The British Finance Minister George Osborne is considering slapping new taxes on foreign property investors in an effort to tackle what many see as a house price bubble in London and the south east of the UK.
He is actively investigating imposing capital gains tax on foreign owners of British property at the Autumn Statement in December. The British Treasury has already provisionally costed the measures and is awaiting a final decision from Mr. Osborne in the coming weeks.
While those living in Britain have to pay capital gains tax (CGT) of 18% or, more commonly, 28%, if they make a profit when reselling all but their main home, non-resident property owners are currently exempt for all their properties.
Britain's comparatively generous regime is thought to be one of the factors behind the sharp increase in foreign ownership of properties in London. House prices in London rose by nearly 9% in August, compared with around 2% elsewhere in the UK, according to the Office for National Statistics.
Fast-rising property prices have fuelled fears about a housing bubble in so-called 'prime' London areas such as Kensington & Chelsea, where the average home is now worth almost 30 times the average local salary.
There are worries of a property bubble developing in prime London locations
This compares to recent figures from the Central Statistics Office (CSO) here, which showed Dublin property prices are now 12% higher than a year ago, but prices actually dropped 0.1% outside the capital.
The price increases in Britain have been driven in part by foreign investment, with around 70% of the most expensive London newly-built properties being bought by non-UK citizens, according to estate agency Knight Frank. It calculates that 65% of overseas buyers intend to rent their London properties rather than live in them.
At present, these buyers do not have to pay tax on the gains if they go on to sell the property in the future.
Under plans being mulled by Mr. Osborne, even overseas buyers would become liable for CGT, as they are in many other countries throughout Europe.
According to the internal research of the UK Treasury, the tax would be unlikely to raise significant sums - tens of millions rather than billions - but would address concerns that overseas investors might enjoy favourable treatment when it comes to property investment.
