The British Property Federation says a government proposal to impose capital gains tax on overseas investors risks deterring crucial investment into the fledgling Build To Rent sector.
The government is currently consulting with the property industry over an idea to impose capital gains tax on non-residents investing in bricks and mortar. In its submission to the consultation, the BPF says it recognises the government's desire for a fair and equal tax regime but warns the idea could kill off valuable overseas investment at a time when the housing shortage is particularly acute.
Recent years have seen substantial investment in the emerging Build To Rent sector, especially from US firms such as Fizzy Living - a leader in BTR in America.
The BPF fears that as BTR gains momentum it is particularly important to maintain interest, especially given the low yields it offers in comparison to other investments including commercial property.
The consultation paper states that overseas Real Estate Investment Trusts, pension funds and some investment funds will be exempt from any future capital gains tax but the BPF says those examptions are too narrow.
"Virtually all of the investment by global capital in the UK's built environment has taken place on the basis that no tax arises on capital gains arising from the disposal of assets. This relief for non-residents goes back to the introduction of capital gains tax in the 1960s and may have been introduced initially to attract overseas capital says Ian Fletcher, the BPF's director of policy.
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Comments
I disagree. Overseas investors are contributing to the housing shortage by buying up properties and then leaving them empty. They then sit on their investment, wait for prices to rise, and sell to the highest bidder. Meanwhile, people who genuinely want to get on the ladder are penalised. Overseas investors might be crucial for Build to Rent, but they shouldnt be painted as angelic saviours, very far from it. Its absolutely right that the Government should take sensible measures to avoid overseas investors manipulating the market.
Ah, just another case of government intrusion! We shouldn't be interfering with overseas investors, especially not when they are supporting our Build to Rent sector, which already needs all the support it can get. You would think that the gov. would realize that we are in housing shortage, but I guess its more important to them to squeeze money out from whomever they can.