earnings into the UK inheritance tax system.

One of the most high-profile non-doms was former prime minister Rishi Sunak’s wife Akshata Murty, who agreed to start paying UK tax on her dividend income from shares in her father’s India-based IT company in 2022. 

Labour has also increased the stamp duty payable on second homes. This includes those who already own another property abroad.  

The additional surcharge payable on top of the standard level of stamp duty was increased from three per cent to five per cent at the Autumn Budget. 

Anecdotal evidence also suggests some wealthy foreign residents are considering leaving the UK because of rising crime and concerns about access to services such as emergency healthcare. 

Will prime property prices keep falling?  

Savills thinks prices in the capital’s most expensive postcodes will ‘bottom out’ this year, falling by 4 per cent over the course of 2025 before rising again.

All prime London postcodes have seen prices fall in the year to the end of March 2025, Savills said, with the exception of Notting Hill where prices stayed flat with 0 per cent growth.

The average price drop across the prime locations was 2.6 per cent.

Across the UK as a whole, house prices went up by 3.9 per cent or about £3,000 in the same period, according to separate figures published by Nationwide today, and is now worth £271,316.

Savills said Notting Hill escaped price falls because it is in high demand among domestic buyers.

Prime postcodes outside of central London, which also predominantly attract UK nationals, saw growth of 0.7 per cent. 

This includes locations like Hackney, where prices grew by 4.7 per cent, and Putney, Wimbledon and Islington, which all saw prices rise by 3 per cent.

‘Domestic buyer demand has been supported by the interest rate cuts that have already occurred, but the prospect of lower debt costs later in the year hasn’t provided a great deal of urgency among prospective buyers,’ Cook added.

Prime property outside London fell by 1.1 per cent on an annual basis.

The Midlands and North were the strongest regional performers, seeing 0.9 per cent annual growth.

This contrasts with annual falls of 4.6 per cent in prime coastal markets, which have been badly hit by the additional stamp duty surcharge on second homes.

Three of the top five performing locations are home to grammar schools: Tunbridge Wells, Sevenoaks and Lincoln.

Said Cook: ‘VAT on school fees has generally tempered demand, with some buyers sitting on their hands as they work out the impact on their household finances.

‘But on a local basis, hotspots are continuing to outperform, especially places that provide strong state schooling or access to less expensive private education.’