Watch out, Manhattan real estate: the British are coming. Currently faced with a wave of tax burdens in London, local property buyers are being provoked to take their business elsewhere. Back in March, the British government began cracking down on tax avoidance, focusing tax-collections on the city’s biggest buyers: foreign investors. According to a recent study, purchasers of London property priced over £2 million are paying twice as much in transaction taxes than those buying in New York. So from the Irish buying out Midtown to the French election prompting wealthier residents to relocate, many Europeans are finding New York City to be a safe haven for their investments, and the Brits are just the latest group geared to make an impression on our market.
For some time, buyers such as Russian oligarchs and Middle Eastern sheiks have been able to avoid paying stamp duty through the use of offshore entities in transactions. As a result, the Chancellor of the Exchequer has raised the stamp duty on properties with high price tags from 5 to 7 percent, and buyers using offshore corporations are finding an even more severe increase, as it now sits at 15 percent. Additionally, the British government will change an annual tax of less than 1 percent on offshore entity properties priced over £2 million, and for the first time, foreigners will be subject to capital gains when selling British properties.
Those most upset by these new implementations are members of London’s real estate community, who feel as though the government is trying to profit off of one the city’s only thriving economic sectors. New York City has yet to follow London’s lead, despite the area’s prominent stature in real estate during past few years. New York is very fond of foreign ownership, as it has allowed the real estate market to thrive; with so many investors considering the city to be a secure region to place their money, it comes without surprise that London would turn to Manhattan for purchasing property .