The silver lining in the cloud of wealthy fleeing Reeves' tax grab
The number of ultra-high-value home loans in Britain has surged, as wealthy domestic buyers step in to acquire prime London property released onto the market by departing non-domiciled taxpayers.
Analysis by Lubbock Fine Wealth Management shows that the total value of residential mortgages worth more than £5 million climbed by 22 per cent in 2024, reaching £3 billion compared with £2.5 billion the year before. The rise underlines how the UK mortgage market is adapting to political shifts that have redrawn the landscape for wealthy overseas residents.
The Autumn Budget reforms that abolished the long-standing non-dom regime have prompted many affluent international residents to leave the country. From April 2025, such individuals will be taxed on overseas income in the same way as other UK taxpayers. As a result, a growing number are moving to jurisdictions such as Dubai, Portugal, Italy and the United States, where the fiscal environment is perceived to be more favourable.
Their departure has injected fresh supply into the prime central London (PCL) housing market. Data from Knight Frank shows that sales instructions in the first half of 2024 were 32 per cent above the five-year average (excluding the pandemic year of 2020).
While many non-doms preferred to transact in cash, domestic purchasers now competing for these properties are more frequently turning to debt. According to Andrew Noton, partner at Lubbock Fine, this marks a notable shift in behaviour at the very top end of the housing ladder.
“With more non-doms leaving the UK market a significant number of new prime properties have been added to the market. Wealthy UK residents are now seizing the opportunity to snap up those properties and move up the property ladder,” Noton said.
“These wealthy UK buyers are most often using mortgages – rather than cash – to fund purchases. They either prefer to or need to borrow the sums required rather than sell down some of their other investments or they have to fund the purchases from future income. Non-doms on the other hand more frequently paid in cash.”
He added that not all departing non-doms are liquidating their assets, with some retaining properties as rental investments given the relative stability of the UK housing market compared with other jurisdictions.
The government has also sought to soften the effect of scrapping non-dom status with the introduction of the Foreign Income and Gains (FIG) regime. Effective from April 6, 2025, the regime allows new UK residents to avoid tax on foreign income and gains for four years, regardless of whether such income is brought into Britain.
Although Noton describes the FIG rules as “very attractive to overseas wealthy individuals”, he notes that many prefer to rent initially rather than buy at the super-prime level. Their presence adds to demand in the lettings market but does not yet offset the volume of high-value homes being sold by outgoing non-doms.
For mortgage professionals, the data points to a growing pool of clients seeking structured finance at the uppermost end of the market. This segment, once dominated by cash buyers, now represents a significant lending opportunity for private banks and specialist lenders willing to accommodate complex income streams and bespoke repayment profiles.
