Crack down on buy-to-leave investors

The government has announced a crack down on companies that use a company structure to purchase properties over £500,000. From midnight anyone buying a property for £500,000 will have to pay stamp duty of 15%. This punitive tax is aimed at wealthy investors who buy properties in London and leave them empty.

They benefit from any price rises but are often taking properties out of the market that could be used for Londoners to ease the housing crisis. Often these properties are left empty and there have not calls recently from all parties to do something to get these properties back into the system again.

The tax was introduced in 2012 for properties purchased through a company envelope which is set up specifically for this purpose and just served to avoid stamp duty. The government announced back in 2012 that any property purchased over £2m would not attract stamp duty.

Yesterday the threshold was reduced down to £500,000. It is thought that many buyers will be caught up in the new tax with has been set at 15% of the purchase price. So any property sale in the UK will now be charged £75,000 on a purchase of £500,000. It is clear that the government wants to stamp out this practice and wants to put a stop to it.

The government has made it quite clear that it does not want to see Prime parts of London being purchased and being left empty particularly when there is an acute housing shortage. Even though Londoners would not be able to afford to live in these expensive homes it sends out the wrong message where people are struggling to by a small home and there is a mansion down the road that is left empty and allowed to fall into a state of disrepair.

Some of London’s estate agents are doubtful whether the new measures will deter international buyers form investing in London because of the significant capital growth and because of the insatiable appetite for London homes.

Foreign buyers have played an important role in stoking up London house prices and there have been calls for the government to curb the buying power of these investors. New developments of apartments are sold off plan in overseas property exhibitions to international investors who will never set foot inside any of the apartments.

Boris Johnson has recently been asking developers to sign a concordat which promises to offer new homes in London to Londoners first to reduce the housing crisis. The homes would be offered for sale at the same price whereas currently these homes do not even come onto the market for local people to even get a look in.