The non-dom reform, ninety days in
On 6 April 2025 the UK non-dom regime ended. Ninety days in, London prime has been trading against a buyer pool the pre-reform market was not underwritten to reach. Notes from the audit seat.
On 6 April 2025 the United Kingdom’s non-dom tax regime ended. The replacement, the four-year Foreign Income and Gains regime for qualifying new arrivals, is materially narrower than what it replaces (HM Treasury and HMRC, “Reforming the taxation of non-UK domiciled individuals”, 30 October 2024; HMRC FIG guidance, 6 April 2025). For ninety days London prime has been trading against a buyer pool the pre-reform market was not underwritten to reach. The published data is too thin for consensus and the principal’s decision cannot wait for the consensus to form.
The reform was announced in the Spring Budget 2024, reaffirmed and tightened under the Autumn Budget 2024, and came into force on 6 April 2025. After that date, every UK resident is taxed on worldwide income and gains on the arising basis, unless they qualify for and elect the four-year FIG regime, which is open only to arrivals who have been non-UK resident for at least ten consecutive prior tax years. The long-term-resident test is a separate mechanic that governs inheritance tax exposure: ten of the prior twenty tax years of UK residence brings worldwide assets into the UK IHT net, with a departure tail of between three and ten further tax years depending on duration of prior residence. The indefinite-non-dom shelter that anchored thirty years of London prime buying has been removed, and the succession architecture built around it is now rebuilding under a narrower framework.
If you are the principal holding a £20m-plus prime central London asset financed in 2021 or 2022 and facing a refinancing inside the next twenty-four months, the Montrose-adjacent question is not whether the market has repriced. The question is whether the pricing you are about to lock in reflects the buyer pool that will exist at your exit, or the buyer pool that existed when the debt was written.
Ninety days of data, read honestly
The published figures through the end of June 2025 do not yet support a confident market call. Knight Frank’s Prime Central London index for Q2 2025 shows continued softening on a trend already visible from 2024, with the year-on-year delta widening rather than flattening. Savills’ mid-year World Research Prime Residential 2025 edition reports similar directional data. Neither source yet separates reform-effect from cycle-effect cleanly, and both acknowledge the point. Bloomberg and FT reporting on Apr-Jun 2025 transaction volumes documents fewer prime listings moving at asking, longer time on market in the £10m-plus band, and a meaningful uptick in withdrawn listings in Mayfair and Kensington.
Three figures worth holding together. Knight Frank’s PCL index is running approximately 20% below the 2014 real-terms peak. Savills puts prime London values roughly flat against 2023 in nominal terms, down in real terms. On the supply side, Knight Frank reports first-half 2025 new sales instructions in PCL running 32% above the five-year-average baseline (excluding 2020), with the £5m-plus segment up 14% against the same baseline; sellers are bringing stock to market in volume. On the demand side, Bloomberg and FT reporting documents longer time-on-market in the £10m-plus band and an uptick in withdrawn listings across Mayfair and Kensington. None of these numbers is a repricing event on its own. Together they describe a market where sellers have started to accept the new bid, buyers are holding position, and the bid-ask is wide.
Knight Frank and Savills both have an obvious interest in the market staying active, which should be read into their commentary. The data they publish is reliable; the interpretation they put around it tends to anchor on “temporary softening” rather than “structural reprice.”
The OBR has been more forthright about the uncertainty. In its January 2025 supplementary release on the costing of the non-dom reforms, the OBR rates its forecast “very high uncertainty” and publishes a post-behavioural costing range that materially widens once leaver assumptions are stressed (OBR, Costing of reforms to the non-domicile regime, supplementary release, January 2025). Reading the underlying post-behavioural figures against the static costing is the honest version of “the data is thin.” On the intent side, Oxford Economics’ January 2025 report for Foreign Investors for Britain, capturing the non-dom population through direct respondents and adviser-represented clients, put the share who cited IHT exposure as the red-line driver of departure at 83 percent, a figure the sell-side commentary has largely read past (Oxford Economics / Foreign Investors for Britain, Impact of the Non-Dom Reforms, January 2025).
The two-frames problem
The mainstream narrative from late 2024 and the first half of 2025 has settled on a relatively comfortable frame. High-net-worth residents adjust. Some leave for Dubai, Milan, Lisbon, Monaco. The four-year FIG regime substitutes for departures with new arrivals who intend to stay fewer than four years. The market finds a new equilibrium within two years and PCL recovers. This is the story the sell-side prefers.
The counter-frame is that the reform removes a structural feature that underpinned thirty years of London prime buying, and that the buyer pool at the £20m-plus level is materially smaller in 2026 and beyond than it was through 2024. If that second frame is closer to correct, the repricing is not temporary, the new equilibrium is lower, and on the working assumption that follows, comps written in 2021-2022 do not recover at refinancing. Which frame dominates matters more than almost any other question a prime London principal faces this quarter.
The data through ninety days cannot settle this. It can inform the portfolio-level posture you adopt while waiting for the data to settle. That is the useful work.
What I audited, and what it tells me
I spent time this spring on three advisory engagements where the specific question was how the reform lands at the asset level. The first was a long-held Belgravia residential block within a family-office structure, second-generation ownership, three children non-UK-resident. The second was a newly-underwritten Mayfair asset, institutional wrapper, 2024 closing. The third was a prime lettings portfolio across Knightsbridge and Chelsea, long-held at the family-office layer.
The pattern across the three was consistent. The pre-reform structures had been designed around indefinite non-dom status, with IHT sheltering through offshore trusts and foreign-income protection through the remittance basis. The reform removes both. The regime change is prospective from 6 April 2025, but it lands against residence history that has already accumulated; long-term residents who entered the UK IHT net on day one of the new regime did not structure for it, because the structures were written under rules that no longer apply. The second consequence is that the refinancing assumptions embedded in the debt documents, particularly debt written in 2021-2022 at high LTV, no longer reflect the likely 2026-2027 exit buyer pool.
In the Belgravia block case the family was working out whether to accelerate a restructuring through 2025 or to wait for FY2025/26 to close before acting. My read at the time, and still, was that the acceleration made sense for the specific piece of the structure where the principal was within the ten-of-twenty window for long-term-resident status and had a hard IHT event visible. In the Mayfair asset case the 2024 underwriting had not priced the reform at all, because the reform was announced but not yet in force when the deal closed; the CFO and the external tax counsel were quoting different numbers for the worst-case IHT scenario and neither was the same as my read.
I do not claim any of this is a repricing event for the PCL market as a whole. These are three cases, chosen for the quality of the data I had access to, and they are not a sample. The structural point is that the reform leaves a class of principals whose pre-reform structures were built under rules that no longer apply, and the number of those principals is not small.
What a principal should be running this quarter
Four questions. Each answerable inside a fortnight of structured work. Each necessary before the 2025 refinancing cycle hardens.
First, identify who in the ownership structure is already inside the ten-of-twenty long-term-resident IHT test, who will enter it in the next three tax years, and which leavers are still inside the three-to-ten-year departure tail. That is a morning’s residence-history work. The commercial consequence of the answer is what takes longer.
Second, re-run the refinancings written inside the next twenty-four months against the 2026-2027 exit buyer pool that the reform implies, not the 2021-2022 buyer pool the debt documents assume. If the lender’s internal exit model is already ahead of the borrower’s on this, have the conversation before the lender opens it for you.
Third, separate the transitional levers properly, because they address different problems. The four-year FIG regime applies to qualifying new residents with ten consecutive prior years of non-UK residence (HMRC, “Check if you can claim the four-year FIG regime”, 6 April 2025). The three-year Temporary Repatriation Facility (TRF) lets former remittance-basis users repatriate pre-6 April 2025 foreign income and gains at a reduced rate through tax years 2025-26 to 2027-28. The 5 April 2017 rebasing election, available to individuals who were taxed on the remittance basis in any year 2017-18 onwards and were not UK domiciled, allows foreign assets held on that date to be rebased to their 5 April 2017 market value for disposals from 6 April 2025 onwards. The transitional IHT protections apply narrowly, primarily to certain trust positions settled before 30 October 2024. Each has separate qualifying conditions and separate filing deadlines; confusing them is expensive.
Fourth, run the succession timeline against these rules. Who in the structure is likely to dispose or depart before the transitional windows close, and what does the tax geometry look like against the timing of that event rather than against an abstract average.
What would make this argument wrong
Three conditions would flatten the structural-reprice reading back to a temporary-softening reading.
The first is that PCL transaction volumes recover to the 2019-2023 trend by end of Q3 2025 as the market absorbs the reform. If the Q3 indices show the decline arrested and returning to mid-cycle, the structural frame weakens materially. Observable in the Knight Frank and Savills Q3 indices, expected in October and November 2025.
The second is that the FIG regime proves more attractive to new arrivals than the sell-side currently credits it. If the four-year window generates sustained new-arrival inflow from, say, US tech founders planning medium-term UK residence or from Middle Eastern principals cycling through UK for specific business reasons, the buyer pool recovers through substitution rather than replacement. Observable in HMRC FIG-claim statistics by end of 2025, with the first real data visible in the 2025-26 self-assessment filings in early 2026.
The third is that competing jurisdictions do not in fact absorb the leaving capital. Dubai, Milan, Lisbon, Monaco all require structural commitments the UK non-dom regime did not; if those commitments deter the leavers in aggregate, the capital stays in the UK under the new rules. Observable through tax-residency data from those jurisdictions, which tends to run 12-18 months behind.
The working assumption under this note is that at least one of those three softens and at most one holds. Mark the note against the observable state at end of 2025 and then at mid-2026.
What I do not yet know
Ninety days is not long enough to separate the cycle from the reform. The Knight Frank index through Q2 2025 shows continued softening, but London prime has been on a post-peak trajectory since 2014 for reasons that predate this reform by a decade. Which portion of the 2025 decline is reform-specific and which is cycle-continuation is not yet decidable from the published data.
What I am confident about is that the class of structurally under-hedged long-term residents, and the refinancings written on pre-reform comps, together describe a material volume of capital that needs to decide before the market settles on an answer. If you are running that calculation now on a specific asset or structure and reaching a different conclusion from the one this note describes, I would be interested to hear what you are seeing.
The writer, Gopal Patel, is principal at Navaro Advisory. Gopal’s background includes CTO at Auriens (luxury senior-living, Chelsea, 2018-2021) and advisory engagements across London prime residential, senior living, and family-office-held operating assets.