Money walks, as the saying goes, and the UK's non-domicile residents are about to prove how true this is, with a mass migration from some of the most desirable areas of London to more financially sympathetic shores. These non-doms - foreign residents who don't pay tax on overseas earning - are leaving in protest at the removal of some of their tax perks and extra charges imposed by the UK government. They are voting with their feet, and a significant number are hotfooting it to the UAE.
Before tax reforms, there were 120,000 registered non-domiciles in the UK, though this number is likely to have shrunk significantly thanks to the introduction of an annual levy of £30,000 (Dh220,000), which came into effect in April this year. This charge will have to be paid by all non-doms who have lived in the UK for seven years and longer. Capital Gains Tax is also being charged on UK homes owned in overseas trusts, another change that will hit the non-doms where it hurts, and on top of all this is a recent change to the congestion charge, meaning owners of 4x4 cars will have to pay £25 just to leave their garage. All in all, there is a growing feeling that London is becoming too expensive a city to function in.
"The context is that the reforms to the tax treatment of non-doms were badly botched by the UK government," says Mark Buzzoni, the head of the private client group at the law firm Taylor Wessing. "This has shaken confidence of many wealthy individuals in the UK system." Just how many non-doms are likely to leave the UK on the back of this is unknown at the moment - government figures estimated 3,000, but agents predict the real number is a lot higher. Anecdotally, it seems the most popular destination for disaffected non-doms is Switzerland, followed by Dubai.
"We've got several clients - many of them non-doms - leaving the UK and moving to Dubai," says Paul Panayi, managing director at Optimus Wealth, a wealth management company. "We also have a few who have headed to Abu Dhabi. Overall Switzerland does seem to be the place of choice for people in finance - hedge fund managers and bank traders, as it's close to work - but Dubai and the Middle East in general is appealing to a real variety of my clients, including lawyers and accountants.
"Dubai is a new economy and that is its appeal. My clients are going where the money is - the big money is no longer confined to Western Europe and North America. I think the UAE is increasingly seen as a young, vibrant place to be where people can make their mark. There's a growing feeling that the UK isn't as welcoming to the business community - the government has made cheap political gain out of non-doms, as the majority of non-doms don't or can't vote, so they are a soft target."
"Tax is the most significant reason why people are moving to the UAE," points out Paul Panayi. "A lot of my non-dom clients who work in the UK don't send their children to state schools, don't use the NHS and have no intention of retiring there, and Gordon Brown wants to tax them on worldwide earnings. Dubai has a more benign tax regime - one that welcomes you and your expertise. Plenty of non-doms have a big international address book and can work anywhere - and they're about to prove it. The UK's loss will be very much the UAE's gain."
"We are seeing a lot of clients coming over from the UK who are fed up with being taxed to the hilt," adds Oliver Hickey, the sales director at Profile Group, a developer operating in Dubai, with projects in Sport City, Waterfront and two of the islands in The World (Ireland and Thailand). "There's a growing feeling that the UK isn't pro-business any more. You pay 40 per cent taxes, and do you see any improvement in the country? No. Here, you don't pay any taxes and you see improvement on a daily basis. Reading UK papers, it's very depressing - and when I speak to friends, it's all a bit embarrassing, as their business is struggling; there are problems with the credit crunch. Here, we're not affected at all - sales are still going through the roof, in fact."
Of course, people are moving to Dubai for lots of reasons - better weather, somewhere to drive their 4x4 with impunity and the chance to escape tax, to name but a few. "People move to Dubai because you can have more fun, have a better life and earn more money," summarises Gary Hersham of Beauchamp Estates, a London-based agency selling property internationally. "You could go to other tax havens such as the Isle of Man or Gibraltar, but they have to be some of the most boring places on the planet."
As straight-talking Hersham points out, Switzerland has its problems. It is a highly restricted place to buy property as a foreigner, with controls on the size of property you can buy and a permit system restricting foreign ownership in the various Cantons. This means buying villas in some of the more desirable Cantons - Valais, for example - is near-impossible. "The weather isn't as good in Switzerland; it's more expensive to buy. Because of the laws there, you can't buy property that measures more than 180 square metres, and you're restricted where you buy," he says. "You also can't get residency, which in Dubai isn't a problem. If you go with your entire family and want a four or five-bed home, it is going to be tricky."
As we all know, however, it's not just non-doms moving to the UAE. According to recent figures compiled by the UK's Office for National Statistics, the UAE has seen its population of British expatriates double from 60,000 in 2006 to 120,000 this year. This has made the UAE, and Dubai in particular, the fastest-growing community of British expatriates anywhere in the world. So on top of all the other Brits making the move, will the non-doms heading to the Middle East have an impact on the housing market?
"You're making me laugh," says Hersham. "There are 70,000 flats for sale in Dubai at the moment. The amount of British non-doms moving to the UAE will have no impact whatsoever. To put it into perspective, I don't think there are ever more than 15,000 flats on the market in London at one time."