The planned property tax on foreign buyers won’t have been welcomed by some of the country’s biggest housebuilders –including Barratt Developments, Taylor Wimpey and Berkeley Group – who saw their share prices slide in the wake of May’s announcement.
And many others were unhappy with the proposals. Camilla Dell, managing partner at the Black Brick agency, called the move ‘desperate’ and based on very little research. “The new proposed tax will simply pour more glue into what is already a very fragile London market…What it will do is dissuade wealthy buyers from buying homes well above £1m and in turn reduce the tax take - not just from stamp duty but other ways in which foreigners contribute through employing people and spending money in our shops,” she said.
Caroline Takla, managing partner of prime London buying agency The Collection LLP, claimed Theresa May’s plans to impose a new high rate of stamp duty land tax for non-resident buyers was ‘another knee jerk reform to what is fast becoming a punitive tax’.
“The Prime Minister can't have her cake and eat it,” she said. “If high SDLT deters foreign buyers then it won't raise any significant tax and similarly if it works in terms of increasing revenues, it can't have put off non-residents.”
She said the new-build sector would be most affected as developers would have to take a hit on prices. “Unfortunately, this is a sector that supports many jobs in construction, architecture, interior design and sales and will likely have a knock-on effect on unemployment which can only fuel some of the challenges that this new tax is trying to address,” Takla added.
But others were more supportive of May’s planned tax on overseas investors, with the Association of Accounting Technicians (AAT) pleased with the prospect of an additional stamp duty levy.
The organisation, which has long called for action to be taken against overseas residential investors, briefed all MPs, including the Prime Minister and Housing Minister, on the topic last year and again in June this year. It also polled its members in 2017 on the following question “Should an additional tax be paid on property purchases by overseas investors?” Some 78% said yes, while only 14% said no.
“Put simply, it doesn’t matter how many houses are built in the UK, there will never be enough to meet demand because demand is not simply coming from the 65m currently resident in the UK but from across, Europe, Asia and America,” Phil Hall, AAT head of public affairs & public policy, said.
“Years of London property purchases by the super-rich from Russia, China, America and various other countries are well documented but it’s not just London that overseas investors are setting their sights on. Liverpool, Manchester and other parts of the UK are proving equally attractive.
He also insisted it’s not just the super-rich alone who are snapping up properties across the country. “Middle income earners from across the world, especially China, Malaysia and Singapore, are finding UK property an increasingly attractive proposition. This has been exacerbated by the weakness of sterling following Brexit.”
Hall believes May’s plans to impose an additional 1% stamp duty surcharge, potentially rising to 3%, on overseas residential property investors is a ‘sensible, measured response to this increasing problem’.
May herself said in her statement: “Britain will always be open to people who want to live, work and build a life here. However, it cannot be right that it is as easy for individuals who don’t live in the UK and don’t pay taxes here, as well as foreign based companies, to buy homes as hard working British residents.”