Foreign buyers of English properties will have to pay a levy of 3% of the purchase value under plans put forward by Prime Minister Boris Johnson’s Conservatives on Friday, aimed at deterring wealthy investors from driving up house prices.
The plans form part of the Conservative Party’s campaign to win a Dec. 12 election, which is heavily based around Johnson’s promise to deliver Brexit within months and move on to domestic issues like education, healthcare and policing.
Successive British governments, including the last nine years of Conservative rule, have failed to alleviate a long-term housing shortage which has driven up property values and priced many working Britons out of buying their own home.
The proposed reforms to Stamp Duty Land Tax – a levy on property purchases – would apply to companies and individuals who are not resident in Britain for tax purposes, and could raise up to 120 million pounds ($155 million) per year, the party said.
London’s high property prices and a strong legal system have made it the destination of choice for foreign billionaires looking for a safe place to park their cash, attracting Russian and Middle-Eastern money especially.
A Conservative briefing note cited an academic study which showed 13% of new London homes were bought by non-residents from 2014 to 2016.
“This adds significant amounts of demand to limited supply, inflating house prices and making it harder for people in Britain looking to get a foot on the property ladder,” the briefing note said.
The party said the policy was based on residency, not nationality, and the surcharge would be in addition to existing taxes which already charge higher rates for those who own more than one home.
Opinion polls put Johnson’s Conservatives well ahead of the opposition Labour Party, led by socialist Jeremy Corbyn, but the election is hard to predict because Brexit overrides traditional party allegiances.
Corbyn launched his election manifesto on Thursday, promising to overturn a system he said was rigged in favour of the rich. His party has promised to raise more than 80 billion pounds from taxes on high earners and corporations.
