George Osborne, the Chancellor, is preparing to announce in the Autumn Statement that property in Britain sold by overseas nationals will incur capital gains tax.
While British property owners are liable to pay capital gains tax if they make a profit when they sell property that is not deemed to be their main residence, foreign investors are currently exempt from tax on all properties.
London is the world capital of choice for foreigners, who make up 90 per cent of purchasers of the high end of the London housing market. This new measure would impose a 28 per cent capital gains tax on the sale of second homes owned anywhere in the UK by foreign investors. It would also have implications for British expatriates and Britons who go abroad to work while holding on to properties in the UK they may wish to sell.
This is a response to concern felt by the government that foreign buyers are creating a housing bubble in London and the South East. In London last year, foreign investors spent £7 billion on properties in the capital and such is the competition for property that London house prices are hugely outstripping inflation under the pressure of global demand.
Nick Clegg, the Deputy Prime Minister, has said that while the UK welcomes foreign investment, wealthy foreigners should not be exempt from property taxes paid by British owners. Tax experts however have warned that the changes could reduce the attractiveness of the UK property market.
Source: Daily Telegraph
