Recent changes in the UK tax scheme will see Singaporean investors in the UK paying higher stamp duties and other new taxes, according to a media report.
While Singaporean investors are not worried, many experts noted that they have been seeing a significant increase in the number of inquiries. The tax changes may be particularly hard on investors who acquired properties worth more than £2 million (S$4 million) using a company compared to a standard purchase.
For instance, a proposed annual charge will be implemented to both existing and new homes valued at more than £2 million (S$4 million) held by companies. The changes will likely take effect in April next year.
Jonathan Conder, Head of private client practice at law firm Macfarlanes, said its customers will likely take their existing properties out of companies over the next year to avoid paying the annual charges.
However, some foreign investors thinking about new acquisitions will have other issues to face.
“We are already seeing an impact with an increase in demand for properties between £1 million (S$2 million) and £2 million (S$4 million) where you have the normal rates of stamp duty without the annual tax or capital gains tax exposure,” said Conder.
Several investors are also eyeing commercial property, which is not affected by the tax changes.
A few marketing agents said that the majority of homes purchased in London comprise apartments that cost below £1 million (S$2 million).
“Most of these buyers are investors so they won’t want to incur more cost by buying something more than £2 million (S$4 million). The new tax will definitely make buyers think harder and they will hesitate a bit on apartments of that price,” said Jones Lang LaSalle (JLL).
The consultancy is marketing London’s Kensington High Street project in Singapore. Doris Tan, Director of International Project Sales at JLL, said 15 units were snapped up on the first day of the launch at an average price of between £1.5 million (S$3 million) and £1.9 million (S$3.8 million).
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