The non-dom exodus is harming London’s housing market
Punitive taxes and onerous regulation on landlords are leading the wealthy to sell up and leave London – with knock-on effects at all levels of the housing market, says James Evans
As City PM’s Editor-in-Chief recently pointed out, ‘The UK only has around 70,000 non-doms, and that number is falling fast. More than 11,000 millionaires, along with 12 billionaires, left the UK last year – the biggest annual outflow in a decade.’ It’s not just a statistic. We’re seeing it on the ground. Overseas investors who previously viewed London as an investment haven are going elsewhere. Whether I’m speaking with clients over lunch in an eerily quiet Chelsea restaurant or abroad on business in the US, Asia or Africa, the message is the same: Britain is closed for business.
Why? This sentiment is driven by the government’s overall approach to taxation, including sustained increases in stamp duty, land tax and property taxes. Its stance towards landlords to date – including the Renters’ Rights Bill – has led many to simply cash out. These policies aimed at levelling the playing field, are actually making life harder for those who most need help. Take the buy-to-let market. Two decades ago, at least one in four properties I dealt with were investment purchases. Today? It’s more like one in twenty, as investors take their money elsewhere.
Everyone knows that wealthy people are transient. The affluent can live and invest almost anywhere – and other nations are welcoming them with open arms.
The result? Fewer homes to rent, and a squeeze on those trying to build their lives in London. I’m talking about the baristas, the grads, the junior doctors – people spending upwards of 50 per cent of their salary on rent just to keep a roof over their heads, while wages and London weighting allowances have not necessarily increased to match.
Disappearing stock
When landlords sell up, rental stock disappears. Demand doesn’t. So, despite the government introducing additional renters’ rights, unravelling the non-dom regime is resulting in poorer living conditions for many. Short supply often means (illegal) sub-lets in an already expensive rental market. Imagine six people squeezed into a flat versus the three on the lease. It’s a real problem for literally everyone involved.
Chasing out the mega-rich doesn’t free up homes for everyday Londoners. A £4m flat in Notting Hill isn’t a viable alternative for a young family in need of a two-bed in Tooting. The top end of the market is already quieter in the current climate – so why paralyse it further?
In my view, nobody benefits when there is stagnation or indecision in an economy. The super wealthy do more than just buy property. They spend. They renovate. They employ. From cleaners and contractors to gardeners and – yes – estate agents, their money circulates in the real economy. And when they swap London for Milan, Cape Town or Dubai, that money disappears too.
So, what’s the solution? Rather than stamp duty holidays, which cause temporary surges (similar to the sugar high we all recognise from Easter), we need more appealing taxation on property to encourage movement and investment.
When the market moves, everyone benefits – from buyers and sellers to tradespeople, landlords, and tenants. But when it stagnates, we all lose out. So, Ms Reeves – help us out. Send the right message to international investors. Let them know the UK is still open for business. Let’s bring them back – and with them, the vibrancy and opportunity that London Town thrives on.
James Evans is CEO of Douglas & Gordon