UK capital gains tax changes may not affect London house price boom

Published:  19 Dec at 6 PM
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Given that around five million Britons have chosen to live overseas and most keep an eye on the news from back home, how severe will the changes be for expat property investors?

Expat investors living outside the UK have traditionally favoured buy-to-let property back home, both to have a home ready and waiting when it’s time to return, and as a way to beat the measly returns most banks are offering. The Chancellor’s confirmation during his Autumn Budget Statement that foreign investors will be liable for CGT didn’t come as much of a surprise.

Commentators are now stating that the new rules may not have the intended effect on soaring London real estate prices, as the bulk of foreign investors are sinking a very small percentage of their total wealth in exclusive London properties. Also, there seems to be no reason why, as London is a premier world visitor destination, super-wealthy investors should suddenly decide to sell up simply to make a buck they don’t need, especially as a large percentage of the profit will now be grabbed by the government.

The tragedy is that everyday expats investing their savings against their retirement or the end of an overseas contract will be caught in a net thrown to catch much larger foreign fish. Expats working overseas have been able to claim that, due to still being resident in the UK, they are exempt from CGT as their main residence is still in their home country, although buy-to-let investors have to pay the tax, wherever their present base.

The dilemma is being made more confusing by the withdrawal of most of the formerly available expat mortgage schemes. Those still operating are either expensive in terms of interest rates or insist on large deposits or, in the case of several firms, both.
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