Foreign billionaires are renting rather than buying luxury homes in London following increases in tax bills on upmarket properties. Lettings that cost more than £3,000 a week – £156,000 a year – increased by 28% in the last three months of 2016, according to research by the property data service LonRes.
The number of prime central lettings in the capital has risen steadily since the introduction in April 2016 of a 15% stamp duty tax on properties bought via offshore trusts, and a three percentage point surcharge on stamp duty on second homes.
Marcus Dixon, LonRes’s head of research, said that rich foreigners who previously would have shelled out £10m or more on a London home are choosing to rent to avoid paying the tax.
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“The stamp duty cost at the very top end is significant,” he said. “Especially as you have to consider that a majority of these people would be buying it as an additional property so would be paying the additional 3% second-home tax as well.”
So if affluent buyers have turned to renting rather than buying how can policy makers deter this process in a bid to reduce demand for luxury properties?