Does it still make sense to invest in UK property?

For many higher‑net‑worth and internationally mobile borrowers, the “wait and see” phase around inheritance tax reform is drawing to a close. What was once background noise in client meetings has become a central part of the conversation about whether to buy, hold or exit UK property.

Nicholas Mendes, mortgage technical manager at John Charcol, says the change is clearest among non‑dom and international clients who have historically treated UK real estate as one piece of a much wider global jigsaw. The shift to a residence‑based inheritance tax system, coupled with the new ten‑year “tail” after leaving the UK, has fundamentally altered the way those clients assess their position.

Where UK property once sat largely in its own silo – judged on rental yield, capital growth prospects and perhaps a lifestyle element – it is now being weighed alongside worldwide assets for UK IHT purposes. Once clients cross the relevant residency thresholds, global wealth is dragged into the UK net, and that forces a different type of portfolio discussion.

“The conversation has moved beyond simple yield,” Mendes explained. “It’s increasingly about long‑term exposure and, crucially, optionality.” In practice, that means asking not just whether a Mayfair flat or a Kensington townhouse will perform, but how easily the family can unwind the position if their plans or the tax landscape change.

There are already clear signs that this is influencing behaviour. Mendes reports that borrowing is now being approached more cautiously. Clients who once saw leverage as a straightforward way to amplify returns on prime property are interrogating their loan‑to‑value levels more closely. The question is no longer just “What can I borrow?” but “Does it still make sense, in IHT terms, to be this exposed to the UK?”

Timelines for new UK purchases are also stretching. Deals that would previously have gone through at pace – particularly for discretionary or trophy assets – are now more likely to be paused while clients run the numbers with their tax advisers and family offices. Mendes is seeing more instances where potential buyers slow down, seek cross‑border advice and consider the ten‑year tail before signing contracts.

Perhaps the most striking development is how early “keep or sell” conversations are now happening around existing holdings. For internationally mobile families planning to relocate away from the UK, discussions about whether it still makes sense to retain property here are taking place much sooner than before. Rather than waiting until after the move and only then confronting the inheritance tax consequences, many are looking at their exposure as soon as it becomes clear that the numbers no longer stack up.

“These are no longer purely theoretical considerations,” Mendes said. “They are real keep‑or‑sell decisions prompted as soon as the numbers stop stacking up.” For some, that means a managed exit from UK real estate ahead of a move abroad; for others, it triggers a rebalancing – perhaps selling one or two properties while retaining a core residence or strategic asset.

In parallel, interest in alternative ownership structures has returned firmly to the agenda. Trusts, corporate vehicles and family investment companies are not new territory for this segment of the market, but recent tax changes have sharpened focus on how they are used and whether existing arrangements remain fit for purpose.

For families approaching the UK, there is renewed urgency around pre‑arrival planning: when to acquire property, in whose name, and whether any assets should be settled into trusts before crossing residency thresholds. For those already here, the question is often whether historic structures built around old domicile assumptions are still doing the job under the new rules.

This is where the lending piece becomes more complicated. While some private banks and specialist lenders are comfortable dealing with trusts and corporate wrappers, others remain distinctly cautious. Mendes notes that this uneven appetite can narrow the options available to borrowers who want, or need, to use such structures.

Even where a lender is open to the idea, underwriting is rarely straightforward. Understanding beneficial ownership, control, cashflows and the interplay with tax advice adds layers of due diligence. That, in turn, tends to lengthen transaction times – something clients accustomed to moving quickly can find frustrating. For brokers, it demands close coordination between lawyers, tax advisers, lenders and the client’s wider advisory team.

The result is a very different decision‑making environment to the one that prevailed a decade ago. UK property has not lost its appeal for high‑net‑worth and international clients overnight. London remains a global city, and prime assets still carry prestige as well as potential upside. But, as Mendes’ comments make clear, those assets now have to work harder to earn their place in a portfolio.

They are being judged not only on yield and capital growth, but on how they affect long‑term UK inheritance tax exposure and how much room they leave for future manoeuvre. For brokers serving this part of the market, that means helping clients navigate a much more intricate matrix of tax rules, residency patterns and lender preferences – and recognising that, in the era of ten‑year tails, the real question is no longer just “Is this a good property?” but “Does this still make sense for the family as a whole?”