The UK is not the only country in the world with a perilous property situation. Other countries are experiencing market challenges but dealing with them in different ways.
From Australia to Canada and even European neighbours like Denmark, France, and Switzerland, national governments are coming up with creative ways to minimize the housing squeeze. Can the UK housing crisis benefit from any of them
Higher Stamp Duty in Australia
Australia has taken several measures to improve its property situation, such as an empty homes tax and Stamp Duty surcharge for overseas investors
Last year New South Wales introduced a foreign investor surcharge of 4%, doubling to to 8% in July. Victoria brought in a tax of 1% multiplied by the capital improved value on homes that have been empty for six months or more.
Britain is also experiencing issues with foreign investors buying property and leaving it vacant for months at a time. Conservative think tank the Bow Group stated three years ago that if this trend continues, the UK could keep producing new homes without British people being any better off.
Tax on Empty Homes in Canada
The city of Vancouver in Western Canada introduced the ‘Empty Homes Tax’, which will be levied on homes that are vacant for over six months of the year, provided they are not the owner’s main residence
Each year every residential property owner is required to make a ‘Property Status Declaration’. Unless rental restrictions are in place or the property is being renovated, homes deemed ‘empty’ will be subject to a 1% tax on their value. All revenue generated will be invested in affordable housing schemes
Like Australia and Canada, Paris recently increased the yearly surcharge for property owners who leave their homes empty for months at a time. Property experts have pointed out that the UK housing crisis is being dealt with in a similar manner: the ‘Empty Homes Premium’ in England requires homeowners to pay more council tax if the property is unoccupied for two years or more.
Foreign Investment Restriction in Denmark and Switzerland
For non-EU residents to buy property in Denmark, they must have lived in the country for at least five years or get permission from the Danish Ministry of Justice. In Switzerland, foreign investors can only buy residential property in specific areas
Jeremy Leaf, former Residential Chair of the Royal Institution of Chartered Surveyors, said that penalising foreign buyers may not work in Britain. He pointed out that a lot of new residential developments rely on financial support from overseas buyers for long-term projects
If an idea is marketed to the Far East, investors respond by buying several apartments ‘off plan’, which in turn is a method of advance funding for the project. In contrast, when one buys with a mortgage offer, it is usually only good for three to six months. Walking the line between encouraging overseas investment and knowing when to restrict sales to UK residents can be a fine balancing act
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