Tax changes are one of the factors behind a decline in a prime UK market during the second half of last year, an expert has said. Analysis of premium London property transaction data by postcode from the Land Registry by Jefferies London has suggested that monthly transaction levels fell by 31% compared to the first half of the year.

Data suggests that across premium London postcodes, an average of 1,431 property transactions were completed per month during H1 2025. But this fell to an average of just 987 transactions per month in H2, with just three prime London postcodes – with homes included in the top 5% to 10% of the market by value – seeing an uplift in activity.

Damien Jefferies, founder of Jefferies London, commented: “Our latest research highlights the extent to which the prime London market declined during the second half of 2025, with transaction volumes falling quite considerably across all but a handful of postcodes.

This slowdown reflects wider conditions across the prime central London market, where a combination of tax changes, revisions to non-dom rules and a prolonged period of higher interest rates have all weighed heavily on buyer demand.”

The Chancellor, Rachel Reeves, announced in her November 2025 Budget that the basic and higher rates of tax on property, dividend and savings income will increase by two percentage points.

In addition, a new “High Value Council Tax Surcharge” will be introduced for homes in England valued at over £2million.

The HomeOwners Alliance suggests this will cost homeowners £2,500 to £7,500 per year, depending on property value.

Moreover, on October 31, 2024, the stamp duty land tax (SDLT) surcharge on second homes was increased from 3% to 5%.

Non-doms avoid paying UK tax on money made abroad because their permanent home for tax purposes is outside the country.

Labour pledged to scrap the status in its 2024 General Election manifesto, but this policy has been tweaked.

Ms Reeves announced changes to the Temporary Repatriation Facility, which enables ex non-doms to bring their assets to the UK at a discounted tax rate.

Mr Jeffries added: “As a result, fewer deals are being agreed and transactions are taking longer to complete, something that is clearly reflected in the drop in activity seen during H2.

“Renewed uncertainty with respect to the current situation in the Middle East has also added an additional layer of complexity for many international buyers, particularly those impacted by weakening currencies against the pound.”

“Of course, such events can also present heightened windows of opportunity and the prime London market remains one of the most desirable global destinations for high-end buyers.

“All things considered, it will be interesting to see how buyer activity levels shift over the first half of 2026.”