- Labour Party proposes an extra property tax on foreign buyers
- The Primer Minister’s Conservancy Party is also proposing something similar
- Real estate firm lawyer Melanie Williams expressed concerns saying that the foreign investors had become an easy target for politicians
The United Kingdom’s opposition party, the Labour Party, has promised to broaden the tax base imposed on foreign trusts and companies looking to invest in the UK. This is part of the party’s long-term tax strategy, and it looks to impose a tax purchase charge on all properties bought by foreigners, in addition to the current surcharges and stamp duties.
According to Shadow chancellor John McDonnell, the revenue is necessary to “raise essential revenue for our public services”.
But the Prime Minister’s Conservative Party came out strongly saying that its Labour counterparts were simply venting out their frustration on firms since they had “no credible plan to get Brexit done”.
Last week the Conservative Party said that all individuals and companies looking to own property in the UK but are not tax residents will be required to pay an additional surcharge of 3%, which Boris Johnson’s party estimates will raise about £120 million each year.
Tim Farron, the former head of the Liberal Democrats also stated that his party’s manifesto proposes an amendment to the law to increase stamp duty on properties purchased by foreigners in the UK.
In its manifesto, the Labour Democrats said: “A company purchasing residential property benefits from the UK’s infrastructure and legal framework, and ought to pay a small levy to acknowledge that”.
According to the party, the extra revenue will go towards cooling the UK housing market, “prevent illicit flows” and boost the Treasury’s revenue coffers. The party estimates an additional £3.3bn a year from further taxing overseas investors in the UK.
But Melanie Williams, a partner at a real estate law firm called DWF questioned the plan by the three parties to raise taxes for foreign investors, wondering whether the move would discourage foreign investors and boost the construction sector.
“Overseas property investors have become an easy target in recent years for the British government, as well as the two main opposition parties, as the latest proposals from all three in this election show,” Williams said.
According to Ms. Williams, the proposals by both the Conservative and Liberal Democrat parties were quite similar, however that of the Labour party “appears confused at best, given the number of tax reforms introduced in the past six years, which have included measures designed to prevent overseas buyers investing in property through company structures”.