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British families “grab the moment” to snap a bargain luxury home in London’s exclusive postcode, leading to double-digit price drops as a declining pool of international buyers blocked by new non-dom tax rules.
Real estate agents say families living in major areas outside London, such as Burns and Chiswick, may not have had the chance to step into the capital’s main interior areas before, but have a foothold in the most exclusive areas, such as Belgravia and Kensington.
“We’ve seen more domestic market purchases in central London as some sellers adjusted prices to affordable prices,” said Matt Thompson, sales director at Chestertons.
“There are definitely people in Belgravure who are looking at family homes that can be purchased for under £2,000 a square foot a few years ago,” added Stuart Bailey, head of sales at Knight Frank’s Prime London.
“If the property is listed for six to 12 months, a double digit reduction means you are selling.
To promote change is a rapid cooling of London’s interest by wealthy international buyers, and postponing the establishment of a capital home due to new non-dom tax regimes and changes to stamp duty for workers.
Mark Redfern, senior sales director at UK Sotheby’s International Realty, said central London is “a definitely a challenging market.”
The withdrawal of these buyers has traditionally dominated the major markets of homes over £5 million, reducing competition in areas such as Kensington, Belgravia and Knightsbridge.
A data analysis of National Statistics data released last month shows that home prices in Kensington and Chelsea have fallen to their lowest levels since 2013.
Knight Frank data, released Monday, showed that Prime Residential London real estate sales for six months fell 7% year-on-year.
The number of new future buyers signing up for Prime Home has dropped by 13% over the same period, Knight Frank data also shows.
“The serious sellers looking to sell next year are lowering their asking price to attract buyers,” Bailey said.
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Chestertons’ Thompson has reported price cuts of some major homes since January, converting them to hundreds of thousands of pounds on properties over £5 million.
“People think they can’t buy in the area, and they’re definitely thinking about it again,” he added.
Data compiled for FT by property analytics firm Twentyci shows a sudden cooling of Prime Market.
By the end of May, the data showed 706 price cuts had been reported in households in central London against 1,333 new instructions. This was comparing it to a 610 price cut with 1,484 new instructions a year ago.
Prime Home took 50% longer to sell, with an average of 216 days of trading in the second quarter compared to 144 days in the same period in 2024.
Under the old rules, non-domes can live in the UK without paying taxes on overseas income and profits. Since April, this has been limited to four years, meaning global assets will be subject to UK inheritance tax.
Elite international buyers considering other locations such as Milan and Paris have opened up the opportunity for British families to purchase a more exclusive London postcode.
“For domestic buyers, if they want to buy in the most ambitious location, they have less competition and more real estate,” said Lucian Cook, director of housing research at real estate agent Savills.
“The balance of demand is changing, and this is probably the biggest change in the major market.”
