Wealth Concern: Waiting Game to Learn Cost of UK's Non-Dom Clampdown

In Chester Square, the exclusive London address once home to Margaret Thatcher, multimillion-pound stuccoed townhouses are proving a hard sell.

- Lauren Almeida

More than 20 luxury properties in the Belgravia postcode are on the market, says a buying agent. In nearby Montpelier Square, Knightsbridge, a 10-minute walk from Harrods, nine houses are on the open market.

Huge price reductions do not appear to be working either, with some homes lingering unsold for months and even years despite repeated reductions. One six-bedroom Chester Square townhouse has been on the market since 2022, despite its price being slashed by £4m - almost a quarter of its original £17.5m listing.

One possible reason for this luxury property glut has been echoing loudly in City boardrooms in recent months: the world's footloose super-rich are starting to lose interest in the UK, put off by Labour's tax changes. After Vladimir Putin's invasion of Ukraine in 2022 halted the flow of wealthy Russians, some claim Labour's shakeup of the non-dom tax system has sent the global elite fleeing for Milan, Singapore, Geneva and Dubai.

The centuries-old non-dom regime allowed wealthy foreign people to avoid paying tax on money they were earning outside the UK, and avoid paying inheritance tax on global assets.

Such is the concern that the chancellor, Rachel Reeves, is reportedly considering softening changes to the inheritance tax aspect of the non-doms clampdown. But that comes amid speculation about more tax rises in the autumn budget after Labour's U-turn on its welfare bill left a £5bn hole in the chancellor's fiscal plan.

Under the last Conservative government, Jeremy Hunt laid out plans to replace the 225-year-old non-dom system, a relic of Britain's colonial era.

Introduced under George III in 1799, it allowed subjects born in Britain's colonies to live in England without paying tax on their foreign rents and stocks as long as the money remained abroad.

After winning last year's election, Labour went a step further by also exposing their overseas assets to the UK's inheritance tax.