London is world’s second-most expensive city for super rich
The government’s decision to charge VAT on private school fees has helped make London the world’s second most expensive city for footloose super rich individuals.
According to a fresh study from Swiss bank Julius Baer, the UK capital overtook Hong Kong to come second on its annual ranking of the most expensive cities in the world for its ultra-net worth clients, with Singapore ranked first.
Renowned boltholes of the super rich – Monaco and Zurich – rounded off the top five, but the study observed that low-tax Dubai was “nipping at the heels of the bastion cities” in the world.
Authors highlighted the UK government’s decision to bring private schools into the orbit of VAT as being the predominant driver for higher costs for London’s wealthy residents.
As part of its maiden fiscal event last autumn, the new Labour administration opted to plough ahead with a manifesto pledge to apply the 20 per cent consumption levy on private school fees.
Chancellor Rachel Reeves said in her Budget speech that the revenue generated by the measure would be funnelled towards the state sector, arguing it was needed “to provide the highest quality of support and teaching”.
The move meant some prestigious schools – including Eton College – immediately hiked their fees by 20 per cent to recoup the hit the new tax took on their bottom lines.
And according to the Julius Baer study, private school fees were found to have jumped by 26 per cent in local currency.
The rise constituted the second largest increase in costs affecting rich Londoners, behind business class flights, which were found to have jumped nearly 30 per cent between 2024 and 2025.
The school fees hike also helped push the cost up for UHNWIs across the world, the report’s authors said, given the UK’s international reputation as a “global centre for academic excellence”. Overall, schooling was found to have cost super-rich families an extra five per cent over the past year.
Researchers said that London has managed to “hold its position as one of the most appealing global cities for the wealthy”. This was despite the Starmer administration introducing several punitive tax raids.
London weathers ‘turbulent’ period for super rich
“London’s appeal as a centre for wealth and lifestyle has had a rather turbulent ride in the past year,” the report said. “The UK’s new Labour government has made several changes that impact the HNW demographic, including the abolition of non-domiciled residency status and changes to inheritance tax.
In some better news for the well-off, prices tracked in Julius Baer’s basket of goods fell by two per cent, for the first time in the survey’s five-year history, in a development branded “quite exceptional”.
Historically the luxury goods included in the study have risen at over double the rate of average consumer prices, implying the world’s wealthiest inhabitants were beginning to tighten their belts in the face of heightened geopolitical and trade tensions.
“Hard times have hit high-end goods and services providers,” said Christien Gattiker-Ericsson, head of research at Julius Baer. “Following a global savings glut and a seemingly endless buying spree among affluent consumers that last over a decade, the luxury sector faced a downturn in winter 2024/5 – at least by its own elevated standards.”