Indians have emerged among top foreign buyers of property in the UK in recent years, but the Theresa May government is planning a new surcharge on such buyers in a bid to control a rise in property prices.
The falling value of the pound in recent months and years, combined with easier Reserve Bank of India (RBI) norms on buying property abroad, has led to a rise in the number of Indians buying flats and other properties in London and other areas in the United Kingdom.
Several London-based property agents have highlighted research and figures that show Indians among the top foreign buyers, besides Russians and Chinese.
Foreigners buying property in the UK is considered one of the key reasons for the rise in property prices to the point that not many UK residents can put down the basic deposit needed for a mortgage to own property.
The new surcharge will amount to 1% of the stamp duty that is levied on every purchase. Proceeds from the surcharge are intended to help deal with people sleeping on streets or public places, a growing phenomenon in the UK in recent years.
The May government issued a consultation on how the new 1% increase to stamp duty costs for non-UK residents buying residential property in England and Northern Ireland would work. A commitment to levy the surcharge was made by May and in the budget of 2018.
“The UK is and will remain an open and dynamic economy, but some evidence shows that non-UK resident buyers of UK property could be inflating house prices,” Mel Stride, financial secretary to the treasury and paymaster general, said.
“A 1% surcharge could help more people own their own homes in the future, and its proceeds will go towards tackling rough sleeping, boosting our plan to halve the numbers of rough sleepers by 2022,” Stride said.
The consultation will cover all aspects of the charge, including how non-residents will be defined and how it applies to companies. The charge will apply to any person who is a non-resident in the UK, including certain UK-resident companies which are controlled by overseas shareholders.