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Inheritance Tax Impact On Overseas Buyers

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Have we had a thread on this yet?


most especially the fact that property in trusts and suchlike are no longer exempt.

Immediately drops the 'value' of London property to overseas buyers by 40%. That is a HPC right there.


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Have we had a thread on this yet?

Not that I can recall. I've picked up on a few of these position changes along the way, but not put it all together like that.

It seems a bit nonsensical to flick back to a HPC post of 2012, from a HPCer (investment-banker iirc), given the HPI serious continuation years thereafter.

However it's just all been piling on, in the background (assuming this stamp duty rates still apply at higher end). Perhaps 0.5% and QE kept the party going in the minds of many buying and owning market participants. Owning, for such limited inventory on market, scraping multi-decade lows just recently, yet such high values in many areas. (How can so many owners resist selling at these prices in London?) Yet the exits are narrowing, as the HPI has raged on - imo, with seemingly a lot more recently (C.24, higher stamp duty rate for those who own one home and want to buy another / or BTL).

- The 15% stamp duty being imposed on properties valued over £2 million held in offshore vehicles after Budget Day
- The Chancellor's warning that he will impose retroactive and large annual fees to properties held in offshore vehicles
- The new 7% stamp duty on properties valued over £ 2 million

This is the opening salvo. There really isn't much logic to the £2 million barrier with respect to the 15% stamp duty on properties held in offshore ownership vehicles as well as the fees imposed on existing structures. It would not be a surprise to see the threshold reduced or eliminated in future Budgets.

The behavioural effects on the market are not certain but I can see the non-dom universe looking at the changes in the non-dom tax regime (the previous changes with respect to income as well as these changes with respect to property) and seeing that the financial advantages of remaining in the UK are dwindling. For the non-oligarch cohort, the decision to remain in the UK versus repatriating becomes increasingly difficult.

My expectation is that this market segment will behave in the same fashion as any other market which has topped out. Supply will increase, volume will decrease for quite a while before prices begin to crumble.

Many of us think that the entire market pricing structure is driven by the high priced segment, as all other properties are priced based on compromises versus the ideal (location, size, commuting etc). When the top end crumbles, everything else will follow.

There have been a lot of discussions on this site related to the fact that the poor market fundamentals will require a catalyst before prices resume their logical downward path. The new property tax regime, along with the decoupling of mortgage rates from the Base Rate, will, in hindsight, prove to be the catalysts.

Nonlinear world; A mighty flame followeth a tiny spark. - Dante.

Contrary to common expecatations, cause and effect do not often move in a simple straight line, but interact in cycles, 'with the effect feeding back on the cause and perhaps amplifying it.'

Perhaps the most famous example of nonlinearity is the "straw that broke the camel's back." Under most circumstances it would be a trying task to kill a camel with a straw. [..]but clearly there is some weight that the animal's overburdened spine cannot support. Locating that point may be difficult, but that does not make it any less the real. Load one straw too many and the camel's back breaks.

There are for more nonlinear events than most people realise. Time and again people have marginalised their affairs, rendering themselves increasingly crisis prone. They have gone into debt, extending claims on resources to an extreme that could only be supported if current conditions were sustained uninterrupted into the future. Time and again these hopes have been disappointed.

There was only one problem with the Land of Infinite Fun, and that was that if you ever did lose yourself in it completely - as Minds occasionally did - you could forget that there was a base reality at all. In a way, this didn't really matter, as long as there was somebody back where you came from minding the hearth. The problem came when there was nobody left or inclined to tend the fire, mind the store, look after the housekeeping (or however you wanted to express it), or if somebody or something else - somebody or something from outside, the sort of entity that came under the general heading of an Outside Context Problem, for example - decided they wanted to meddle with the fire in that hearth, the stock in the store, the contents and running of the house; if you'd spent all your time having Fun, with no way back to reality, or just no idea what to do to protect yourself when you did get back there, then you were vulnerable. In fact, you were probably dead, or enslaved. -Excession

What annoys many people is rachman (the hpcer) - like many in London - are literally lottery winners. (Being given £1-1.5 million pounds for nothing can most definitely be classed as a lottery win)

And are not even cashing it in !!

There is also the belief that they are somehow deserving of it - which is ********.

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This, preventing overseas buyers treating uk property as a piggy bank.

Could be a key trigger, indeed.

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