New UK wealth taxes have hit the London market with up to 1,000 homes on the market after the announcement of the new annual ‘non-dom’ levy and 50% income tax band.

Since October 2007, 7% of non-doms (non-domiciled workers) and 2% of high net wealth individuals (HNWI) have moved out of the UK in the months following the announcements, according to a new Knight Frank survey.

A further 31% of non-doms and 25% of HNWIs are planning or thinking about leaving the UK in the future.

‘Despite the negative take on wealthy individuals departing or considering departing the UK, 32% also said they are hoping to expand their UK property portfolios over the next couple of years,’ says Liam Bailey, head of residential research at Knight Frank.

Equally, looking at demand going forward, Mr Bailey doesn’t believe many foreigners living in the capital will actually carry through their moving plans and bring them to reality.

One factor could be a likely change of Government in the near future, while a second is the fact that it is not all that straightforward to move countries.

Tim Wright, head of Knight Frank’s Kensington office, says decisions made by non-doms in the capital are not all financially driven. ‘If a businessman comes home and says, ‘Darling, we’re moving to Switzerland,’ his wife might well tell him to forget it. Those who have moved are more transient and without any families – they can go and switch on a computer in Geneva the next day,’ Mr Wright explains.

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The numbers of those going are being balanced by new arrivals, points out Mr Wright, with more families from places like Russia and Nigeria wanting to move to Kensington, which has many good schools in the area.

Cliff Gardiner from Knight Frank’s home finding service, The Buying Solution, has noted interest from Middle East buyers. ‘They want good buildings in good places. They just love London and always have loved it.’

The market is not just being led by cash-rich foreigners scooping up property at lower prices. Dick Ford, who heads up Knight Frank’s London residential department, says the places where English buyers like to settle, such as Chelsea, Wandsworth and Wimbledon, are picking up the fastest.

‘Since May, we have agreed or sold 28 properties in Chelsea. Last year, we did not sell even half that number,’ he says, showing how the market has recovered over the last couple of months.

Mr Ford believes ‘pent-up demand, the prospect of increased mortgage rates, the fear of inflation creeping in and the fact that if we are not at the bottom of the market we are pretty close are all encouraging buyers to get on and purchase property now.’

It is a good time to venture into buy-to-let with a number of rentals homes going back onto the sales market.

‘We are losing landlords as they decide to sell. Yields are rising and are at about four-and-a-quarter percent. This is not a boom market, but a healthy one,’ adds Tim Hyatt, Knight Frank’s head of lettings.

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