Understanding the Inflation Rate, 4.0% Higher

The Consumer Prices Index (CPI) measures UK consumer prices. In January 2024, it was 4.0% higher than a year earlier.

There are global and domestic reasons behind the increasing inflation in the UK. International factors stay as the initial phase of this increase. It’s possible to mention the strong global demand for consumer goods. It’s the result of the Covid-19 pandemic and the lockdowns that followed.

The related supply chain disruption also affects this situation, as do soaring energy and fuel prices. Dependent on a large net importer of goods, including energy, the UK faces these global factors in consumer prices.

Economic Recession and its Effects on the Housing Market

High rates have increased household borrowing expenses, particularly mortgage interest rates, which have risen considerably from their prior low levels. Around 1.6 million people whose fixed-rate mortgages expire in 2024 will face higher mortgage payments. Rental prices have also been increasing in recent years.

The Role of Rental Markets During Economic Challenges

Higher mortgage payments result in more people living in rental housing for an extended period of time. However, the supply of rental homes is declining, and landlords are debating whether to remain in the market due to tax and regulatory challenges.

Rising rents are likely to limit renters' capacity to save and move up the housing ladder. That, combined with dropping housing prices and lower mortgage rates, will boost buy-to-let yields. This should see landlords return to the market, increasing the availability of rental homes and potentially lowering rents, but this will most likely be a long process.

Because of the scarcity of social housing options, the private rental sector is crucial. This is the primary topic of the rental reform measure being debated in Parliament this year.

61% of First-Time Property Buyers are Willing to Relocate to a Different Part of UK

Many prospective first-time buyers are already adjusting their expectations, with 61% willing to relocate to a different part of the country to buy their first home and 46% willing to explore homes up to a quarter smaller than their preferred size.

If house prices decrease and salaries grow faster than inflation, first-time buyers' affordability will improve. According to our research, first-time buyer numbers are unlikely to fall in 2024 compared to 2023.

Cost of Living Crisis in the UK after the Covid Pandemic

The 2024 election will also impact the market, as both the government and opposition parties pledge to improve access to home ownership. Housing will be a crucial battleground, so the market may see some volatility in the run-up to the election.

According to a survey, Britain's poorest households have experienced a £4,500 financial impact since the beginning of the Covid pandemic, with those on the lowest incomes bearing the brunt of the cost of living crisis.

It predicted that living standards for the lowest half of British households would be up to 20% lower this year than in 2019-20, after accounting for inflation, and would not return to pre-pandemic levels until 2027.

Credits: Supplied Image; Author: Client;

Policy Changes: The Phasing Out of Non-Dom Tax Regime in 2025

The term "non-dom" refers to a UK resident whose permanent home - or domicile - is outside the UK for tax purposes. Jeremy Hunt, Chancellor of the Exchequer, stated in the March 2024 Budget that the non-dom tax regime would be phased down.

For the first four years after moving to the UK, individuals will not be required to pay tax on money earned abroad beginning April 2025. If they remain in the UK after that time, they will be subject to the same taxation as everyone else.

Those who now hold nom-dom status will be granted a two-year transition period during which they will be encouraged to bring their foreign riches into the UK system. The chancellor stated that eliminating non-dom status will generate £2.7 billion in revenue annually by 2028/29.

It relates to a person's tax status, not their nationality, citizenship, or residency status, though these variables can influence it.

Understanding Non-Dom Status and Its Implications

If you are a non-resident and opt not to pay tax in the UK on your abroad profits, you must pay:

  • £30,000 if you've been here for at least seven of the last nine tax years.

  • £60,000 for at least 12 of the last 14 tax years.

In 2017, the non-dom regulations were amended such that you can no longer claim this status if you have been a UK resident for 15 of the previous 20 years or if all of the following circumstances apply:

  • You were born in the UK.

  • Your domicile of origin was in the UK.

  • You have lived in the UK for at least a year since 2017.

However, if you earn less than £2,000 per year from foreign earnings and do not bring that money into the UK, you are not required to do anything.

68,800 Persons Claimed Non-Dom Status in 2022

According to the most recent numbers from HM Revenue and Customs (HMRC), 68,800 persons claimed non-dom status in 2022.

This is a small gain over the previous year, but there has been a decline since the 2017 regulation change.

More than 93% of Non-Doms were born Overseas

A survey of people who were non-doms in 2018 or had claimed non-dom status since 1997 discovered that:

More than 93% were born overseas, and another 4% had lived abroad for an extended period.

Three in ten people who made £5 million or more claimed non-dom status, compared to fewer than three in 1,000 among those earning less than £10,000.

Since 2001, there has been a significant increase in non-doms from China and former Soviet states. The majority of non-doms reside in and around London, with about one in every ten persons in Kensington, the City of London, and Westminster being non-dom.

by Charles Taylor Harris - Executive Director of Get Golden Visa