Super-rich ditch London mansions for flats, developer says
London’s super-rich are swapping mansions for pieds-à-terre as they seek to wind down their presence in the UK or exit altogether, one of the top developers in the capital has said.
Alex Michelin, co-founder of Valouran, said many high net worth individuals (HNWIs) remained attracted to London but were scaling down their property investment to reflect plans to spend more time elsewhere.
“Whilst it is well documented that the removal of non-dom tax status has prompted many HNWIs to leave the UK entirely, across the Valouran portfolio, we have also observed that a lot of non-domiciled buyers are shifting the type properties they purchase, rather than not purchasing at all,” Michelin told CityAM.
“While they may no longer move here on a full time basis and base their families here, London’s appeal as a global city remains strong. These buyers continue to visit, conduct business, and socialise in the city, albeit for fewer months now.
“Consequently, while demand for larger homes among this cohort has softened, interest in smaller properties…remains robust.”
Read more: How London’s luxury property market ground to a halt
Mansion tax on the cards
The super-rich rush to downsize is the latest sign of an exodus of high net worth individuals as they baulk at the removal of non-dom tax advantages by Chancellor Rachel Reeves as well as the threat of further tax hikes at next month’s Budget.
The trend could also be fueled by speculation that Rachel Reeves is set to introduce a mansion tax, reviving plans that were first mooted by former Labour leader Ed Miliband a decade ago.
Under the plans, owners of property worth more than £2m would face an annual surcharge.
“I can’t remember a time where I have seen so many kites flown specifically related to high value property so far in advance of a budget,” said Lucian Cook, head of residential research at Savills.
“It feels like what is being discussed much more here is bringing higher value property within the ambit of capital gains tax.
“That means there’s going to be caution in the market, because you can’t extract the same value from your property…so it’s definitely not a guaranteed revenue raise.”