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The departure of non-domiciled (‘non-dom’) residents from the UK, spurred by tax reforms effective from April 2025, is transforming the upper echelons of the capital’s housing market. The exodus is particularly visible in the super-prime London property sector, where a wave of ultra-high net worth homeowners are selling, downsizing or transitioning to becoming landlords.
This reshaping of the market is redefining price dynamics, buyer profiles and rental demand across the city’s luxury districts. While the non-dom departure marks the end of an era defined by offshore wealth and tax efficiency, it has also brought about new opportunities and challenges in luxury property in London.
Increased Supply Brings Easing Prices
Over the past year, 70% of London properties valued above £15 million have been listed for sale by non-dom sellers, probably seeking to divest in light of the new tax rules. This sudden injection of high-value inventory has helped ease price growth across central London. For buyers, this has created a rare window of opportunity. Where once the market was dominated by non-dom transactions and limited availability, there is now a broader choice of luxury homes and greater room for negotiation.
Changing Buyer Profiles
As non-doms sell, the buyer mix in the luxury London property market is undergoing a shift. According to market data, American and Middle Eastern buyers now account for roughly 50% of all super-prime sales, up from 45% in 2024.
The ‘House-Swapping’ Phenomenon
However, not all non-doms are cutting ties with the capital completely. Many are adopting what analysts have termed the ‘house-swapping’ trend, selling their primary London residence while retaining a smaller property. These downsizers are relocating to more tax-favourable jurisdictions, but maintaining a London foothold for business and lifestyle reasons, ensuring ongoing access to the city while reducing tax exposure.
A Boom in the Luxury Lettings Market
The non-dom departure has triggered a surge in luxury rentals. Many wealthy owners reluctant to sell at reduced prices are opting to rent their properties instead. At the same time, incoming international professionals and families are choosing to rent first before committing to buying.
The result is a tightening supply of high-end rental homes and rising rents across the prime London property market. According to The Super Prime Report, super-prime London lettings have doubled year-on-year. For investors and developers, this signals renewed strength in the luxury rental sector, especially for well-maintained homes catering to international tenants with exacting standards.
The Drivers Behind Non-Dom Depature
The defining catalyst for these shifts is the UK government’s overhaul of the non-dom tax regime. The reforms fundamentally change how international wealth is treated in Britain:
1. Abolition of the remittance basis
Until now, non-domiciled residents could pay UK tax only on income and gains generated domestically or on overseas funds remitted to the UK. Effective from April 2025, this long-standing framework has been replaced by a residence-based system. Once an individual has been a UK resident for four years, they are taxed on worldwide income and gains.
2. The Foreign Income and Gains (FIG) regime
To soften the impact for newcomers, the government introduced a new FIG regime, offering a four-year exemption from tax on foreign income and gains. After that period, full UK taxation applies. While this offers limited breathing room, it does not restore the long-term appeal of the previous system.
3. Inheritance Tax reforms
A consequential change for wealth planning has been the decision to abolish inheritance tax (IHT) exemptions for offshore assets held in trusts. From 2025, these structures have become subject to UK IHT.
Together, the above measures have fundamentally altered the outlook for ultra-high net worth individuals. The UK, once seen as a stable and welcoming base for international wealth, now carries significantly higher ongoing tax exposure.
Implications for London’s Property Market
The implications of this policy shift stretch beyond the super-prime segment. The ripple effects of the prime London property shift are influencing broader market sentiment, investment confidence and development strategy.
A more balanced, diversified market
While the immediate result is an uptick in listings and softer prices, this could lead to a healthier long-term balance in luxury property in London. The dominance of non-dom capital had previously influenced pricing and accessibility. Their partial retreat allows for greater participation by domestic and new international buyers.
A changing investment landscape
Developers and institutional investors are beginning to adapt, shifting focus from speculative capital appreciation to sustainable rental yields. The surge in luxury lettings suggests that London’s desirability endures, but the profile of ownership and investment is evolving toward more income-based returns.
Policy and political sensitivity
Finally, the transition underscores how sensitive super-prime London property is to political and fiscal policy. Future adjustments to non-dom rules or wealth taxation could continue to drive volatility, influencing both domestic and foreign investor confidence.
Opportunities Amid the Adjustment
Despite the turbulence, London’s global status remains intact. World-class education and political stability continue to attract foreign capital. For opportunistic buyers, the market shift in super-prime London property represents a strategic entry point. Discounts, combined with softening competition, make this an appealing time for acquisition.
Equally, the rental boom has created new opportunities for those seeking income-generating assets. For investors willing to take a long-term view, the evolving structure of luxury property in London could mark the start of a new investment cycle defined less by tax planning and more by genuine lifestyle and yield considerations.
Conclusion
The departure of non-domiciled residents has brought disruption and renewal to London’s most prestigious property sector. As non-doms reposition globally, the super-prime London property landscape is transitioning from an enclave of offshore wealth to a more diverse and professionally managed marketplace. With rising rental yields, broader buyer diversity and price corrections creating openings for new entrants, the post-non-dom era may ultimately produce a more sustainable model for luxury property in London. London’s allure remains, but the nature of its ownership is changing. For the capital’s super-prime market, the change marks not decline, but evolution.
FAQs
Q. What is causing the recent rise in super-prime London property listings?
A. The increase is largely due to non-domiciled residents selling as a consequence of the 2025 tax reforms taking effect, adding significant supply to the market and easing price pressures.
Q. How have prices been affected in the super-prime market?
A. Prices in super-prime London property areas have softened as some sellers accept larger reductions to achieve quick sales.
Q. Who is buying luxury property in London now?
A. American and Middle Eastern buyers dominate current activity, alongside a growing number of wealthy domestic purchasers who are taking advantage of market corrections.
Q. What are the key tax changes driving non-doms to leave?
A. The abolition of the remittance basis, the new Foreign Income and Gains regime and the removal of inheritance tax exemptions for offshore assets have made the UK less favourable for non-dom residents.
Q. Why are luxury rentals booming?
A. Many former non-dom homeowners are renting their properties instead of selling, while new international arrivals prefer to rent before purchasing, tightening supply.
Q. What areas of London are most affected?
A. Super-prime central districts such as Kensington, Mayfair, Chelsea and Belgravia have seen the greatest increases in listings and price adjustments.
Q. Could prices fall further?
A. Modest further softening is possible as more stock enters the market, though long-term fundamentals for luxury property in London appear to remain strong.
Q. Will London lose its status as a global property hub?
A. This seems unlikely. Despite the tax reforms, London retains an enduring appeal internationally due to its legal stability, global connectivity and cultural influence.
Additional Sources:
https://thesuperprime.com/news/prime-london-lettings-record-breaking-luxury-rental-market-2025/
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