Starmer proposes a rise in stamp duty on new-builds and restrictionsA Labour government would increase the stamp duty paid by foreign buyers of UK property while also restricting the sale of new-build properties to overseas investors under plans being drawn up for the party’s general election manifesto.
Labour Party leader Sir Keir starmer wants to address Britain’s housing affordability crises, which have made it more difficult for young workers to purchase their own home.
Starmer’s policy will be scrutinized more closely ahead of the general election in 2019. Labor is far ahead in polls, and has made significant gains in Friday’s elections.
For a period of time — say, six months — Labour would implement new rules that would allow only first-time homebuyers to purchase homes in new developments.
Councils will negotiate with developers to determine how long the sales period is and whether it begins with the first sale off-plan, or when projects are completed.
A new development would only allow overseas buyers to buy up to 50% of the property.
The Starmer government will also increase the stamp duty surcharge, which is currently 2 percent and that overseas buyers pay in comparison to domestic buyers.
According to a Conservative official, the government of Prime Minister Rishi Sunderk looked into the idea of taxing non-UK residents more — either with stamp duty or by imposing a “penal council tax rate” — but decided against it. The proposal was quashed last year by Jeremy Hunt, who feared that it could “freeze” property prices and raise very little money. Treasury continues to oppose.
Labour’s new ideas are expected to be approved this summer, when it draws up its final party manifesto in preparation for the general election next year.
In the last decade, the number of English and Welsh homes owned by foreign buyers almost tripled. This is due to a flood of residents from Asia and other tax havens flooding into the market.
Recent analysis by the Centre for Public Data (a non-profit organization) suggests that the number residential properties registered in England and Wales to individuals living overseas has jumped from less than 88,000 in 2010, to approximately 250,000 in the year 2021.
Starmer’s initiative is similar to other initiatives around the world. Denmark, Canada, and Malta are among those countries that have restricted the sale of homes to foreign residents.
Luke Mills of CBRE’s UK Residential department said that the policies could slow down the construction of new apartment buildings in urban areas, where developers prefer to sell some units before starting the building.
Off-plan sales are dominated by foreign investors, even though they account for less than 50% of the projects.
Mills stated that it was unrealistic to expect all buyers to buy at the same time.
Stewart Baseley said that the Homebuilders Federation’s executive chair, Stewart Baseley: “While it is important to prioritize UK buyers, some large-scale projects require upfront funding from overseas investors.”
Baseley, however, said that the industry supported Labour’s focus on “prioritising the housing supply”, especially by addressing the constraints in the planning systems.
The shadow levelling up secretary Lisa Nandy has pledged to reform the planning system in order to allow more homes to be built.
Labour also promises to build more affordable and social homes, although the Treasury team is still unsure of how much additional subsidy it will offer to housing associations.
Starmer will also introduce a permanent, “more comprehensive”, mortgage insurance scheme for first-time homebuyers.