Labour need to be wary of alienating non-doms and the rich - they could flee UK after Budget

30 October 2024, 16:00

As the non-dom tax regime ends, the Labour government does need to be wary of alienating non-doms and high net worth individuals from living and working in the UK.

This Budget may be a painful one for some corners of the economy, but for property, it’s not all doom and gloom.

While Labour have confirmed the non-dom regime will be abolished, non-doms are already fleeing to places like Milan and Dubai and this does not mean they’re abandoning the UK forever.

They will still keep a hub in the UK and travel back and forth, and the UK will continue to be the ultimate destination to do business.

Interestingly, we’re seeing our clients prioritise education and good schools, and the UK’s education system is second to none - that’s a huge retainer, even with the added VAT onto fees. 

While property won’t take the same hit as other areas of the economy, the Labour government does need to be wary of alienating non-doms and high net worth individuals from living and working in the UK. That’s where the pinch points for the economy will be felt most.   

The decision from the Chancellor to leave CGT levied on the sale of second homes and buy-to-let properties untouched is critical too. The party knows that a decision like that would cost the Treasury a lot of money, by slowing down property sales.

However, the announcement that the surcharge on purchases of second homes and buy-to-let properties is to increase from three to five per cent from tomorrow will not only ruffle feathers, but reduce demand from second home buyers and investors.

Historically, property has always performed better under a Labour government. But for the current government not to buck the trend, property reform on areas such as stamp duty needs to be a priority.

Rachel Reeves’ announcement that there will no longer be first-time buyer relief on properties priced up to £625,000 and the total property price must be no more than £500,000 for any first-time buyer savings on stamp duty to apply will hurt those living in more expensive areas of England such as London and the south-east.

Ultimately, it’s going to make the rungs on the property ladder harder for first time buyers to reach, let alone climb. While the Government need to raise money, this shouldn’t be the area to try and do it through.

Announcements of measures to boost social housing are welcomed with open arms, however this will be a government focus that will require more and more funding, and consistent review against targets.

That funding shouldn’t be raised at the detriment of first-time buyers.

In fact, a policy decision like implementing stamp duty for sellers rather than buyers would not only incentivise people to buy but help many first-time buyers onto the property ladder, at a time when rental prices have reached record highs.

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Trevor Kearney is the founder of The Private Office: Real Estate, a luxury real estate agents.

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