Foreigners and expats who buy property in Britain will pay a rate of stamp duty, the government has announced.
Prime Minister Theresa May broke the news to the Tory faithful at her party conference.
The move is part of a strategy to relieve the housing crisis in the country.
She argues buyers from abroad are investing in homes to grow their cash and push up prices.
The proposal will go to consultation, but expats and foreign buyers – defined as anyone not tax resident in the UK – will pay between 1% and 3% more when they buy a home.
York University research found 13% – about one in eight – new homes built in London were snapped up by foreign buyers between 2014 and 2016, denying homes to British buyers.
Another study by Kings College, London, revealed a 1% increase in homes bought by overseas companies pushed house prices up by 2.1% in the capital, making them less affordable to Londoners.
Foreign buyers already pay a 3% stamp duty surcharge on homes in England and Wales.
“We are very concerned about the impact that foreign buyers have on the housing market and the impact they have on people who are living here and trying to get into the housing market. The evidence is that foreign buyers coming in pushes house prices up and lowers home ownership here,” said May.
“We are going to consult on the figure but around 1%, we are going to consult to see if that’s the right figure.”
Hit on prices
More research by property consultancies Hampton International and Knight Frank shows foreign buyers spent more than £2 billion on 2,172 homes in the past year, with half of the sales comprising prime property in Central London.
May expects the stamp duty surcharge to raise £120 million for the Treasury.
Estate agents marketing British property to foreign investors claim the measure will have a detrimental affect on the London housing market.
“The new build sector will be most affected as developers will have to take a hit on prices,” said Caroline Takla, Managing Partner of prime property agents The Collection.
“Unfortunately, this is a sector that supports many jobs in construction, architecture, interior design and sales and will likely have a knock-on effect on unemployment which can only fuel some of the challenges that this new tax is trying to address.”