London’s high-end property market cools on worries about tax hit

LONDON (Reuters) – Demand for London’s most expensive homes cooled last month as high earners worried about the possibility of tax increases by Britain’s new centre-left government, a property data firm said on Tuesday.

LonRes said sales of property in prime central locations in the British capital were down by 7.5% compared with the same month a year earlier while new sales instructions had risen by 8.1%.

The average selling price for prime property was 4.2% lower than a year ago.

A post-election bounce in the market in July ended quickly as attention turned to the possibility of tax increases when Labour finance minister Rachel Reeves announces her first budget on Oct. 30, Nick Gregori, head of research at LonRes, said.

“The negative sentiment is amplified at the top end of the market, with more specific budget fears in the form of ‘non-dom’ and other tax changes,” Gregori said, referring to the scrapping of tax breaks on some rich taxpayers’ overseas income announced in March by the previous Conservative government.

Prime Minister Keir Starmer said last month the budget would be “painful” and “those with the broader shoulders should bear the heavier burden”, adding to speculation about increases in taxes paid by the wealthiest contributors.

Gregori said that while some estate agents reported strong appetite from overseas buyers, others suggested some current international residents were looking to sell.