The Chancellor George Osborne has announced plans to introduce Capital Gains Tax (CGT) for foreigners who own property in the UK but do not reside here. From April 2015, UK CGT of 28% will be imposed on the profit made by overseas investors when sell their UK properties, providing that it is not their primary residence.
While some property professionals have slammed the Chancellor's decision to introduce the tax as it may deter some overseas nationals from buying property in the UK, the move to impose a tax on wealthy foreigners is likely to prove popular with most Britons. After all, that is what British second homeowners are required to do.
"It seems perfectly reasonable to me," said Hugo Thistlethwayte of Prime Purchase, a London-based property-search agency. Phil Nicklin, real estate tax partner at Deloitte, said that overseas investors will now "pay their fair share of tax", after being placed on a "level playing field with UK investors".
He added: "This is an extension of last year's rules for residential property owned by overseas companies and other ‘non-natural' persons, but it's not just limited to properties over £2m."
Despite some concerns that the new tax will drive many existing foreign investors out of Britain and drive down property prices, particularly in London, Gary Hersham, managing director of Beauchamp Estates, believes that there will be "only have a marginal impact on demand and pricing" of property as a result of the decision to tax foreign property investors.