Non-doms are leaving the UK but holding on to their London properties, according to Knight Frank.
Under the old rules, non-doms could live in the UK without paying tax on overseas wealth.
New regulations are tighter, which is driving more wealthy people to live in countries like Italy, which has an annual flat tax that ringfences overseas assets.
Stuart Bailey, head of prime central London sales at Knight Frank, said: “While there is evidence of non-doms leaving London and taking their tax dollars with them, it doesn’t mean they are necessarily selling up.
“Many are keeping their property because of London’s long-term credentials compared to other parts of the world.
“In some cases, they are renting out their homes as a short-term option and looking beyond the next four years of the current government.”
Property listings in the first half 2025 were skewed towards the lower price brackets in prime central London.
The number of new sales instructions in the first six months of the year in prime central London (PCL) was 32% higher than the five-year average (excluding 2020), though above £5 million there was an equivalent increase of 14%.
Average prices in PCL fell 2.5% in the year to June, which was the widest decline since April 2024 and the second largest fall since March 2021.
Meanwhile, prices in prime outer London (POL) rose by 0.9% in the year to June, where demand is driven by domestic and needs-based buyers, are being squeezed by higher levels of supply.
Gary Hall, head of lettings at Knight Frank, added: “There is a sense of limbo at the moment in the lettings market. We have the Renters’ Rights Bill on the horizon but there is speculation that it could be delayed.
“Those landlords that are trying to sell are finding they are not necessarily able to do so quickly because there is so much stock around. A number of them are therefore bouncing between lettings and sales and back again after failing to get their asking price.”