One in every 42 homes – more than 700,000 – in the UK is now worth more than £1 million, according to new research from estate agency Savills.
The vast majority of these – just under 350,000 – are in London while another 160,000 are in South East England. This means one in every 11 homes in London is now worth more than £1 million, a record high.
However, other areas of the UK have seen a retreat in the number of high-value homes, with the South East, East of England, the South West and Wales all experiencing falls.
Savills points to rising mortgage costs dampening the property market for the declines.
Lucian Cook, head of residential research at Savills, comments: “Growth has been limited by higher mortgage costs and stretched affordability, further reducing some of the gains made over the course of the pandemic in suburban and rural areas.
“However, increased demand for city living driven by the return-to-work movement has re-balanced the market back in favour of London homeowners, with 5,000 properties crossing the £1 million threshold in 2024.”
Wealth implications
The rise in property values in the UK is a long-term trend that has slowed but not abated in recent years.
The increase in £1 million+ homes, and even lower value but rising property prices, has important implications for owners’ wealth management, tax liabilities and retirement planning.
Homeowners can find themselves sitting on highly valuable properties which could inadvertently create tax liabilities from duties such as inheritance tax (IHT).
IHT is due on an individual’s assets over £325,000. However, estates benefit from a £175,000 nil rate residential band – meaning up to £500,000 of someone’s home could be exempt from IHT liability.
Taken with a married partner, this means a house up to the value of £1 million could be exempt.
But this says nothing of additional assets which could then be liable for IHT above these allowances. It is essential therefore for homeowners to ensure they have carefully considered plans in place to minimise potential liabilities.
Consideration also needs to be made for retirement income planning as homeowners who are too reliant on their property for their retirement could find themselves struggling to sell at the right price depending on property market conditions.
It is essential for anyone in this position, or if you’ve even got a mix of assets such as pensions and other savings to consider how best to use long-term wealth in order to maximise its longevity and minimise tax implications.
An adviser can help you plan to ensure the best outcomes possible for you and your family to achieve this.
If this blog has raised any questions why don't we have a quick chat?
MD & Certified Financial Planner
A brief meeting might be of interest, especially if you’re unsure just how wealth management and financial planning could help you.
It would only require the investment of an hour or so of your time, and the coffee’s not bad either.