The Budget’s Impact on the Prime Central London Property Market

With the dust settling after Chancellor Rachel Reeves’ delivery of the first Labour budget in 14 years, Will Watson, Head of The Buying Solution, assesses how prevailing uncertainty could create exceptional opportunities.

As buying agents operating in the prime property market, the recent UK budget has left many in our industry with mixed feelings. In the immediate aftermath, there was a collective sigh of relief – things could have been worse. But as we’ve had more time to comb through the details, it feels as though there is “small print within the small print.” This lingering uncertainty has put the market in a cautious holding pattern, and while this isn’t ideal, it has created unique buying opportunities for those who can see beyond the headlines.

The non-domicile (non-dom) status proposals, in particular, are keeping high-net-worth foreign individuals on edge. While the government hasn’t taken direct action yet, the signal is clear: more changes are likely coming. London remains a magnet for ultra-wealthy buyers from around the world, and I believe this budget cycle could amplify that. If overseas buyers feel the UK’s tax landscape could stabilise in their favour – through a simplified flat fee for non-doms of £200,000-£300,000, akin to Italy’s approach – we could see renewed international interest. Until then, however, many buyers are maintaining a wait-and-see approach, postponing significant moves until they feel the market is on more predictable ground.

Inheritance tax is another point of friction. With unused pensions now being moved into that scope and heirs being taxed 20% for anything over £1million, the potential tax bill on assets will be so steep – potentially nearly 70% once inheritance and income tax are factored in – that many are reconsidering how to structure their investments. Property has long been a stable asset to pass down to the next generation, and London real estate remains uniquely appealing – a tangible, culturally rich asset that no financial portfolio can replicate.

The high end of the market is ripe with good properties, but they aren’t all immaculate, turnkey homes. In fact, much of the super-prime stock requires significant work, which puts off many buyers seeking to move quickly. Renovation costs have soared by 30-40% in recent years, and planning permission is also more complex than it used to be. However, clients who are willing to take on these projects could see strong returns as the market recovers. Ironically, many buyers now want a “finished” home, but the reality is that most people end up making changes even when they buy something new. Taking on a project can mean a property truly designed to your taste, and in a quiet market you might secure it at a favourable price.

So, what does this all mean for buyers right now? In short, opportunity. The uncertainty around inheritance tax and non-dom status has slowed the market, giving buyers who are open-minded and flexible a distinct advantage. London remains a global city, highly desirable and underpinned by wealth and cultural appeal. And while prices are softer now, there’s no sense of panic. Those who own these properties often have the financial resilience to wait things out rather than sell at a discount. So, while the market may be stagnant for now, it is poised for a resurgence if economic or political conditions – both in the UK and overseas – shift favourably. London is very reactive, the market could turn around quickly, and those who bought in the current lull will look very prescient.

For now, the best advice for buyers is to stay flexible, think long-term and be ready to seize opportunity. London is, and will likely remain, one of the most desirable property markets globally. While it’s easy to get caught up in tax worries and policy shifts, prime property here isn’t just about financials – it’s about lifestyle, legacy and the enduring appeal of London itself. For those prepared to take a long view, this could be an exceptional time to buy into a city with a remarkable track record of resilience and growth.

Will Watson, Head of The Buying Solution

Will Watson is Head of The Buying Solution

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Buying for children – still a smart London property play?

According to Legal & General, the ‘Bank of Mum and Dad’ will contribute to 47% of house purchases this year. But does this really reflect what is happening in the prime London buying market?

As a London buying agent, many of my clients are parents investing in property for their children. I’ve had the pleasure of meeting dozens of families over the years, and parental-led purchases have always formed a large part of the prime London market. In my role, circa 20% of active requirements come from clients buying for their children.

From my experience, buying real estate for children remains a wise decision. It sits at the intersection of securing a comfortable future for the next generation, economic foresight, emotional attachment, and a desire to provide safety and stability.

Typically, the parents drive the decision to start a property search, often as part of their tax planning. I have had clients whose children are very young and properties were being ‘bought for them’, but when you get to know the client, other reasons for the purchase emerge. Examples include wanting a rental investment in the immediate term that is tax efficient, protecting assets from Capital Gains or Inheritance Tax if it is structured correctly, or simply using the rent to pay the school fees. The children are rarely involved in the early stages of the search.

In some instances, I have parents looking to buy as many as three or four London properties for their children of equal size and budget so that there is no favouritism shown. Siblings tend not to share individual properties as this can cause complications if one party decides to move at a later stage.

On my patch, I tend to see families searching for properties within the £2 – £5 million price range. However, parents buying multiple properties need to factor in paying multiple sets of legal fees and stamp duties. Most of the properties we have sourced for children this year have been houses with a freehold, as this reduced the parents’ exposure to service charges and other costs.

These variables form part of the initial consultation with clients at the start of the process to understand their needs and advise on which London areas would best suit them and their budget.

I recently advised an Australian family on the merits of London postcodes and property options for their daughter, most of which were off-market. The reality is that a two bedroom flat in Notting Hill is great, but moving further to a location like Battersea, Putney or Clapham will secure a house for the same budget. Many of these areas are excellent locations but have been hampered by the lack of quality housing, transport links and amenities in the past. Consequently, they are more affordable than some of their more affluent neighbours.

I have seen a spike in demand for parents seeking properties in Fulham, South West London, where there are more options for Victorian houses and prices can range from £1.5 – £2.5 million for a good-sized house on the best streets. These properties are also easily resellable should circumstances change.

Nostalgia also plays a significant role in choosing a location. Many parents have a deep-seated attachment to an area whether due to personal experiences, cultural ties, or professional opportunities. This emotional connection often drives the decision to invest in property to preserve familial roots and ensure that future generations have a tangible link to the family’s history and heritage.

In conclusion, London, as a global financial and cultural hub, has long been an attractive destination for property investment. Parents keen on ensuring the financial well-being of their offspring recognise the potential long-term gains and liquidity that London’s real estate market can offer. The city’s property values have historically shown a consistent upward trajectory, making real estate an appealing asset for wealth accumulation. By purchasing property for their children, parents essentially provide them with a valuable asset that is likely to appreciate over time, potentially serving as a foundation for future financial security.

For more information, please get in touch with me here.