England, Wales, Scotland & Northern Ireland
UK Housing News
Why a foreign ownership levy won’t fix the fundamental problems of Britain’s broken housing market
180,000 properties are currently estimated to have foreign domiciled owners, a figure that has doubled in recent years
David Hannah, Group Chairman of Cornerstone Tax, asserts that such the UK property market requires more than “political tinkering” to repair its broken incentive structure
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New reports from the treasury indicate that levelling-up secretary Michael Gove has been lobbying the government to impose a “foreign ownership levy” on homes to deter international investors from buying up residential property in the UK. Estimates currently suggest that 180,000 properties in the UK have foreign domiciled owners, a figure that has more than doubled in the past 12 years. It’s understood that Gove believes that such buyers are distorting the property market, driving up prices for domestic buyers and further intensifying Britain’s housing crisis. According to David Hannah, Group Chairman of Cornerstone Tax, the UK’s leading property tax advisory, a proposed levy on foreign ownership would do little to repair the housing market’s broken incentive structure.
David Hannah, Group Chairman of Cornerstone Tax, comments:
“Over the past thirteen years the British public have grown tired of so-called ‘political tinkering’ within the housing market, foreign owners already have numerous taxes levied against them, including a 2% surcharge on SDLT. Despite these interventions, the number of foreign domiciled properties has more than doubled over the past twelve years.
“What Gove fails to understand is the demographic of foreign buyers, these are individuals that don’t tend to buy starter homes at the lower end of the property market, often opting for ‘trophy homes’ in London. A foreign ownership levy would, therefore, have little impact on repairing the broken incentive structures that currently pervade Britain’s housing market.
“Policymakers should instead look towards creating momentum from the bottom-up. Raising the stamp duty threshold to suit current house prices would be an affable start, encouraging movement on the lower-end of the market and freeing up current housing stock for first-time buyers.
“At the end of the day, a cut to interest rates would be the necessary antidote for a poisoned market, despite December’s inflation figures revealing a minimal rise in inflation, sliding wage growth and an increased shift towards budget options amongst retail shoppers indicate that inflation should shift closer to the Bank of England’s 2% target in the coming months, providing ample political ammunition for policymakers to lobby for a cut to the base rate.”
David Hannah, Group Chairman
