04 October 2018

Why a property tax on foreign buyers

Those of us who think that the stamp duty system is already broken will be dismayed by the government’s announcement that it is to 'consult' on the idea of levying an additional 3 per cent stamp duty on any foreign person buying property in the UK.

This will be on top of the 3 per cent surcharge already payable by those who own, or have a beneficial interest in, another property anywhere else in the world, which I imagine any foreign buyer looking in the UK is likely to have. So, if this foreigner is looking to pay over £2m, the headline rate of stamp duty will be 18 per cent – enough to send even the wealthiest of buyers running for the hills.

The idea behind this is said to be that foreign buyers have priced 'local' people out of the market. This is absolute nonsense; the majority of foreign purchasers are spending vastly more than the average local can afford and are not, as a consequence, competing directly with them.

One American client rang to say that after 26 years of living in the UK, owning property, contributing to his local community and raising his children, he is now off to France, as the UK no longer feels like a friendly and welcoming place for those from overseas. He is unlikely to be the only one.

To my mind Brexit represents an opportunity to make the UK a comfortable island haven off the coast of Europe for wealthy people from all over the world who want to do business and invest money. This policy, if it becomes law, will send the wrong message, or more likely underscore one that the country is already sending out: 'you are not welcome'. Talk about an own goal.