In May 2015, the government of Victoria announced that foreign investors buying real estate in the Australian state would be subject to a 3% tax on its purchase price, in addition to an absentee land tax of 0.5% from July 2016.
Now, the United Kingdom government has followed with a similar policy, by increasing sales tax on second homes in Britian which will also apply to buyers from abroad.
Starting from 1 April 2016, buyers of second homes and buy-to-rent properties in the UK will be subjected to 3% extra stamp-duty sales tax compared to those who are buying a home to live in. On the question of a ‘second home’, the government will consider the individual’s assets outside the UK to determine whether the purchase is for an additional home.
“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,” according to a consultation document published by the UK government.
London house prices have jumped 7.7% in the year through October, due to demand from foreign buyers, and off-plan sales abroad have helped developers fund projects including Battersea Power Station development, which is owned by a Malaysian consortium comprising SP Setia, Sime Darby Bhd and the Employees Provident Fund (EPF).
The new policy will raise stamp-duty sales tax to 15% from 12% for purchases of £1.5 million or more. Tax rates of between 3 percent and 13 percent will apply to properties with a lower value, up from between 0% and 10%.