Foreign buyers to be hit with higher stamp duty, Therea May announces after criticism over housing crisis

Hike will raise tens of millions of pounds to cut the number of rough sleepers, prime minister will announce

Rob Merrick
Deputy Political Editor
Saturday 29 September 2018 22:35
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Theresa May: Young people right to be angry about housing crisis

Foreign buyers of UK homes will be hit with higher stamp duty, as Theresa May seeks to counter criticism that her “mission” to tackle the housing crisis is a flop.

The one per cent hike – possibly rising to three per cent – will raise tens of millions of pounds to cut the number of rough sleepers, the prime minister will announce.

The government believes there is evidence that allowing foreign buyers to snap up homes while paying the same duty as British residents “is inflating house prices”.

Now the surcharge will be levied on top of existing higher levels of stamp duty, introduced in 2016, on second home and buy-to-let purchases.

The move comes amid criticism that Ms May has failed to follow through on her pledge, nearly one year ago, to take “personal charge” of solving a housing crisis she has acknowledged.

Stamp duty was scrapped for first-time buyers, but there has been no government-led housebuilding programme to reach the target of 300,000 new homes a year.

Earlier this year, a former housing minister and the Tory head of the Local Government Association (LGA) both warned “the nonsense will go on and nothing will change” unless the proposals were dramatically beefed up.

Gary Porter, the LGA chairman, said the only solution was for the Treasury to lift harsh restrictions on borrowing, to allow local authorities to build the homes themselves.

The government’s efforts to curb rough sleeping – after a sharp rise in recent years – have also come under fire, after it emerged that none of a promised £100m was new money.

Ahead of the start of the Conservative conference in Birmingham, Ms May repeated her commitment to “fixing our broken housing market”.

“Britain will always be open to people who want to live, work and build a life here,” she said. “However, it cannot be right that it is as easy for individuals who don’t live in the UK and don’t pay taxes here, as well as foreign based companies, to buy homes as hard working British residents.

“For too many people the dream of home ownership has become all too distant and the indignity of rough sleeping remains all too real.”

No 10 pointed to a York University study which found that 13 per cent of new London homes were bought by non-residents between 2014 and 2016.

Meanwhile, research by Kings College London estimated a one percentage point increase in the volume of homes being sold to overseas companies put up house prices by 2.1 per cent.

A 1 per cent stamp duty surcharge, on any individual or company not paying tax in the UK, is expected to raise £40m a year – rising to £120m, if a 3 per cent levy is introduced later.

The existing surcharges, on second homes and buy-to-lets, are three per cent (homes below £125,000), 5 per cent (£125,000 to £250,000), 8 per cent (up to £925,000), 13 per cent (up to £1.5m) and 15 per cent (above £1.5m).

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