A wealth tax on overseas owners of UK homes could raise £5 billion a year to help local people buy their first properties at reduced rates, a former estate agency chief has suggested.
Kevin Hollinrake – a former chairman of Hunters estate agency chain prior to its acquisition by The Property Franchise Group – is now Conservative MP for Thirsk and Malden.
He told a debate in the House of Commons that the government had to strike a balance between personal freedom to buy homes wherever an individual wanted, with the broader freedom of local people to afford homes in their own areas.
One suggestion he had was to increase taxes on non-resident purchases of additional homes, whether holiday properties or buy to lets or occasional residences.
He told MPs: “I do not think there is any argument for not taxing those people pretty heavily if they own property in the UK and are non-resident.
“We already have a two per cent surcharge, on top of the per cent surcharge, for overseas owners. These people are having a profound effect on some house prices in urban areas as well as rural areas.
“I think 28 per cent of properties sold above £2m are bought by overseas owners. Around 20 per cent of all properties in London—and probably a decent quantity in York and other cities—are owned by overseas residents. I do not see a reason why we would not seek to tax those people even more heavily than with a 100 per cent increase in council tax.”
Hollinrake went on to say that a one per cent wealth tax on UK properties —bought by non-UK residents – would raise up to £5 billion a year.
“There would still be an incentive for those people to invest their money in the UK, which I am not against, but the reality is that this would make it a fair and level playing field. They would still benefit from the very high house price growth.
“As we have heard today, house prices have been rising by around 10%, so it still makes sense for people to invest, but such a tax would mean that we could take a little bit out of the money they are making every year from house price inflation and put it elsewhere.”
The former agency chief said the revenue from such a property-related wealth tax could go into the government’s First Homes programme, which offers new-build discounted properties to local first time buyers.