Chancellor urged to abandon new tax for overseas property investors as Stamp Duty receipts fall

Chancellor Philip Hammond is being urged to look at the Government’s latest Stamp Duty takings as evidence that an extra property tax shouldn’t be introduced for overseas investors.

Hammond announced plans in last year’s Budget to introduce an extra 1% Stamp Duty rate for overseas property investors, but is now facing warnings that this would be unwelcome amid falling receipts and Brexit uncertainty.

Property adviser London Central Portfolio (LCP) has repeated its calls for the tax to be scrapped.

Naomi Heaton, chief executive of LCP, said: “With the housing market in such a parlous state, it can only be hoped that the chancellor will not implement an additional levy of 1% on non-residential purchasers, proposed in the last Budget.

“This would seem to be particularly imprudent in light of the UK’s need to build on global investment as it exits the EU.

“Foreign investors represent a significant proportion of buyers, particularly in new-build developments.

“With developers currently struggling and scaling back projects, this new tax would not be welcome as the higher end stock enables developers to build out much-needed affordable housing. It is also unlikely to have a material impact on tax revenues, given the recent trend of falling receipts, alongside steadily rising tax rates.

“HMRC’s 2018 Stamp Duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the Exchequer winning out.

“Until the Government has a clear road map for Brexit, we are unlikely to see increased transactions and therefore increased revenues.”

The latest figures from HMRC shows residential Stamp Duty receipts, excluding the higher rate charge, decreased by 7% annually to £1.29bn in the fourth quarter of 2018, while takings for the additional charge fell 6% to £1.04bn, giving a total of £2.3bn.

Heaton added that based on LCP’s own analysis of the HMRC figures, transactions in England, Wales and Northern Ireland fell by 2.6% in 2018 and now stand at just over 1m. This compares with Land Registry data for 2018 which reports a 4% fall.

LCP said additional property transactions have been hardest hit, down 4.6%.

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