House builder stocks listed on the FTSE 100 shed value on Monday morning after the U.K. government announced plans to introduce an additional tax on foreign buyers of British property.
A rise of up to 3 percent in stamp duty is to be paid by any individuals and companies that are not registered to pay tax in the United Kingdom.
Speaking at the Conservative Party conference in Birmingham on Sunday, U.K. Prime Minister Theresa May said Britain would always be open “to people who want to live, work and build a life here,” but it was fair that foreign property investors should pay an additional levy.
“It cannot be right that it is as easy for individuals who don’t live in the UK, as well as foreign-based companies, to buy homes as hard-working British residents,” she said.
The prime minister also said there was evidence that investment by foreign buyers had pushed property prices up to a level that had taken many out of reach for local buyers.
In London especially, there has been criticism of a growing number of properties bought by foreign clients who then let them stand empty. Housing and homeless charity Shelter has estimated that in England alone there are 279,000 long-term, privately owned empty homes.
May said revenue generated from the new tax would be funneled toward the government’s attempts to tackle homelessness.
“For too many people the dream of home ownership has become all too distant and the indignity of rough sleeping remains all too real,” she added.
The housing market in Britain has struggled for momentum in recent months following the introduction of a new tax on second home ownership and wider uncertainty brought about by Britain’s upcoming departure from the European Union.
In August, New Zealand’s government passed legislation that meant only local residents and long-term residents can buy homes. Official statistics had shown that in central Auckland, more than one in five properties was owned by a non-New Zealand national.