A new take on how expat and other foreign based property investors are fuelling the buy to let housing boom may explain why the government is keen to change capital gains tax rules.
Figures on how many buy to let landlords own rental homes in Britain is notoriously difficult to pinpoint.
But pulling together figures from the latest Department of Communities and Local Government private rental sector survey in 2010 and information about the numbers of overseas landlords from HM Revenue & Customs (HMRC) and the Office of National Statistics English Housing gives a clue.
The 2010 Private Rental Sector survey breaks down buy to let ownership and says 78% landlords own a single buy to let, 5% are owned by companies and the rest by other organisations, like trusts, partnerships and organisations letting to staff.
The Housing Survey 2012-13 puts the number of private rented homes in England and Wales at 3.956 million.
Crunching the numbers
Those figures suggest the number of private landlords is 3.08 million, while the number of property companies managing buy to lets is 197,800.
The latest figures from HMRC reveals the number of foreign based landlords is 1.46 million or 47% of all buy to let landlords.
New capital gains tax laws going through Parliament scrap the exemption for expats and foreign based landlords.
Instead, they will pay capital gains tax on property disposals in the same way as UK based landlords.
The details of how the tax will work and the rate of tax are still under consideration by the government.
CGT laws aimed at foreign owners
Mark Giddens, head of private client services for accountancy firm UHY suspects the high number of foreign investors is spurring the government drive to change capital gains tax rules.
“The headlines are all about foreign buyers purchasing trophy homes, but these buyers are looking more and more at buy to let, especially new-build properties.
“Our research reckons the tax take from overseas landlords with rental properties in the UK has risen by 64% from £230 million in the 2006/7 tax year to £379 million last year. Adding capital gains into the equation will increase this even more.”
HMRC keeps tags on expat and foreign landlords through the non-resident landlord scheme.
Landlords either have withholding tax on rents deducted by letting agents or landlords or declare their rental income by submitting a tax return.
