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U.k. Property Sales-Tax Increase To Include Overseas Homeowners

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Photographer: Simon Dawson/Bloomberg

U.K. Property Sales-Tax Increase to Include Overseas Homeowners

Andrew Blackman

AndrewDBlackman

December 28, 2015 3:01 PM GMT

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The U.K. governments plan to increase sales taxes on second homes in Britain will also apply to people who live abroad.

From April, buyers of second homes and buy-to-let properties in the U.K. will be subject to stamp-duty sales tax thats 3 percentage points higher than those who are buying a home to live in, U.K. Chancellor of the Exchequer George Osborne announced in November. In deciding whether an individual is purchasing an additional home, the government will also consider assets outside the U.K., according to a consultation document published on Monday.

This means that if someone is purchasing their first or only property in England, Wales or Northern Ireland, they may pay the higher rates if they own property outside these areas, the document shows.

Demand from overseas buyers has contributed to a jump in London house prices, and off-plan sales abroad helped developers finance projects including Battersea Power Station. House prices in the city rose 7.7 percent in the year through October, according to the Office for National Statistics.

The stamp-duty sales tax will rise to 15 percent from 12 percent for purchases of 1.5 million pounds or more. Tax rates of between 3 percent and 13 percent will apply to properties with a lower value, up from between zero percent and 10 percent.

Will this crack down the foreign investors? Edited by Fairyland

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From April, buyers of second homes and buy-to-let properties in the U.K. will be subject to stamp-duty sales tax thats 3 percentage points higher than those who are buying a home to live in

I've seen this distinction mentioned a few times now, and it has me slightly worried that the 2nd property SDLT changes may not apply to people changing their PPR whilst holding other properties (BTL, holiday homes, whatever). Some comments on other sites seem to corroborate this (I won't say "confirm" since it seems that no one really knows). What concerns me is that if it does get interpreted in this way, then the "accidental" (on purpose) LLs that "can't" sell their existing homes (for 200% more than what they paid for them) will be able to let them, and get out of the 3% surcharge on their new place by designating the new place as their PPR. Can anyone put my mind at rest?

edit: OK - this seems to have been answered in the other thread. Should put the knockers on accidental LLs.

Edited by mattyboy1973

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Chances of the checks being rigorous and penalties being severe if cheating caught? Almost none.

True. But the act of doing anything clearly illegal that leaves permanent evidence will put most off.

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Unenforceable.

What does 'own' mean? It's not a globally consistent term. A Singaporean may live in his families HDB public housing (cheap, good, 99 year lease) but buy an investment property in London. Does he 'own' the SG flat? Well, no, his father or grandfather owns it. But in reality, his 'family' owns it.

Or Chinese family structures, where someone in the family will own a property on behalf of a relative - no paperwork, just trust. Seen this myself in Australian properties where one person provides the money for 10+ houses but each is legally owned by a different family member.

Stupid, stupid, Osbourne. Just do what Singapore does - 15% flat extra tax for non singaporeans (and other rules to stop property speculation).

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