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London property has become 'safe haven' for dirty foreign money – pricing ordinary Londoners out of the housing market

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"80 per cent of properties in the capital were bought by foreign investors in a survey of 2,066 homes." - I didn't realise it was this bad. Is this Greater London or some smaller part of it?

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...is being discussed on LBC at the moment.......well the homes are becoming so expensive in comparison to local wages, either have to take out ginormous amounts of debt using lump sum savings or gift.....or move out to pastures new......does the quality of life now justify the cost of living?.......thousands of old Londoners have already escaped....ring out the old, ring in the new.....thousands of new flats and apartments are being built, lets hope there continues to be the overseas demand, they will be the only ones left that will be able to buy them.....happy days.;)

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I still think the Government / BoE understand and are planning in more than we think they are.

All this "Northern Powerhouse" ******** and BTL brochures for the Chinese, the permitted dirty money into prime London...

That's a lot of losses taken off the balance sheet of UK PLC in a crash you know.

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8 minutes ago, disenfranchised said:

I still think the Government / BoE understand and are planning in more than we think they are.

All this "Northern Powerhouse" ******** and BTL brochures for the Chinese, the permitted dirty money into prime London...

That's a lot of losses taken off the balance sheet of UK PLC in a crash you know.

I have wondered whether they took notice of what happened to those who bought second homes in Spain and the EE countries and subsequently lost the lot.

i can just see sir Humphrey planning and plotting thinking, now if we can only attract lots of foreign money into the housing market, then crash the system, we have a housing stock for free. 

Mind, that would assume that they had both a plan and a clue 

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26 minutes ago, One-percent said:

I have wondered whether they took notice of what happened to those who bought second homes in Spain and the EE countries and subsequently lost the lot.

i can just see sir Humphrey planning and plotting thinking, now if we can only attract lots of foreign money into the housing market, then crash the system, we have a housing stock for free. 

Mind, that would assume that they had both a plan and a clue 

What now is an ordinary Londoner?......Lost the lot, not lost anything unless you do not actually own it....Lost someone elses money you borrowed may be......You buy something it is yours, why have you lost it if living in it.;)

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9 minutes ago, winkie said:

What now is an ordinary Londoner?......Lost the lot, not lost anything unless you do not actually own it....Lost someone elses money you borrowed may be......You buy something it is yours, why have you lost it if living in it.;)

What I meant, or was at least thinking, based on conversations I had with people who had bought second homes abroad was that what was lost is borrowed money. The loan is still there and needs repaying.  Meanwhile someone else has that borrowed money, so,a nice profit made by someone.  My thoughts were that the government was encouraging an inflow of foreign money for property which would subsequently become worth a lot less. That money coming through purchase of said property would be sloshing around the system but the property it had bought could then be sold on for a lot less 

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2 hours ago, xiox said:

"80 per cent of properties in the capital were bought by foreign investors in a survey of 2,066 homes." - I didn't realise it was this bad. Is this Greater London or some smaller part of it?

I think it's a much smaller part of Central London and only newbuild developments. Report here

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4 minutes ago, Patient London FTB said:

I think it's a much smaller part of Central London and only newbuild developments. Report here

Anecdotal but:

Camden new build flats most lights off after dark. Not central London

cambridge new build flats mainly bought by overseas investors

my road in London, family homes not new build, two doors down rented, owner Indian, back home in India, up,road, ditto, but one owned by Ozzies, one by middle eastern.  These are only three that I know of out of 50 houses. 

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Not hard to find many empty houses and flats.....Not hard to find owners of houses and flats that are rented out but the owners do not live here......I suspect they sometimes have debt but the debt will be in another foreign currency.;)

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So, what are your thoughts Winkie?  why is this being allowed? The cost of rent to these people I mentioned is 1500 a month each. If this is replicated across London, not to mention wider afield, then that is a lot of money flowing out of the uk economy.  

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I don't know the answer, I suppose money talks, any money from anywhere, few questions asked....as another poster said, there are simple straight forward ways to change things, but only if there is the will to change things.....no will, no way.;)

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1 hour ago, One-percent said:

I have wondered whether they took notice of what happened to those who bought second homes in Spain and the EE countries and subsequently lost the lot.

i can just see sir Humphrey planning and plotting thinking, now if we can only attract lots of foreign money into the housing market, then crash the system, we have a housing stock for free. 

Mind, that would assume that they had both a plan and a clue 

I'm not sure about that. I think it'll be more about how to tax them -- I'd guess that the holding-charge of property for overseas owners will go up.  That way the banks win (the debt continues to be paid) and government wins (increased taxes).  Oh, the proles don't win, but who cares about them?

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4 minutes ago, dgul said:

I'm not sure about that. I think it'll be more about how to tax them -- I'd guess that the holding-charge of property for overseas owners will go up.  That way the banks win (the debt continues to be paid) and government wins (increased taxes).  Oh, the proles don't win, but who cares about them?

Maybe, but I'm not sure that there is a tax take on any of this, at the moment.  I'm trying to get my head around why government would allow so much uk property to be bought up by overseas investment, especially as they argue that there is a housing shortage. I'm not convinced that the overseas property investors on my street are paying tax on the rent they charge.  Even if they were, that is a hell of a lot of money being sucked out of the uk economy.

as you say, whatever happens, the plebs, aka you and me, don't win.  

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54 minutes ago, dgul said:

I'm not sure about that. I think it'll be more about how to tax them -- I'd guess that the holding-charge of property for overseas owners will go up.  That way the banks win (the debt continues to be paid) and government wins (increased taxes).  Oh, the proles don't win, but who cares about them?

Tax mainly.

The UK has never made much money from foreigners owning property. Thats changed in the last years.

What better way to raise tax than on foreign owned property - it cannot be hidden - and the owners dont vote.

 

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6 minutes ago, spyguy said:

Tax mainly.

The UK has never made much money from foreigners owning property. Thats changed in the last years.

What better way to raise tax than on foreign owned property - it cannot be hidden - and the owners dont vote.

 

I'm not convinced we are there yet with taxing overseas property owners. Will ask my neighbour whether they know if their landlord is paying tax. My guess is that they are not.

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Will is the operative word.  I don't think they ARE CURRENTLY. Which, as per the discussion above, why are the establishment tempting money in?  So as to milk it later?

i don't know but given that there is an argument that there is a housing shortage, why would they allow significant amounts of property to be held by foreigners?

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58 minutes ago, One-percent said:

I'm not convinced we are there yet with taxing overseas property owners. Will ask my neighbour whether they know if their landlord is paying tax. My guess is that they are not.

Exactly.  So change the rules so that they have to.  eg, impose business rate type tax on foreign owned residential housing*; if the bill isn't paid then eventually sell the asset and recover costs.  Just because it's not done currently doesn't mean it won't be in the future.

It's quite difficult to do this sort of thing with nearly every asset type, but trivially simple with property.  

[Actually, I think this'll happen to all owners of property -- assume it is rented out and bill the tax that they'd have got if rented (at 40%).  If you're a standard rate taxpayer, simply fill in a tax return and get the rebate.]

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2 minutes ago, dgul said:

Exactly.  So change the rules so that they have to.  eg, impose business rate type tax on foreign owned residential housing*; if the bill isn't paid then eventually sell the asset and recover costs.  Just because it's not done currently doesn't mean it won't be in the future.

It's quite difficult to do this sort of thing with nearly every asset type, but trivially simple with property.  

[Actually, I think this'll happen to all owners of property -- assume it is rented out and bill the tax that they'd have got if rented (at 40%).  If you're a standard rate taxpayer, simply fill in a tax return and get the rebate.]

Agree.  However the issue is, if it is so simple (and I agree it is, you can hardly hide an immovable object) why is it not already happening?  Are our leaders that incompetent or is something else in play here?

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52 minutes ago, One-percent said:

Agree.  However the issue is, if it is so simple (and I agree it is, you can hardly hide an immovable object) why is it not already happening?  Are our leaders that incompetent or is something else in play here?

One train of thought - they need to stop the investors bailing and crashing prices.  I suppose you first have to get some inflation and then change the rules so that capital gains tax is charged to non-residents and is impossible to escape them.  The latter part of that has been sorted (2015), now all we need is the rampant inflation to make the capital gain occur.

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CGT for non residents is only payable on the gain since the new rules took effect [2015?]

WHY [WTF] they did this and WHY [WTF] no one [here] shouts about the injustice of this detail beats me.

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2 hours ago, One-percent said:

Will is the operative word.  I don't think they ARE CURRENTLY. Which, as per the discussion above, why are the establishment tempting money in?  So as to milk it later?

i don't know but given that there is an argument that there is a housing shortage, why would they allow significant amounts of property to be held by foreigners?

The govt wants to do as little as possible of building houses on balance sheet due to trying to minimise expenditure and due to its faith in the market to provide.

So it's happy to leave building up to private developers and with Britain being open to foreign capital those developers have used it or are even owned by it e.g. LendLease

It's natural for those developers to not only use foreign capital to build but also to target it as the end buyer. Welcomed by government as it appeared to be a free lunch and it funds affordable housing. 

However, in the fullness of time problems emerge and what we're seeing now is the delayed reaction of govt to them. 

We've already had an annual tax on properties owned through a company (annual tax on enveloped dwellings). And stiffer money laundering checks. And higher stamp duty on high value properties. And additional stamp duty on second homes. 

I think the logical next step would be some sort of extension to the annual tax on enveloped dwellings. 

 

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10 hours ago, One-percent said:

I'm not convinced we are there yet with taxing overseas property owners. Will ask my neighbour whether they know if their landlord is paying tax. My guess is that they are not.

In which case you need to warn your neighbour that they will be liable. If your LL is overseas and you don't have the correct permission from HMRC you are meant to deduct the tax from the rent and send it to HMRC quarterly. If you don't, it is you, not the LL, that owes the tax and fines.

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