The ninth-richest person in the U.K. is officially leaving the country — joining a growing wave of billionaires heading for the exit in recent months.
Norwegian-born Cypriot oil tanker and shipping billionaire John Fredriksen has reportedly laid off more than a dozen domestic employees and has privately listed his 30,000-square-foot mansion known as The Old Rectory for sale, according to Forbes.
In an interview with Norwegian publication E24, the 81-year-old billionaire confirmed that the reason for his departure was the country’s rising taxation on wealthy residents. “Britain has gone to hell, like Norway,” he said. “The entire Western world is on its way down.”
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In an effort to escape this perceived national decline, Fredriksen confirmed he was relocating to the United Arab Emirates.
His departure is part of a growing exodus of millionaires and billionaires from the U.K. in recent months. Here’s why the ultra-rich are fleeing the country.
Shutting the billionaires’ playground
For decades, the U.K. in general, and London in particular, built up a reputation as a playground for the world’s ultra-wealthy. This was partly achieved by offering favorable tax structures that benefit this elite cohort.
A prime example of this is the non-domicile system. A so-called “non-dom” is someone who resides in the U.K., but claims their permanent home is elsewhere. It’s a tax status not tied to citizenship or residency — a person can live in the U.K for years and still be considered non-domiciled for tax purposes.
Non-doms pay U.K. tax only on U.K.-sourced income. Foreign income is tax-free unless brought into the U.K. For the wealthy, this can mean large, legal tax savings by keeping global earnings offshore and claiming a lower-tax country as their domicile.
This special treatment may have been part of the reason why billionaires like Fredriksen, who was born in Norway and is officially a citizen of Cyprus, lived in London.
However, there has been a bi-partisan push to close this loophole in recent years. Critics argue that the system creates a disincentive to repatriate money to the U.K. and invest it in the local economy.
The non-dom regime was effectively abolished in April of this year, which unleashed a wealth exodus from the country.
In addition to Fredriksen, South African-born Richard Gnodde, vice chairman of Goldman Sachs, and Nassef Sawiris, Egypt’s wealthiest man and Aston Villa co-owner, have both reportedly exited the country, according to CNBC. Indian-born steel tycoon Lakshmi Mittal may be next.
The ongoing capital flight is already having an impact on the housing market.
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Real estate correction
London’s prime real estate market is already reflecting the fact that many of its wealthy residents are heading for the exit.
According to Forbes, Fredriksen is “arranging for discreet viewings” of his 10-bedroom mansion in Chelsea, which is reportedly worth $337 million (£250 million) and boasts the third-largest private gardens in the city.
If it sells at that price, it would be one of the most expensive homes sold in the country. However, given the glut of prime real estate currently listed on the market, Fredriksen’s listing could fall short of this estimate.
The number of luxury homes on the market recently hit a record high, according to a LonRes report. Transaction volume has dropped 35.8% from last May and the average discount on luxury properties is at 9.1%.
This downturn may be bad news for the non-doms, but it is seen as a “once in a generation” buying opportunity for wealthy Americans moving to the U.K. to avoid rising crime and political uncertainty, according to Beauchamp Estates.
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