General election 2019: Labour plans extra property tax on foreign buyers

St George's Wharf tower — Image caption The lower pound has been luring foreign buyers to the London residential market

Labour has pledged to put an extra tax on foreign companies and trusts buying property in the UK.

It is part of the party’s wider tax plans and would charge offshore firms 20% for property purchases, on top of existing stamp duties and surcharges.

Shadow chancellor John McDonnell said the levy was needed to “raise essential revenue for our public services”.

The Conservatives said Labour was “lashing out” at firms because it “has no credible plan to get Brexit done”.

Earlier this week, the Conservatives said companies and individuals who buy property in the UK, but are not tax resident here, will have to pay a 3% surcharge, raising an estimated £120m a year.

Former Liberal Democrats leader Tim Farron said his party’s manifesto also contains a pledge to increase stamp duty for foreign buyers of residential property.

Image copyright Getty Images

Image caption Jeremy Corbyn will officially announce the plan outside an Amazon warehouse

The Labour pledge states: “A company purchasing residential property benefits from the UK’s infrastructure and legal framework, and ought to pay a small levy to acknowledge that”.

The party said the extra tax would help cool the housing market, “prevent illicit flows” and raise revenue for Treasury coffers.

The party said the extra levy on overseas firms will raise £3.3bn a year.

‘An easy target’

However Melanie Williams, a real estate partner at law firm DWF, said all three housing tax plans raise questions about whether they will deter foreign buyers and stimulate house building.

“Overseas property investors have become an easy target in recent years for the British government, as well as the two main opposition parties, as the latest proposals from all three in this election show”.

Ms Williams said the Conservative and Liberal Democrat policies were fairly similar, but Labour’s plan to tax foreign firms buying housing “appears confused at best, given the number of tax reforms introduced in the past six years, which have included measures designed to prevent overseas buyers investing in property through company structures”.