Rob Perrins, head of property giant Berkely Group, has today suggested that the UK property tax system is in need of a complete overhaul. His scathing comments about the UK property market tax regime comes at a time when the UK government is rumoured to be looking at introducing capital gains tax for overseas investors due to the fact that foreign investors seem to be behind the ever growing rise in London property prices.
Whether or not you agree with Rob Perrins analysis of the UK property market tax system there is no doubt that historically governments have added ad hoc taxes and very often see the property sector as an easy touch for new tax income streams when in need of funding.
The head of Berkely Group made an interesting observation about the UK property stamp duty system and believes that sellers as opposed to buyers should be forced to foot the bill. This is certainly a very different take on the current system which has historically put the emphasis of paying stamp duty on the buyer of a property as opposed to the seller. The growing belief is that if sellers are forced to pay the stamp duty then this would leave more money for buyers although it may impact the asking price for properties put up for sale.
Quote from PropertyForum.com : “Whether or not we see a change in UK government at the 2015 election there is already debate as to whether a change in government would impact the UK property sector.”
Indeed interestingly the UK government appears to be on the verge of yet another increase in London property stamp duty which could be brought in under the guise of a further increase for properties in excess of £2 million. While this increase in stamp duty is not officially targeting the London market, this is the market where the vast majority of expensive properties are located.
Uncertainty breeds uncertainty
One issue which has been mentioned time and time again is the fact that ongoing changes to the UK property tax system will and do have an impact upon sentiment amongst investors. It is this ever-changing strategy to future tax streams which is causing major concern and will eventually have a more profound impact upon investors.
Some experts believe it is now time to increase council taxes on more expensive properties which would reduce the need to tinker with the property tax system in the future and allow investors to look further ahead. The chances of this happening are fairly remote when you bear in mind that the next general election is only couple of years away and political parties will need to stay on the side of the voting public. Whether we seen increasing council taxes after the next election remains to be seen but it is unlikely we will see any major changes in this particular area over the next 24 months.
It is interesting to see such a prominent figure in the UK property market as Rob Perrins commenting upon the ad hoc addition of property taxes over the years with rumours of more to follow in the short to medium term. He makes some very valid points regarding the UK property market and the impact which the ever-changing tax situation could have on investor sentiment. When you bear in mind that the UK property market has historically dragged the UK from periods of recession it is vital that the interest and trust of property investors in the UK is maintained by the government.