It’s a recurring topic of conversation in London property circles: who’s going to win the General Election, and how might that shape the city’s prime rental market?

A key consideration, according to David Mumby, the head of Prime Central London Lettings for Knight Frank, is how Labour or Conservative governments would reform the tax treatment of ‘non-doms’. David regularly speaks to his clients – tenants and individual owners, as well as investment funds – about mooted changes to the non-dom tax regime.

Under the current arrangements, individuals who are a UK tax resident but not domiciled in the UK for tax purposes, but can elect to not pay UK tax on overseas income and gains, unless these are remitted to the UK. In the March 2024 Budget, the Conservative Government announced that, from April 2025, new ‘non dom’ arrivals in the UK will be taxed as UK taxpayers would on worldwide income and gains, after a four-year grace period. For non-doms who are already in the UK, there will be a transitional period, which will include some relief. Labour have said it would go further, including removing the UK inheritance tax exemption on non-UK trusts.

If buying London property becomes less attractive to non-doms, there could be an increased demand for prime rentals, which are typically listed between £1,000 and £5,000 a week. “Some tax advisers would probably suggest renting and to see how it is looking when the dust settles,” says David. “If the inheritance tax on non-UK trusts is reviewed, this could have an even bigger impact on the prime property market. I’m having a lot of conversations with owners who are saying that, if that happens, they’ll buy somewhere else,” he adds.

Another possible policy change is an increase in the stamp duty land tax (SDLT) surcharge for overseas buyers. A hike in that property tax could also encourage rental demand, as well as potential opportunities for buy-to-let investors. “If [an overseas visitor is going] to be here for two or three years, it may not be viable to spend that stamp duty money if the property isn’t perceived to go up in value.”

David Mumby
David Mumby, Head of Prime Central London Lettings for Knight Frank

The vast majority of properties that we let are fully turnkey and dressed by interior designers... It’s a lot easier to rent a really good product in London. It’s more of a lifestyle choice.


Rental price growth for prime central London was almost 18% in 2022 and 7% in 2023, according to the Knight Frank Prime Central London Index. “The growth is being driven by a lack of stock,” David says. “There’s a lack of property availability for a variety of factors: people exiting the market, people selling, and a significant number of people who are renewing in their existing leases. Our average tenancy length is approaching three years; that’s gone out from 19 months three years ago. People are staying in property for longer.”

In the 20 years that David has been working in prime central London, he has witnessed enormous change in rental demand and supply. Ten years ago, David says, just over 20 per cent of all available property in the Royal Borough of Kensington and Chelsea was rental and today that figure is over 50 per cent*. The increase in supply has been accompanied by what he described as an “exponential” rise in quality, with tenants seeking “something that’s beautifully presented”.

“If it’s a family, they’re looking for a nice garden square and a decent presentation. The vast majority of properties that we let are fully turnkey and dressed by interior designers. Some places have a 24-hour concierge, as well as health spa facilities and restaurants on site. Those amenities mean it’s a lot easier to rent a really good product in London. It’s more of a lifestyle choice.”

While the demographic depends on which area of London you’re in, David says 30-40 per cent of tenants tend to be British nationals, followed by “a significant proportion of North Americans and mainland Europeans, and a plethora of other nationalities*”.

There’s a strong appetite among Investec’s clients for renting in London. “Many of our clients, including those from South Africa, choose to rent when they are not familiar with areas or are awaiting a liquidity event or foreign currency conversion before they decide to buy,” says Pooja Naidoo, a Private Banker for Investec. “After they’ve settled, they will look to make a purchase using a tailored mortgage.”

Pooja says Investec is perfectly placed to help clients with the relocation process: “Our ability to connect like-minded individuals gives us access to specialists who can support with property, legal, schooling and accounting transitions, including tax and fiduciary assistance. Building relationships and finding efficiencies is at the heart of private banking.”

Investing in buy-to-let prime properties in 2024

While many prime properties in London are bought outright in cash, Investec has helped clients who wish to invest with a buy-to-let mortgage.

“Some clients want to preserve capital for higher yielding investments that could generate a greater return than their mortgage interest costs,” says Investec Private Banker James Thomson. “When a buy-to-let property is lower yielding, this may impact the loan size that a mainstream bank is willing to offer. However, a private bank like Investec can look beyond rental income and consider a client’s wider balance sheet to determine affordability. We recently helped a client purchase a buy-to-let property in Chelsea when the rental income covered 70% of the mortgage interest cost. The bank was able to make an assessment on the remaining serviceability from reviewing her wider liquidity and other assets.”

James says prime property investments tend to be purchased within a special purpose vehicle (SPV), such as a limited company, as it enables beneficial owners to offset some of their mortgage interest costs. However, he warns: “It’s important to seek tax advice ahead of finalising an ownership structure. For example, if an individual ends up residing in a property that’s held by a limited company, they may be liable for an annual levy called ATED that is based on the value of the property.”

A typical yield on a prime central London property is currently 4% gross, according to David Mumby, the head of Prime Central London Lettings for Knight Frank. However, when they are buying prime rental properties, many of Investec’s clients are looking beyond yield and considering long-term capital preservation. “Property in prime central London is seen as a relatively secure asset that is more likely to hold its value over time because of the status of London as a business and residential hub and stable economic climate. I have clients who purchase a prime property that is income-generating, with the intention for it to become an asset that is passed down through future generations of a family,” says James.

“Our typical buy-to-let investor in the prime market has a portfolio of up to six or seven properties, whereas those investing in mainstream apartments for young professionals will typically have a higher number of assets. One of our clients specialises in enhancing penthouses, while another has invested in townhouses in south-west London that attract corporate tenants.”

Aside from market demand, owners of prime rental properties have been monitoring the Rental Reform Bill, which could make letting more challenging. “We’re asked about this a lot, as this could increase the amount of property management that is needed,” adds James. “It could also be harder for a landlord to end a tenancy if they wanted to sell an asset. Therefore, each opportunity needs to be considered carefully.”



James Thomson
James Thomson, Private Banker, Investec

I have clients who purchase a prime property that is income-generating, with the intention for it to become an asset that is passed down through future generations.


* Figures provided by Knight Frank

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Important information:

Investec residential mortgages are only available for residential properties in England or Wales and are primarily available to UK residents and subject to eligibility.

This article is for general information purposes only and any reference to Tax should not be used or relied upon as professional advice. It is based on regulations in effect at the time of publication and no liability can be accepted for any errors or omissions, nor for any loss or damage arising from reliance upon any information herein. It is advisable to contact a professional advisor if you need further advice or assistance as the tax implications can vary depending on an individual’s personal circumstances and may be subject to change in the future.