One thousand non-doms leave the UK, more to follow
Local high net worth individuals are also leaving
At least one thousand non-domiciled UK residents and wealthy individuals have quit the UK in the wake of recent tax hikes, estimates Knight Frank, the UK upmarket estate agent.
A new survey from the estate agent found that up to 1,000 property sales in the £1m to £2m price bracket have happened since the removal of resident, non-dom tax privileges in April 2008.
The combination of the annual non-dom levy and the new 50% income tax band implemented in April this year have driven away non doms as well as wealthy UK citizens, said the agent.
Seven per cent of non-doms have sold their house and left since October 2007, and 2% of high net worth individuals (those with at least $1m in investible assets) have left for more favourable tax jurisdictions, said the survey.
The agent said around 50% have moved to either Switzerland, or Monaco. Other popular destinations include the Channel Islands and the US.
Knight Frank said that as many as 31% of non-doms and 25% of HNWIs are still considering leaving.
The survey found the biggest impact of the new taxes is damage to the UK's attractiveness as a place to do business. It also found concerns over the reputation of the UK as having a stable tax regime.
Nevertheless, the agent said activity was still strong in the top end of the London property market, buoyed by the weak local currency. Since March, said Knight Frank, the proportion of foreign buyers of £3m-plus property has risen to 70%. Local buyers in the past have comprised around half of these sales.
Cliff Gardiner, a partner at The Buying Solution, a Knight Frank subsidiary specialising in private sales, said there is still more demand from foreigners wanting to buy in London than there is supply from non-doms selling to quit the UK.
He added this may be short-lived, and after the summer he expects Sterling to rise in value and foreign interest to slow. "The current ratio of 9.3 applicants per property, about four times as high as this time last year, will reverse and supply will outpace demand," he said.
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