Foreign investors pushing London house prices to record levels are set to be hit by new taxes, it emerged today.
Chancellor George Osborne may impose capital gains tax on foreign owners in an attempt to prevent what many analysts fear is a housing bubble in the capital.
It follows official figures showing that the number of homes in London costing more than £1million has rocketed by 44 per cent in the past year.
About seven in 10 of London’s most expensive newly built properties are snapped up by people living abroad, say estate agents, and some are never lived in.
House prices are rising at their quickest rate of in three years as Mr Osborne’s mortgage subsidy scheme and the Bank of England’s cheap lending policy stoke confidence in the property market, the Nationwide building society said today. Average prices rose 5.8 per cent on a year earlier in October after a one per cent rise during the month.
But London property prices are rising at 9.3 per cent, far outstripping the two per cent rises seen in the rest of the country.
Charging capital gains tax would end an anomaly where people living in Britain are charged up to 28 per cent on the profit when they sell a home they do not live in, but investors who do not reside in the UK are exempt.
The Treasury has carried out a study of the costs, say sources, and a final decision will be made by the Chancellor before the Autumn Statement. However, the Treasury said the idea was “speculation”.
