The changing landscape of London’s property market: A strategic outlook from a buying agent’s perspective
January 2025 - PrimeResi
The prime London property market is undergoing a profound transformation, driven by a complex interplay of economic trends, political shifts and evolving buyer behaviours.
London remains a global financial hub, and for many high-net-worth individuals, it continues to be regarded as a long-term investment opportunity. However, recent shifts in government policy, particularly under Labour’s aggressive tax reforms including significant changes to inheritance tax, targeting offshore trusts, capital gains tax and entrepreneurs’ relief—are compelling some of the wealthiest individuals to reconsider their residency.
‘Early signs indicate that we may see a robust spring market, with more clients already onboarded this year compared to the second half of 2024’ targeting offshore trusts, capital gains tax and entrepreneurs’ relief—are compelling some of the wealthiest individuals to reconsider their residency. The government’s approach, building on the Conservative’s 2024 tax crackdown on non-doms,has seen 10,800 millionaires leaving the UK, which is a 157% increase on 2023, according to New World Health and Henley & Partners, to relocate to more favourable tax jurisdictions. Rachel Reeves’ latest announcement to ‘increase the generosity of the temporary repatriation facility’ is quite frankly too little, too late.
While media coverage often sensationalizes these trends, the reality is more nuanced. At the super prime level, many have already left or are in the process of leaving, which will have a significant impact on the top tier of the market which has a much greater proportion of non-doms. However, at the more normal levels there is less mass exodus than might be assumed, particularly for families with young children, with many choosing to remain in London for its unparalleled culture, education, rule of law and security. These factors continue to retain significant weight in the decision-making process, despite the ongoing political and tax changes.
2024 was particularly challenging for the prime London market. High interest rates, a change in government and a highly anticipated budget, all contributed to lower transaction volumes. Despite these conditions, our firm experienced a surprisingly strong financial performance, bolstered by several large transactions. One of these was a wealthy non-dom client looking to take advantage of the Temporary Repatriation Facility, which we’re hoping will also attract many others. The market, as always, is highly responsive to sentiment and while it’s early to predict, we are seeing strong pent-up demand, especially from the domestic market. Early signs indicate that we may see a robust spring market, with more clients already onboarded this year compared to the second half of 2024, which was weaker than average. Particularly notable is the growing influx of American buyers, spurred in part by domestic political and social instability, as well as the quest for high-quality educational opportunities for their children. Given that American citizens are taxed on their worldwide income, recent tax reforms in the UK have not impacted them in the same way and coupled with the strength of the dollar, further fuelling their interest in the London property market.
However, navigating the regulatory landscape remains a challenge. Key legislative shifts—such as the implementation of the Leasehold and Freehold Reform Act 2024, which could fundamentally reshape property transactions—require careful consideration. For example, the recent ban on amalgamations in RBKC (effective July 2024), which limits the ability to combine smaller flats into larger units, could restrict supply and push premiums on large, adjoining properties.
The Building Safety Act, aimed at improving safety for leaseholders, is another critical factor shaping the market. While its intentions are commendable, its evolving nature requires constant vigilance. Buyers and sellers alike need to ensure that properties meet all compliance criteria. This added complexity requires expert guidance to avoid unnecessary delays or issues that could jeopardize a transaction, and from a buying agent’s perspective, whether we would even then pursue a particular property. The introduction of the Gateway 2 system for higher-risk buildings, effective from April 2024, has already begun to create significant delays and cost overruns for those looking to carry out works, however minor. These shifts could have short-term implications for the market, including upward pressure on already limited turnkey properties, due to higher construction costs post Brexit, and potential downward pressure on unmodernised leasehold apartments.
The prime London market is becoming increasingly fragmented, particularly with the rise of small, independent agents, brokers and the increasing prevalence of off-market transactions, especially at the higher end of the market. While change often brings opportunity, the buyer may not always benefit directly from this evolution. The market’s complexity, combined with its often closed-off nature, underscores the importance of having a trusted buying agent who can navigate these waters effectively, giving clients access to even the most exclusive off-market opportunities, all handled with the utmost discretion. This is crucial in a market where confidentiality is highly prized, and many of the best deals are quietly negotiated behind closed doors.
For buyers hesitant to enter the market amid ongoing political and economic uncertainty, our advice is clear: now, more than ever, is the time to invest in rare, blue-chip assets that will hold their value and offer liquidity in the future. These types of properties, often found off-market, are likely to perform best in the long term, providing stability and growth in a volatile environment. As always, the key to success lies in receiving expert guidance and securing the right assets at the most competitive price, precisely when the timing is optimal. And we feel this could be now.
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