A report published today suggests that the U.K. should ban overseas property purchases by non-European Union residents.
In its Finding Shelter
report, the influential right wing organisation Civitas, the Institute
for the Study of Civil Society, urges the U.K. government to introduce a
scheme, similar to that operating in Australia, where overseas buyers
can only buy property where they can show their investment will add to
existing housing levels.
Today’s report blames foreign property
buyers for driving property prices out of the reach of many U.K.
citizens. It says that in 2012 a total of 85 percent of prime London property purchases were made with “overseas money”, and that two-thirds of overseas buyers were purchasing for investment purposes.
It
also notes that since 2012 more than half of all new homes in central
London were sold to residents of Singapore, Malaysia, Hong Kong, China
and Russia, with just 27 percent being purchased by U.K. residents.
The
report adds: "The U.K. property market is being used as an investment
vehicle by the global super-rich – and increasingly the simply
well-to-do. The inflationary impact of this extra cash is good news for
property owners – until they want to trade up the housing ladder.”
The subject of foreign property buying in the U.K. is a hot political topic right now.
In
December U.K. Finance Minister George Osborne announced the
introduction of a capital gains tax for foreign property investors. The
opposition Labour party also announced plans to force British developers
to market their developments in the U.K. before selling overseas, and
to double the amount of tax on empty properties as well as second homes.
Speaking to U.K. newspaper The Observer Sadiq Khan, the
shadow London minister, said: "London is in the middle of a severe
housing crisis, yet there are around 50,000 empty homes across the city.
It’s complete madness. We must stop housing that’s built as family
homes being used instead as a piggy bank for the world’s wealthiest
people.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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