> <placeName ref="#London">his home</placeName>
While it is a string that may, in this context, refer to the place
called London, it is not the name of anything. So I think encoding it
as a <placeName> is incorrect.
Being able to link it to you gazetteer is a Good Idea, though. Thus I
would use the <rs> (referring string) element with the same key= or
ref= attribute you would have used on <placeName>:
<rs ref="#London">his home</rs>