Foreign buyers face higher taxes on their purchase of homes in the UK as Prime Minister Theresa May starts unveiling policy plans before her Conservative party conference.
The government said it will launch a consultation to increase stamp duty on individuals and companies not paying tax in the UK Ministers are considering a rate ranging from 1 percent to 3 percent, according to the Sunday Telegraph newspaper.
The move is likely to add to the pressure on the country’s property market. Bank of England Governor Mark Carney told senior government ministers earlier this month that a no-deal Brexit could see house prices plummet by more than 35 percent, according to people with knowledge of the matter.
“Further taxes on international buyers sends out a conflicting message about post-Brexit Britain being ‘open’ to the world,” said Faisal Durrani, head of research at property consultants Cluttons.
“We will have to revisit our residential forecasts with a view to making further downward revisions should the international residential surcharge be confirmed."
The UK’s imminent departure from the world’s biggest trading bloc is already weighing on property values in London, where house prices posted their biggest decline in almost a decade in July. The average property in the capital cost 485,000 pounds ($632,004). Nationally, growth slowed to the weakest pace since August 2013.
“Currently foreign buyers can purchase homes in the UK as easily as people who live here, but there is evidence this is inflating house prices,” the government said.
May is facing pressure over her leadership and the Tory conference comes a week after a series of policies were announced by the opposition Labour party to try to rejuvenate struggling parts of the country, including a house building program.
The government said the stamp duty increase would make homes more affordable for British residents and money raised would be used to help the homeless.
“This policy, with its uncomfortable echoes of blaming foreigners for every ill, may make good headlines, but it sends an uncomfortable message to the rest of the world and will do nothing to create more homes for those unable to buy or to rent today,” said Henry Pryor, a UK-based luxury real estate broker.For all the latest real estate 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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.