LONDON (Reuters) – Demand for London’s most expensive homes slowed last month as high earners worried about the prospect of tax rises from Britain’s new centre-left government, a property data company said on Tuesday.
Lonres said property sales in prime central locations in the capital were down 7.5% compared to the same month last year while new sales instructions were up 8.1%.
The average sale price of luxury properties fell 4.2% from last year.
Nick Gregory, head of research at Lonris, said the market’s post-election rally in July was quickly over as attention turned to the possibility of tax rises when Labor finance minister Rachel Reeves announces her first budget on October 30.
“Negative sentiment is building at the top end of the market, with more specific concerns about the budget in the form of tax changes for foreigners and other changes,” Gregory said, referring to the removal of tax breaks on some wealthy overseas taxpayers announced by the previous Conservative government in March.
Prime Minister Keir Starmer said last month the Budget would be “painful” and “those with the broadest shoulders should bear the heaviest burden”, adding to speculation about tax increases for the wealthiest contributors.
While some real estate agents reported strong appetite from foreign buyers, others indicated that some existing international residents were looking to sell, Gregory said.