Letter: Property Speculators Inhibits Housing Affordability

Published on: 16 Apr, 2016
Updated on: 16 Apr, 2016

From: Bernard Parke

Overseas Buyers are forcing up house prices by a system know as “flipping”.

The system works by gambling on properties before they are built. Homes are bought off-plan by paying ten to fifteen per cent deposits, the remaining cost is not payable until the buildings are completed.

It is possible to make large profits by selling on these investments. An example given in a recent Times article is a £300,000 property secured with a £30,000 deposit. Once the value increases to £400,000 the right to buy is sold and a profit of £100,000 pocketed.

This process is quite common place in large city areas but there is evidence that outlying areas of London can now be effected.

Such a scheme certainly hinders many families achieving their ambitions of owning a home of their own.

Central government should act now to frustrate these buyers who have no intention of taking up residents in the UK.

Responses to Letter: Property Speculators Inhibits Housing Affordability

Jules Cranwell Reply

April 19, 2016 at 4:32 pm

The government could solve this at a stroke, by:

1. Imposing Capital Gains Tax on profits made by overseas investors from flipping.

2. Imposing a tax on properties owned, but left empty, by overseas investors.

Why don’t they?

I’ve read various reports that up to 80% of properties being bought in London off-plan go to overseas speculators. This now is apparently being exported to Guildford, as opportunities dry up in London.

GBC’s unchanged plan to concrete over the green belt will benefit these speculators most, to the detriment of Guildfordians most in need of housing.
- John Perkins Reply
  
  April 20, 2016 at 9:18 am
  
  I agree with Jules Cranwell. I’m not entirely sure how a tax on empty properties would work, but it’s probably worth pursuing.
  
  Another factor is Stamp Duty, which can still be avoided by ‘foreign’ investors. The government says they will pay the surcharge if they “own another property anywhere else in the world”, but they don’t say how that can be established when the beneficial owners are not known. The tax should be mandatory.