AT THE Conservative Party Conference the Prime Minister Theresa May announced a new tax for foreign property buyers. They will now likely face a surcharge of one per cent or three per cent on investments with the money raised being spent on tackling rough sleeping.
The surcharge for foreign buyers will be on top of stamp duty and has a secondary purpose of attempting to stop driving up UK prices.
While the move was widely welcomed domestically what does it mean for investors?
Managing Director of Visionary Finance Hiten Ganatra believes it is a relatively small change and the fundamental reasons for investing remain.
He said: “This tax may, indeed it should, force buyers to think a little longer about any investments. It is something new on the agenda and could be seen as a barrier. However, one per cent is low. It is a relatively small change, and is unlikely to make a notable dent in any return on investment particularly as savvy investors will price this surcharge into their negotiations”
“Furthermore, there are real opportunities on the horizon for buyers. These include the depreciation of the British pound, the on-going housing shortage keeping demand strong, the completion of Crossrail in 2019, Heathrow expansion, and the development of HS2.”
Investors have voiced a mixed response to the announcement.
Michele Cheng, a director and partner at realty Ashton Hawks, said she foresees little impact of the proposed tax to Hong Kong investors commenting:
Talking to the South China Morning Post she explained: “There are always fundamental reasons for Hong Kong buyers to invest in the UK. These include hedging schools fees and the low pound.”
However, City AM reported shares in Berkeley Group, Barratt Developments and Taylor Wimpey all slid soon after the Prime Minister’s announcement.
The UK is not the only country to look at extra taxes for foreign investors. Western Australia passed legislation just this week which will see foreign buyers of residential property paying a seven per cent surcharge from January 1, 2019.
- Visionary Finance is a fee free mortgage broker based in London and Milton Keynes. If you’re thinking of making an investment in the UK give us a call on 01908 465100 and our experienced team will work with you to make it a success.