Prime Central London property values have fallen by up to 25% in some cases, according to market analysis from North-West London estate agency Glentree, as recent tax changes targeting non-domiciled residents impact the upper end of the market.
Properties priced above £15 million to £20 million have been particularly affected, with international buyers historically accounting for around 70% of transactions in this segment. The recent removal of non-dom tax advantages has significantly reduced demand from overseas purchasers.
Market segmentation emerging
However, the impact has been uneven across the prime market. Fully refurbished properties requiring minimal work have proven more resilient than properties requiring extensive renovation. International buyers have shown reluctance to commit to lengthy planning and construction processes, which can extend to three years or more.
In North-West London, values have remained more stable, down approximately 10% from post-Covid peaks. Recent sales in the £8 million to £12 million bracket have achieved prices comparable to those seen over the past two years, supported by limited stock availability.
Apartment oversupply challenges developers
The London apartment market faces significant oversupply, particularly affecting new developments conceived several years ago. Major housebuilders including Barratt London, Bellway, Berkeley and Galliard are offering incentive packages to move unsold stock, including stamp duty contributions, service charge holidays, reduced deposits, mortgage subsidies and cashback offers.
These measures reflect the challenges facing developers who planned projects when build costs were lower and demand expectations higher. The shift mirrors broader market dynamics affecting different regions of the UK property market.
Housing delivery targets under pressure
The government’s target of delivering 300,000 new homes annually appears increasingly challenging. Current delivery rates suggest actual completions may reach only half that figure. New measures granting mayors superseding powers on major development schemes previously rejected by councils represent an attempt to address planning bottlenecks.
However, housebuilders face limited incentive to develop existing land banks while unsold stock remains in the market, creating a supply paradox.
Rental market dynamics shift
The rental market continues to show resilience despite regulatory changes. As buy-to-let landlords exit the market following the introduction of the Renters Rights Act, rental stock has become scarcer and rental values have risen.
At the upper end, weekly rents have reached £34,000 to £40,000 for premium properties. International clients, particularly from Hong Kong and China, are increasingly choosing to rent rather than purchase, effectively saving the 19% stamp duty that would apply to purchases above certain thresholds.
Market observers note that buyer activity has reduced significantly from two years ago. Properties in the £2 million to £3 million range that previously attracted 30 to 40 applicants and five offers now typically see 10 to 15 applicants and one or two offers. However, limited stock levels have prevented significant price deterioration.
Future policy speculation
Some international clients who relocated to Dubai, Monaco, Milan, Portugal and Geneva following recent tax changes are monitoring potential policy reversals under a future Conservative or Reform administration. Both parties have indicated support for abolishing stamp duty, though no firm commitments have been made.
The analysis suggests pricing discipline remains critical for sellers, with properties priced more than 5% above market value experiencing extended marketing periods. For buyers over 75, particularly empty nesters, renting rather than purchasing is being recommended as a strategy to preserve liquidity and avoid stamp duty in a low capital appreciation environment.
The data indicates that while regulatory changes continue to reshape the rental sector, fundamental supply constraints are supporting values in areas without significant oversupply, creating a two-tier market across different London submarkets and property types.
