Non-dom change to take investors from London to UK regions?

Non-dom change to take investors from London to UK regions?

Reforms announced in the Budget could make prime property in the capital too expensive for some – should they now head to cities like Manchester instead?

Summary:

  • The abolishment of the non-dom tax status could have a significant impact on the prime central London property market
  • Investors will find the cost of holding property more expensive, and see its value for Inheritance Tax purposes reduce
  • A large number of investors have already left the capital and turned to the high yielding markets in regional cities such as Manchester and Glasgow

Will George Osborne’s non-dom changes see more overseas investors head out of the capital and to regional cities such as Manchester and Glasgow?

In the Budget earlier this month, the Chancellor announced that the permanent non-dom tax status will be abolished from April 2017. This means that tax will now be levied on those assets gained outside of Britain, such as UK property held in offshore companies.

Many experts anticipate that these changes will have an effect on the prime central London market, usually a go-to safe-haven for foreign investors, particularly in areas such as Westminster, Chelsea and Kensington. Of the changes, Simon Aldous of Savills believes that “the crux is it will make it more expensive to hold London property”.

Non-dom changes will add to the cost of owning property in the UK and will reduce its value for Inheritance Tax purposes.

The market in the capital is already feeling the impact of a series of recent tax increases, with values falling by 0.9% according to the latest figures from data provider LonRes.

Many investors have already headed to high performing regional cities such as Manchester and Glasgow, with lower prices and strong rental demand making these cities strong investment propositions.

In terms of property values, Glasgow, for example, has one of the fastest rates of job creation in the UK, whilst Manchester is integral to the government’s Northern Powerhouse plans. This positive economic outlook means that investors may be able to realise strong capital gains in the coming years.

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