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New tax planned for foreign buyers of UK properties

Updated October 01, 2018

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Avenfield apartment building on London's Park Lane. — Photo/File
Avenfield apartment building on London's Park Lane. — Photo/File

LONDON: The UK government is planning to introduce a new tax for foreigners buying property in Britain.

According to the plan unveiled ahead of ruling Conservative Party’s annual conference that opened here at Birmingham on Sunday, all foreign buyers face paying one to three per cent tax in addition to the stamp duty on their purchase of homes in the UK.

Stamp duty is a tax on properties worth more than £125,000.

The government said it would launch consultation to increase stamp duty on individuals and companies not paying tax in the UK.

Foreigners may have to pay up to 3pc tax in addition to stamp duty on purchase of property

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 has 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 reasoned.

PM Theresa 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 programme. 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.

Published in Dawn, October 1st, 2018