Theresa May has proposed introducing a new levy on foreign buyers of UK properties in an attempt to tackle the country’s housing crisis.
The plans would see foreign buyers pay extra stamp duty to fund a drive to tackle rough sleeping.
According to The Observer, the Prime Minister is attempting to return to her vow to tackle social injustices and champion the “British dream” – the idea that the next generation should do better than the last. Fixing the housing market is a major part of the programme.
A study by King’s College London estimated that a one percentage point increase in the volume of homes being sold to overseas companies drove up house prices by 2.1%.
The new measure marks the start of the Conservative Party’s conference in Birmingham, which comes amid fears of another Brexit row and a concern that the Tories have failed to respond to the radicalism of some of Labour’s economic programme.
The latest Opinium poll for the Observer suggests the Conservatives take a three-point lead into their conference, with the Tories on 39% support and Labour on 36%.
Foreign buyers have been accused of taking advantage of Britain’s housing market as a safe haven for their money, pushing up prices in the process.
People buying a second home or buy-to-let property already pay an extra chunk of stamp duty on purchasing their property.
It isn’t yet known exactly how much extra stamp duty non-UK taxpaying individuals and companies will have to pay, but it is likely to be between 1% and 3%, according to reports. The money raised will be used to support schemes in the government’s rough sleeping strategy.
It comes after Labour suggested increasing council tax on second homes used as holiday homes, with the funds raised used to tackle homelessness and children in temporary accommodation.
“At the Conservative conference last year, I said I would dedicate my premiership to restoring the British dream, that life should be better for each new generation, and that means fixing our broken housing market,” May said. “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, as well as foreign-based companies, to buy homes as hardworking British residents.”
May added that the dream of home ownership has become “all too distant” for many people.
Political interest in clamping down on foreign buyers has been growing around the world.
In August, New Zealand banned non-resident buyers from purchasing existing homes in an attempt to make housing more affordable for its citizens. Switzerland has also banned non-residents from outside the EU from buying property, while Hong Kong, Singapore and British Columbia in Canada impose restrictions or surcharges.
DMZ thinks residents in London, in particular, could benefit from some sort of clampdown on foreign ownership.
At least £100 billion of property and land in the capital was purchased using overseas companies between 2008 and 2014. Two-thirds of those purchases were made by companies registered in just four overseas tax havens – Jersey, Guernsey, the Isle of Man and the British Virgin Islands – according to Land Registry data obtained by Private Eye magazine.
Making foreign buyers pay additional tax won’t solve the UK’s housing crisis on its own, but it could form part of a series of measures that helps struggling first-time buyers get onto the property ladder.