UK Tax Rules Draw Property Investors

December 26, 2011 Taxation in UK

Property tax in London
LONDON – London’s reputation as an international metropolitan center brought swarms of overseas investors to the city in 2011 in the search for real estate, but the use of overseas companies has allowed the buyers to skip out on nearly GBP 750 in taxes for the purchase.

In 2011 foreign residents purchased GBP 4.3 billion worth of real estate in the city of London, and the current tax rules in the UK meant that the properties were levied at a reduced tax rate, costing the HM Revenue and Customs over GBP 750 million in lost tax revenues. Under current regulations, properties worth over GBP 1 million which are purchased by a foreign company are only subject to a 0.5 percent stamp duty, compared to the regular stamp duty rate of 5 percent.

According to experts, more than 65 percent of all properties available in London in 2011 were purchased by overseas residents, who were mainly from the Middle East or countries of the former Soviet Union. London’s popularity as an investment destination has been attributed to the simplicity of the UK’s regulations for purchasing property, and the current rules which allow real estate to be held anonymously by companies registered in offshore jurisdictions.

According to estimates published by the British press, nearly 9000 new homes and apartments are being built over the next 9 years in order to meet the current demand for new property investments.

Photo by failing_angel