London real estate is the most attractive in the world for investment

Whether the new UK tax?

Increasingly, discussions in the press highlighting the problems in the real estate sector of great Britain, that the probability of introduction of the tax on capital gains for non-residents. Tax on capital gains in the UK

At present, it is unconfirmed information, however, it is expected that soon followed the official announcement of the Chancellor of her Majesty’s Treasury George Osborne.

Currently, homeowners living in the United Kingdom, pay 18% tax on capital gains when selling their property, if that property is their primary residence. If they sell property that does not fall under the classification of a main residence, residents pay 28% when selling. Non-residents are also exempt from tax on capital gains at all.

The idea is to equate the conditions in relation to payment of tax on capital gains residents and non-residents because of excessive interest from foreign investors created a speculative sentiment in the market and the government seriously fears a “bubble” in the real estate market.

According to many analysts, most real estate agents this initiative should be welcomed, because it will eliminate the abnormal imbalance in taxation between foreign and local investors. The only question is whether this measure in speculative sentiment in the property market of London.

The fact that the measure will still allow the London property look the most attractive for investors against the background of other investment cities. A well-known fact that in the world there are only four cities of attracting investment capital into real estate from around the world: London, new York, Hong Kong and Singapore. Making a comparative analysis of the attractiveness of all of these cities, you may find that in London property still wins in terms of efficiency of investments.

For those who have made an investment in property in London for 5 years, the total value of costs of buying, selling and maintenance of the property will amount to approximately 8.5% of the sales price. Even if we impose a tax on capital gains, these costs will average about 12%. It will still be substantially less than the costs of maintenance for any other investment property in any part of the world, except, where applicable preferential tax regime.

The most important that the planned measure will not deter foreign investors, especially because many of them are still resident and London is attractive to many as a cosmopolitan city – a city that many aspire to not only work, but to live in it. London has always been known as a particularly welcoming city for foreigners that make an important contribution to the economy of the city.

There is no doubt, however, that input will have an impact on the buying activity of foreign investors, because the share of foreigners in the top segment of elite real estate of London is approximately 50% -70%. The initial market reaction may be even opposite intentions, but then comes a sharp decline in activity. For example, the new York market reacted to the increase in the tax on capital gains from 15% to 23.8%, in 2012, when first the demand for property has increased dramatically, but in 2013 it plummeted. The cooling of the market has seen and Singapore, where we recently introduced stamp duty of 15%.

Not yet known the exact details of how it will be introduced a new tax and what will be the tax rate, it is difficult to predict its impact on the market, but it is clear that the government in their desire to introduce new taxes and control the market need to be very careful. As a result, foreign investment has significantly increased the profits of construction companies that influence the development of industry in the city as a whole. Investments have given a strong impetus to the development of the financial sector, trade, hotels, and entertainment business.

Now almost every street of London traces of new investment inflows. The city updated and prettier. Recently, the residential real estate market of London is easy to “swallow” the increase in stamp duty. What “Stamp duty” But it is obvious that the balance of the market is very sensitive to changes and, if carelessly to cross the level of investor confidence, the market effects can be catastrophic. Moreover, there are other measures of influence on the market. It is possible to revise the scale of stamp duty, as well as examines the introduction of a tax on mansions worth more £2 million pounds. Although all these measures are also unlikely to be popular.

® Eleantra. 05.11.2013 G.