Increased Property Tax for Foreign Buyers
With the election just around the corner we are getting overloaded with promises and proposals from all the political parties and while they often conflict each other this year all campaigners do seem to agree on one thing. That point is for the increase in tax for non-UK residents looking to purchase property over here. Labour’s manifesto stated they wanted to do this by increasing stamp duty for these buyers, the Lib Dems have pledged to introduce a similar plan, while the Conservative Party has put forth the idea to add a surcharge for those that don’t pay tax in the UK. The parties have all stated that this will be for residential property so the aim of ‘encouraging more people living in the UK to get on the property ladder’ seems clear.
The initial effect, we will likely see, is a drop in the number of investors from abroad. So, if only there were a location where there is a high proportion of property owners living outside the country… Oh wait there is! London is the obvious area where could see a significant effect from these policy changes, this is the only area where the ratio of foreign to resident property owners is anywhere near close. Over the whole UK it is estimated that 5% of residential property is owned by people from other countries, so not that much, this jumps to 44% in London! Therefore, the effects of these potential tax increases could cause the inflated market of the capital to become more on the wavelength of the rest of the country.
The major news outlets that cover property have clearly worked this out as well this week because, while looking for interesting news this week we have been bombarded by articles on London property. We wanted to extend the information from all these pieces onto you. We don’t know about you but, in recent years, London has sort of been pushed to the back of my mind when we think about investing. So, the key bit of information we wanted to get from these articles is what are the best places to look to get the best value for money. London is a big place so we could use the help. In the reference section below we have linked two great articles to help out with this. One from ‘Homes & Property’ provides the cheapest areas near major tube stations. The other from ‘The Telegraph’ provides some areas that are experiencing a large amount of regeneration. These provide some great areas to start having a look at.
London prices are so much higher than most areas currently even a big drop still won’t bring it all the way down to the rest of the country, so if you are interested know that it will still be an expensive endeavour. However, London house prices have been dropping over the last couple of years but demands remains high as ever and so using a London based strategy may be the most viable it has been for years, especially if the policies do come in and have the expected effect. Make sure you do your own calculations and research when doing this, even if the tax is implemented as this market is unpredictable at the best of times. As we said before we haven’t been paying much attention to the London market recently, but it is possible (but not certain) that there may be investment opportunities coming up that aren’t just for the super-rich so don’t exclude London outright.