Within the past year, super rich from around the world have been buying up London properties at breakneck speeds, in fact double the year before. In 2010 sales to foreign buyers totalled £2.1 billion, while to date in 2012, that amount has more than doubled to £4.3 billion. This is prime real estate in London and only figures related to foreign buyers.
According to a recent article in the Guardian, it is Britain’s tax laws which have enabled these properties to be sold so quickly and that government has lost out on an amount equal to greater than £750. This at a time when the economy is struggling and austerity measures are strict is almost unconscionable. To be exact, the tax laws involved are in terms of off-shore firms and their ability to make purchases of luxury homes at tax rates which are inordinately low.
Financial experts and economists are pointing out that super-rich people from around the world are purchasing homes upwards of £40 million without a backwards glance. In fact, London holds the honour of having the most expensive flat in the world, the £136 million penthouse in a Hyde Park development in central London.
What is troubling to many people is the fact that the world’s super-wealthy are squeezing out Brits from the upper end of the market, and more than 75% of properties with a selling price of over £5 million went to foreign buyers. Added to that, all properties which sold for more than £30 were to international investors or buyers.
A London developer is on record as saying that the world’s wealthiest people are attracted to London because it has a true mix of global populations and the tax laws are amongst the most lenient in the world. By purchasing properties through offshore companies, investors can avoid the stamp duty which would raise the price of these properties significantly. This avoidance is costing Treasury at least £750 million per year and why government is taking a new, long look at this practice.