Agents have reacted with anger and frustration at Conservative plans to raise Stamp Duty Land Tax on UK property purchases by foreigners.
Theresa May made the announcement at the weekend, but there was no detail on the proposal nor mention of the fact that foreign buyers have already been hit by Stamp Duty hikes, including a 3% surcharge on the purchases of second properties, and 12% on any component over £1.5m (and that is before the additional surcharge).
Caroline Takla, managing partner of London buying agency The Collection, said: “Theresa May’s plans to impose a new high rate of SDLT for non-resident buyers is another knee-jerk reform to what is fast becoming a punitive tax.
“The idea that this levy will help tackle homelessness is a noble one, but I think this is a cynical distraction.
“One could argue that homelessness has not been caused as a direct consequence of non-resident ownership in London, but rather from imposition of many years of austerity.
“SDLT receipts are perceived as an easy way for the Government to raise revenues, and with Brexit costing the UK economy £500m per week it is a simplistic solution to try and fill the monetary crater left in HM Treasury’s coffers.
“The Prime Minister can’t have her cake and eat it.
“If high SDLT deters foreign buyers then it won’t raise any significant tax, and similarly if it works in terms of increasing revenues, it can’t have put off non-residents.
“The UK is fast getting a reputation as a country which is not business friendly, does not encourage foreign investment and where taxation with respect to residential property can be targeted for change every 6-12 months; there is a limit to how much the property market can absorb.”
Camilla Dell, managing partner at another London-based buying agent BlackBrick, said: “Has the Government forgotten that foreigners already pay a 3% surcharge when buying here?
“Most foreign buyers own property abroad, in their own countries, meaning they are automatically paying 3% more than a UK resident buying their first home.
“This has already had a detrimental effect on London – lowering transaction volumes, creating an illiquid and dysfunctional property market.
“The new proposed tax will simply pour more glue into what is already a very fragile London market, still trying to adjust to higher Stamp Duty rates.
“Putting foreigners off buying will not lower prices at the sub-£500,000 part of the market. It will not make property more affordable for first-time buyers.
“What it will do is dissuade wealthy buyers from buying homes well above £1m and in turn reduce the tax take, not just from Stamp Duty but other ways in which foreigners contribute through employing people and spending money in our shops
“The best we can hope for is a constructive consultation period and re-thinking of this idea.”