Overseas property buyers and investors who use companies to make their
U.K. property purchases were targeted in yesterday’s Budget statement.
Finance
Minister George Osborne announced changes to Stamp Duty on properties
that are purchased through companies, and thereby closing a tax
loophole. Previously the 15 percent tax was payable on properties valued
at £2 million or more; now it has been reduced to £500,000.
This
increase is in addition to the Capital Gains Tax revisions for
non-resident owners of U.K. property that were announced in December.
From April 2015 foreign owners of U.K. property will have to pay a
Capital Gains Tax.
Justifying the new move, which came into
effect at midnight today, Osborne said: “Many of these are empty
properties held in corporate envelopes to avoid stamp duty.”
Commenting
on the new tax, Gary Hersham of Beauchamp Estates said: “This move is
not as aggressive as some had expected it to be, and has been positioned
as a ‘clamp-down’ on all, rather than an attack on foreign buyers and
high net worth individuals.
“However, combined with the December
2013 announcement on Capital Gains Tax, this is a further stealth move
which attacks those who invest in property. Such a move can only serve
to deter rather than attract investment, and dampens the number of
transactions which are the very life blood of the sector.”
Hersham
added that such moves will serve to decrease the number of times a
property changes ownership, decreasing income to those operating in the
sector.
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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