The status of the UK as the leading investment country in the world can damage the new taxes

Pressure on foreign investors from the UK government through the imposition of additional taxes could harm the reputation of the UK as a leading power in the world, attracting investment. While this measure is unlikely to help restrain rising prices and the housing.

In business circles of great Britain, close to government sources there were rumors that the financial Department in the UK, led by George Osborne, addresses the issue of taxation has grown capital to foreign investors, with the aim to curb rising prices in London and the South-East of the country.

According to British real Estate Federation the main cause of rising prices is the lack of sufficient supply in the market. The imbalance of supply and demand pushes prices up.

The decision to impose new tax obligations on foreign investors carries political risks – this can create a situation of uncertainty in the market, which can also affect the behavioral factors of people to invest not only in assets, residential properties and commercial assets.

The reason for rising prices is the chronic shortage of new homes, not interest from foreign investors, which was observed always. And it would be completely unreasonable people who want to invest in the UK economy, scare off additional tax liabilities.

The harm that would be caused to the image of the UK economy as a country open for business, will significantly exceed those paltry amounts that can be collected as a tax. After all for anybody not a secret that only foreign investment, many development programmes in London able to move forward. Because reputation is worth a lot – and make it very difficult to lose instantly.

Many foreign investors, having heard only talk of the introduction of new taxes, thought, and is it worth the risk?

The London School of Economics conducted a study that shows that foreign buyers account for only 6.5% of the total sales in value terms for residential property in London. If you consider that foreign investors are attracted by the real estate of a class “Lux”, that is in the upper price range, the share of foreign buyers in terms of number of sold objects will be even smaller.

According to real estate Agency Knight Frank, which specializiruetsya for luxury real estate in recent years 49% of all real estate more expensive than £1 million. pounds were acquired by persons of different nationalities, but non-residents among them were only 28%, the rest – the citizens of the United Kingdom.

One hopes that the government will be able to soberly assess all the pros and cons of the new tax and to abandon the idea, which carries economic, financial and strategic risk for the UK economy.

® Alice Morgan 31.10.2013 year.

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