Gulf-based investors who own residential properties in the UK will be hit with a new capital gains tax if they sell their assets after April 2015, British Chancellor George Osborne announced in his half-yearly budget statement to parliament on Thursday.
"From April 2015, we will introduce capital gains tax on future gains made by non residents who sell residential property here in the UK,” Osborne said.
Middle East investors have long been prolific buyers of property in the UK and in October real estate firm Knight Frank said they were the third most active investor group in the Greater London's prime residential real estate market last year.
Knight Frank said buyers from the region made up 7.5 percent of the total prime sales in the English capital city during 2012.
The analysis of all £1m+ sales in London over the past year showed that 49 percent went to foreign buyers, although only 28 percent were non-resident in the UK.
It also showed that on prime London sales since June 2011, 69 percent were snapped up by foreign buyers.
However, Knight Frank downplayed the impact the new capital gains tax (CGT) will have on buyers.
“Tax is not the primary driver for the majority of international buyers of residential property in London. We anticipate that the removal of the CGT exemption for non-resident purchasers will have only a marginal impact on demand and pricing,” said Liam Bailey, head of Knight Frank Global Research.
“It is important to note that the change to CGT rules brings the UK in line with other key investor markets, such as New York and Paris where equivalent taxes can approach 35 percent – 50 percent depending on the owner’s residency status.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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